A local consumer group has sued the largest insurance company in the area, accusing the health insurer of subjecting their customers to big rate hikes in order to force older and sicker people into low-benefit and high-deductible plans, a tactic the group calls a death tunnel.The group accuses the insurance corporation of not offering certain policies to new customers and then sharply raising rates for those remaining in the plans.As an experienced attorney I have reviewed many business disputes and have completed same with favorable results.
People with medical problems are often barred from switching to comparable policies and they then become trapped into paying ever rising premiums until they can no longer afford it, or they are forced to switch to a policy with vastly inferior coverage.Either result is beneficial to the insurance company’s bottom line but not the customer,claims the consumer group. Companies are trying right now to only insure healthy people and the group believes the insurers are hoping to make their customer bases as healthy as possible before federal health reforms take effect in 2014. Because at that time the insurers will no longer be able to turn people away based on their medical conditions.The suit claims the insurers are violating a 1993 law meant to prevent so called death tunnels. The law requires insurers that close a plan to new customers to minimize rate increases must benefit the previously insured as well..The allegations are false, claims an insurance company spokesman. A former customer said he had never heard of the term death spiral. But when the insurance company told him last year it planned to hike his family’s premium by 25 percent, from $1,900 a month to over $2,400, he felt he had no choice but to switch to a bare bones plan with inferior coverage.Because his 21-year-old son has a brain lesion from a sports injury that needs monitoring he knew the family would have difficulty getting other coverage.So instead of the $2,000 deductible in his old plan he was forced to change to a policy with a $5,000 deductible per person. He now avoids seeing a doctor unless he has a serious problem.When there’s a high deductible, consumers are less likely to use their insurance,the consumer group noted. The former customer who is a plaintiff said he tried to switch back but was told he could not because his old plan had been closed to new customers.These allegations are very similar to another suit against the insurance giant which was settled last year and requires them to offer consumers in closed policies access to comparable coverage and to limit rate increases in the closed policies for those who remain.The lawsuit notes that the insurance company has closed 9 policies so far and has announced that soon it will close 24 policies regulated by the Department of Insurance. Consumer watchdog groups claim the company will do this without offering customers comparable coverage and limiting rate increases for those remaining in the closed plans.The consumer group is asking the court to declare the suit a class action and order the insurance company to discontinue these practices and pay damages to affected customers.Please call me at 800 320-0080 or visit me at my offices located in Rockville and Baltimore today.