Anthem Blue Cross is sued over policy cancellations

In a new line of attack on canceled health policies, two California residents are suing insurance giant Anthem Blue Cross, alleging they were misled into giving up their previous coverage.

About 900,000 Californians and many more nationwide have received cancellation notices on their individual health insurance policies, triggering a public uproar against the rollout of President Obama’s healthcare law.

Some consumers have complained about hefty rate hikes from the forced upgrades because their current plans don’t meet all the requirements of the Affordable Care Act.

Much of the consumer anger has been directed at Obama’s repeated pledge that Americans could keep their existing health insurance if they liked it despite the massive overhaul.

In separate lawsuits filed Monday, Paul Simon, 39, of Sherman Oaks and Catherine Coker, 63, of Glendale sought to pin some of the blame on Anthem Blue Cross, a unit of WellPoint Inc.

The two plaintiffs are asking the courts to block any policy cancellations unless Anthem customers are allowed to switch back to their previous grandfathered health plans.

In their Los Angeles County Superior Court suits, Simon and Coker allege that Anthem pressured them in 2011 to give up their grandfathered status, a position that would have shielded them from changes under the healthcare law.

People who bought their individual policy before March 2010, when the healthcare law was enacted, and kept it in place aren’t affected by the current changes in the market. In California, nearly half of the 2 million individual policyholders are expected to lose their current coverage and must find a new plan by Jan. 1.

“This is about an insurance company manipulating the situation and concealing the facts,” said William Shernoff, a Claremont attorney for both plaintiffs. “We are asking the court to give our clients and everybody else in the same situation the option of going back to their grandfathered policies.”

Anthem Blue Cross said it hadn’t seen the complaints yet so it couldn’t comment.

In a related development Monday, Blue Shield of California said it has granted a temporary reprieve to some customers whose policies face termination Dec. 31.

The San Francisco insurer said it reached an agreement with state regulators to allow 80,000 policyholders to extend their existing coverage until March 31. Customers who are affected will be notified starting Tuesday.

Blue Shield said the change resolved a dispute with regulators over whether the company alerted consumers early enough.

The insurance department declined to comment until a formal announcement Tuesday.

Patrick Johnston, president of the California Assn. of Health Plans, said insurers have complied with applicable rules and made every effort to let people know how the Affordable Care Act will affect them.

He said its job has been challenging because the healthcare law has been a “moving target” because the Obama administration and state officials wrote new rules and established government-run insurance exchanges from scratch.

Johnston said insurers would have been accused of trying to undermine the healthcare expansion had they issued stern warnings to consumers shortly after the law passed.

“There would have been criticism it was a scare tactic and not helpful to consumers,” Johnston said. “Individuals are understandably concerned about the need to change from policies they liked to other policies that have typically better benefits, but sometimes at a higher price.”

In California, the cancellations in the individual market were prompted by a requirement from Covered California, the state’s new insurance exchange. The state didn’t want to give insurance companies the opportunity to hold on to the healthiest patients for up to a year, keeping them out of the larger risk pool that would influence future rates.

Covered California said a Jan. 1 changeover was best for consumers in the long run despite the initial disruption.

About 310,000 of the 900,000 policyholders who will lose their coverage Dec. 31 should qualify for federal premium subsidies based on their income, said Anne Gonzales, an exchange spokeswoman. She said that means those consumers should get better coverage at the same or lower rates.

But premiums may go up next year for the remaining 590,000 customers who are affected by the switch, according to the exchange. Gonzales said they should benefit from more comprehensive coverage and enhanced consumer protections.

“The whole idea behind the Affordable Care Act was to discontinue an alarming trend of policies with gaps in coverage, sometimes to the surprise of policyholders,” Gonzales said. “The real story here is that more than 4 million Californians who previously couldn’t get insurance will be able to under the new requirements.”

But many consumers still resent being forced to make a change that may cost them more or mean the loss of their long-standing medical providers. Many insurers have sharply limited the choice of doctors and hospitals in new plans next year.

Patricia Mann, mother of plaintiff Paul Simon, said her son has battled melanoma and ulcerative colitis so he’s concerned about losing access to his doctors. None is included as a healthcare provider in the new plans from Anthem or other insurers, she said.

By her calculations, the $400 monthly premiums wouldn’t change much. “It’s extremely upsetting to think you won’t be able to see your doctor,” Mann said. “We were totally deceived.”

Coker said she was alarmed at the recent letter Anthem sent her saying her monthly premium of $289 could jump to $526 for a replacement plan.

She later learned she may qualify for a substantial subsidy based on her disability income. A mid-level Silver plan from Anthem Blue Cross may cost her $183 a month or a less-generous Bronze plan was available for as low as $1 a month.

“That financial help is great,” Coker said. “But how does the coverage compare to what I have now? I have no idea.”

chad.terhune@latimes.com

Twitter: @chadterhune