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SANTA MONICA, Calif. (KABC) —
A consumer watchdog group filed a lawsuit Monday against California’s
largest for-profit health insurer on behalf of policyholders, claiming
they were pushed to take coverage with fewer benefits and higher
deductibles.

Randy and Donna Freed pay more than $20,000 a year for health
insurance with Anthem Blue Cross. They worry they might have to drop
their coverage all together.

"You feel deceived. I think you feel trapped," said Randy Freed. "You are stuck between a rock and a hard place."

The Freed’s are part of a class action lawsuit against Anthem Blue
Cross. In September they received a letter saying their current plan
was being closed to new customers. They could stay in the current plan
or move to a different one.

"Are only other option was a policy with almost twice the deductible and with far fewer benefits," said Donna Freed.

They stayed with their existing plan and a few months later received
another letter. This time around they were informed that their premiums
were going up 33-percent.

"Anthem Blue Cross has been in the
news a lot because Anthem Blue Cross is very good at gouging people,"
said Jerry Flanagan, a health advocate for Consumer Watchdog. "They are
the market leader, not only the largest insurance carrier, but they are
the best at charging people more for less coverage."

Consumer
Watchdog says it’s called a "death spiral" because rates inevitably
increased until policyholders could no longer afford coverage. They say
that’s against California law.

"You have to at least offer
comparable coverage in another policy, or for the people that are going
to stay in the same policy, you have to spread their risk so they do
not suffer these enormous rate increases," said attorney Pamela
Pressley.

Just last week demonstrators protested outside Anthem headquarters in Woodland Hills.

During Assembly hearings last week the company said with the bad
economy it’s losing younger healthier customers and has to pass along
rate increases to those who stay.

Eyewitness News contacted
the company and a media spokesperson said they have heard about the
lawsuit, but have not officially received it through their attorney’s
so they could not comment on the suit.