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Settlement reached in California vs. Anthem Blue Cross

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A settlement was reached in a California insurance lawsuit filed against Anthem Blue Cross, the Los Angeles City Attorney announced, alleging the insurance company illegally canceled coverage for more than 6,000 policyholders, denying them their individual disability claims and individual disability insurance policies.

The lawsuit was filed in 2008 and initially sought more than $1 billion from Anthem Blue Cross. At the time, The Los Angeles City Attorney's Office alleged in the lawsuit that Anthem Blue Cross was involved in false advertising and fraud, as well as illegally canceling policies for people who were diagnosed with serious medical conditions, such as cancer, which often come with high medical costs.

A local Los Angeles-area paper reported in 2008 how one patient had her coverage canceled after she had a hysterectomy for endometrial cancer. According to the patient, the reason for the cancellation was due to not informing the insurance company that she had breast cancer 11 years prior, even though the application only asked for 10 years of medical information, in addition to being told by an agent that she did not have to include that information.

The Los Angeles City Attorney's Office's lawsuit alleged that Anthem Blue Cross used secret internal units to identify and target policyholders who became ill. Furthermore, the lawsuit alleged 500,000 consumers were tricked into buying ultimately worthless insurance policies because of the company's false advertising.

In 2010, the Los Angeles city attorney followed up the lawsuit with an amended complaint against Anthem Blue Cross and its parent company, WellPoint Inc., to stop the companies from illegally rescinding health care coverage. The suit went on to say WellPoint issued three press releases that were "false and misleading," which according to the city attorney, amounted to unlawful, unfair and fraudulent business practices.

Among the allegedly false and misleading claims made in WellPoint's press releases were that the company would change its rescission practices by May 1, 2010, which the suit alleged the company failed to do.

"WellPoint sold approximately 1.8 million policies to California Consumers that, because of their undisclosed rescission practices, provided largely illusory health care coverage," the city attorney argued.

On almost a continual basis, insurance is becoming more complicated and in some cases, can take advantage of those who need it. Arm yourself and your insurance needs with the proper insurance attorney for whatever might lie ahead.

Source: LawyersandSettlements.com, "$6 Million Settlement in California Insurance Lawsuit" Heidi Turner, Jul. 16, 2013