LA’s Lawsuit against WellPoint Could Spark More Suits: Analyst

The City of Los Angeles’ lawsuit against three health care insurers could spark legal action or similar investigations into other insurers by municipalities trying to address health care issues in their communities, says a Fitch Ratings analyst.

In an election year where voters say affordable health care is a top priority, City of Los Angeles Attorney Rocky Delgadillo’s lawsuit (“LA Sues Insurer for Canceling Health Care Coverage,” April 22), accusing WellPoint and two of its subsidiaries of illegally canceling coverage which left thousands of Californians with unpaid medical bills is an attention getter, said Bradley Ellis, a director of insurance for the debt rating company.

“It grabs headlines,” Ellis said. “(Health insurance) is a product that people feel entitled to. It’s personal. It’s health care and it’s expensive. … The potential is higher now that municipalities will look at these things.”

Delgadillo is seeking at least $2,500 per violation in the lawsuit against WellPoint, and a spokesperson for Delgadillo’s office said fines and restitution could total more than $1 billion.

Whether or not the lawsuit has legs, it will encourage officials in other states to take a closer look at policies offered in their communities, Ellis said, and the suit gives them something to focus on, Ellis said.

Industry experts say that when fewer people have health care coverage, consumers aren’t the only victims of health care debt they may not be able to afford. States and municipalities also could see higher demand for Medicaid and other government sponsored health care services, something they are less able to afford in a weakened economy generating lower tax revenues.