WellPoint and RightCHOICE Insurance Faces Class Action

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Madison County, Il: A class action lawsuit has been filed against WellPoint Inc, by residents in Illinois, alleging that WellPoint violated Illinois insurance laws when it forced them to pay 250 percent more for their coverage.

Bob Myrick and Charlotte Phillips both allege that they were hit with the massive increases on their health insurance premiums after WellPoint acquired RightCHOICE in 2002. The merger reportedly cost WellPoint $1.3 billion. As a result, the WellPoint subsidiary Unicare, another defendant named in the class action, took on all the insureds in Illinois.

The lawsuit reportedly states that the merger of WellPoint and RightCHOICE forced less profitable policyholders, such as those who were ill, into either paying a higher price for their health insurance, into receiving an inferior insurance policy, or to be forced out of obtaining insurance all together.

In Ms. Phillips' case, she held an individual PPO plan with RightCHOICE prior to the merger. However, following the birth of her baby in 2003, after the merger, she claims she was forced to enrol in the Unicare 1000 plan, which cost her 250 percent more for insurance. According to the complaint, when she first began receiving RightCHOICE benefits, she was only paying $153 per month, but by December 5, 2002, her coverage had increased to $240 for one month.

In Mr. Myrick's case, he claims that his insurance increased by a significant amount after the merger, up to $430 per month for himself and his family. Additionally, Mr. Myrick claims that following the merger, had he had to apply for insurance with Unicare he would have been denied because he is diabetic. So, he had no choice but to convert his existing policy to Unicare for 250 percent more than he was previously.

The merger allegedly violates the Health Insurance Portability and Accountability Act because under an Illinois HIPPA statute, insurance companies are prohibited from refusing to renew a client's coverage based on their health status. Once a policy holder secures coverage, he/she should be able to rely upon renewing the policy each year without an increase in rates, the complaint says. Only under extremely limited circumstances is an insurance company allowed to terminate a person's health coverage.

The lawsuit consists of six complaints, and alleges that the defendants violated the Illinois HIPPA, breached their contract, were guilty of consumer fraud and deceptive trade practices and intended that the plaintiffs rely on their deception.

The plaintiffs seek an order requiring the defendants to make restitution to the policy holders for all money they obtained through their unlawful conversion, an order requiring the defendants to restore previous coverage to the plaintiffs and a declaration that the defendants violated the Illinois Consumer Fraud and Deceptive Business Practices Act and the Illinois Insurance Code. They also seek compensatory and punitive damages, attorneys' fees, costs and other relief the court deems just.

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