Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—SDIll: Insurance Company Did Not Misrepresent Business Plan, (Dec 11, 2012)

By Jody Coultas, J.D.

Insurance policy holders could not state Illinois Consumer Fraud and Deceptive Business Practices Act (CPA) claims against an insurance company that cancelled the insurance policies and required the policy holders to reapply, convert, or forego coverage, according to the federal district court in Benton, Illinois (Phillips v. WellPoint, Inc., Gilbert, J., December 10, 2012).

The policy holders were insured by RightCHOICE Insurance Company when the company was acquired by WellPoint, Inc. WellPoint obtained approval of the acquisition from the Illinois Department of Insurance, in part by submitting “Form A,” representing that it had no present plans to make changes to the insurance coverage. After RightCHOICE withdrew from the Illinois market, the policy holders filed the CPA claims, alleging that WellPoint misrepresented that it had no plans to change RightCHOICE’s business. Policy holders were forced to either convert to more expensive policies offered by subsidiaries of WellPoint or go through underwriting. Those policy holders that could not afford the new plans or were ineligible had to find another insurance company or go without coverage.

Because there was no evidence of conduct that violated public policy, the court dismissed the CPA claim. RightCHOICE did not withdraw until months after it filed Form A and the Department of Insurance reviewed and approved RightCHOICE’s withdrawal plan. The policy holders’ argument that a jury could conclude that WellPoint never had any intention of continuing the RightCHOICE Illinois business after the merger was dismissed for lack of supporting evidence. There was nothing to support the contention that WellPoint had a “present plan” to exit the Illinois market when it sought to acquire RightCHOICE.

The case is No. 10-cv-00357-JPG.

Clinton A. Krislov (Krislov & Associates) for Charlotte Phillips. Margo Weinstein (Miller Shakman & Beem LLP) for WellPoint, Inc.

Cases: StateUnfairTradePractices IllinoisNews