Many insurance companies illegally deny policyholders their entitled discounts, coverage or payments. When a group of policyholders experience the same illegal treatment from an insurance company, they can initiate a class action lawsuit against the insurance company. An insurance class action lawsuit allows the claims of each harmed policyholder to be resolved in one case, rather than every harmed policyholder filing their lawsuit against the insurance company separately.
For example, in 2015 insurance provider Anthem refused to cover Applied Behavioral Analysis therapy to children with autism after they become eight years-old. A group of 201 families with children who were denied the therapy initiated a class action suit against Anthem. The families alleged Anthem violated a federal law by denying their children medically necessary treatment. After a three-year court battle, the families won a $1.6 million settlement from Anthem.
Like other types of class action suits, the group is represented by one or more of the harmed policyholders, called a class representative, also known as the lead plaintiff. The class representative and their legal counsel carry on the case on behalf of the group, who have given up their rights to sue to the class representative. Other than the fact that it is carried out by policyholders, there is very little difference between the process of filing an insurance class action lawsuit and other types of class actions lawsuits.
Insurance class actions are often brought under federal or state contract laws, including the Employee Retirement Income Security Act of 1974 (ERISA). Certain states also have unique insurance fraud prevention statutes that aim to root out insurance fraud.