Los Angeles City Attorney Rocky Delgadillo on Wednesday filed a civil suit against Anthem Blue Cross and its parent company over the health insurer's practices in processing claims and canceling policies.
The action filed in Los Angeles County Superior Court against Thousand Oaks-based Anthem Blue Cross, formerly known as Blue Cross of California, accuses the company of numerous violations of the state's Knox-Keene Act, which regulates health maintenance organizations. Anthem's parent, WellPoint Inc., is based in Indianapolis.
Delgadillo, who cited the experiences of at least 6,000 current or former Blue Cross members with individual policies, said Blue Cross' rescission practices may also constitute violations of the state's unfair competition and false advertising laws. Also named in the suit was Anthem Blue Cross Life and Health, which writes dental, workers' comp and other specialty policies.
"Countless Californians who believe they have insurance actually have policies that aren't worth the paper they are printed on," Delgadillo said during the first of two Wednesday press conferences announcing the litigation.
The suit seeks civil penalties of $2,500 for each violation of the Unfair Competition Law and False Advertising Law, and an additional $2,500 penalty for each Unfair Competition violation that victimized any senior citizen or disabled person. If all charges are proven, the penalties could exceed $1 billion, according to city attorney;s office spokesman.
An Anthem spokeswoman said the company would not comment until after it sees the complaint. The company last May said it would stop canceling individual policies unless it can show policyholder deception.
Delgadillo's office filed similar civil charges against Woodland Hills-based Health Net Inc. in February, and is considering criminal charges related to an employee bonus program that may have encouraged employees to be overzealous in cancelling policies. The state Department of Managed Health Care also has an ongoing investigation of the industry's recission policies.
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