Consumer Group Sues Anthem Blue Cross, Claims ‘Bait and Switch’ Fraud

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A consumer group said Wednesday it has filed a class action lawsuit that accuses a top California health insurer of fraud and unfair business practices allegedly intended to lure customers into buying its health insurance plans. 

The lawsuit, filed Tuesday in Los Angeles County Superior Court, accuses Anthem Blue Cross of  "deceptive 'bait and switch' misrepresentations, inadequate physician and hospital networks" and of "grossly" mishandling customer service. Consumer Watchdog and Anthem customers filed the suit.

A spokesman for Anthem says any problems with its provider directories were inadvertent.

Attorneys representing the plaintiffs say that Anthem intentionally misled customers beginning in late 2013. That's when the company cancelled plans bought by customers on the individual market and instead offered them a line of new plans that comply with the Affordable Care Act, the lawsuit says.

"The pre-ACA plans had access to an extensive network of providers that Blue Cross had provided for years," says Travis M. Corby, an attorney for the plaintiffs. "The new plans only had access to an extremely narrow network of providers."

At the same time, Corby says, Anthem failed to update its provider lists and instead told consumers that their doctors and hospitals were included in the networks when they had actually been removed.

The lawsuit, which seeks an unspecified amount of damages on behalf of the plaintiffs, alleges Anthem further misled consumers by misrepresenting the company's new, narrow-network plans –  called EPOs, or "Exclusive Provider Organization"  – as providing benefits equivalent to their former PPOs, or "Preferred Provider Organization," plans. But EPOs, unlike PPOS, don't pay for coverage patients seek out of network. 

As a result,  the lawsuit says, many consumers have either incurred costs for medical services that both they and the provider believed were covered but that the insurance company now refuses to pay, or they have gone without needed medical services.  

In response to the lawsuit, an Anthem Blue Cross spokesman provided this statement to KPCC:

"Anthem Blue Cross continually works to improve the accuracy of our provider directory. In the process of updating our provider database earlier in the year, we found that while the vast majority of the listings were correct, there were some providers inadvertently listed. Many of the doctors inadvertently listed decided to join Anthem's network for individual members. Overall, Anthem has added more than 3,800 doctors to our statewide exchange network since Jan. 1. 2014."

"Members having an issue finding a provider should call the customer service number on the back of their ID card, and our customer service team will assist in finding an available provider."

Consumer Watchdog Attorney Jerry Flanagan acknowledges that other health insurers in California have also greatly narrowed their provider networks and have included on their provider lists doctors and hospitals who are no longer covered. But he says "the one thing that is different about Anthem is the level of misrepresentation it engaged in."

Flanagan adds that Anthem is among the state's top health insurers, having enrolled about 350,000 customers through Covered California, the state-run health insurance marketplace. Additionally, he says, the company has  signed up another 100,000-150,000 California customers through its agents and brokers.

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