Class-action suit filed against Nationwide Insurance

Attorneys on Wednesday filed a class-action lawsuit against Nationwide Insurance, claiming the company sold Washington consumers illegal health plans that left them without sufficient coverage.

The suit, filed in Seattle's U.S. District Court on behalf of more than 400 plaintiffs, says Nationwide "unfairly and deceptively" sold insurance plans to Washington residents without authorization from the state insurance-commissioner's office.

It also says those plans, called fixed indemnity plans — did not comply with laws requiring certain minimum benefits.

While some plans pay a percentage of medical expenses — for example, an 80/20 split between provider and consumer — or set out-of-pocket maximum expenses for consumers, fixed-payment indemnity plans set lump-sum payout limits on the amounts that insurers will provide.

But those limits often aren't nearly enough to cover medical expenses, said Joshua Welter, of Washington Community Action Network, a grass-roots organization supporting issues such as health-care reform.

"Even though you think you're covered, you're not," Welter said.

Consumers often don't realize that until it's too late, especially when coverage is offered through employers.

"I would suspect some, if not most, employers are similarly duped," said attorney Eleanor Hamburger of the Seattle firm Sirianni Youtz Meier and Spoonemore, which filed the suit.

Joe Case, of Nationwide, based in Dublin, Ohio, said he was aware of the litigation but would not comment until he could review the case.

Ruth Bjorklund of Bainbridge Island, among the suit's plaintiffs, suffered a seizure two years ago and underwent subsequent surgery for a brain tumor.

But when the bills started coming in, she realized Nationwide was paying only a minimal amount of her expenses.

Now she's more than $135,000 in debt. "I have a master's degree, and I got duped," said Bjorklund. "A lot of people were sold this plan. Hundreds of them. And it's wrong."

Bjorklund, 53, had been offered Nationwide's fixed-indemnity plan through her job as a caregiver.

The plan offered coverage for daily doctor visits — "like if my son twisted his ankle" — and prescriptions, seemingly better than the $500-a-month catastrophic plan she already had, which did not.

She filed the materials away when she got them, not realizing the plan set, for example, a $2,000 maximum annual limit for surgery.

When an affordable option was presented to her, "I felt it was wise to take advantage of it," she said.

"I had no idea it would be taking advantage of me."