Ill. Company Files Class Action Against Blue Cross Blue Shield, Others After Allegedly Overpaying for Life Insurance Premiums

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A proposed class action alleges Blue Cross Blue Shield Association and several affiliates secretly reduced death benefits for senior life insurance customers and then refused to refund those who involuntarily overpaid for premiums.

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The 19-page lawsuit was filed by P&G Keene Electrical Rebuilders, an Illinois-based company that paid premiums to defendant Dearborn Group to provide life insurance to P&G Keene employees. Also named as defendants in the suit are Blue Cross Blue Shield of Illinois and its parent company, Health Care Service Corporation.

Per the case, P&G Keene’s chief financial officer discovered in 2022 that although the company had been paying full price for life insurance premiums for individuals aged 65 and over since 2017, Dearborn was automatically reducing the death benefit to 65 percent at age 65 and 50 percent at age 70.

According to the complaint, P&G Keene became aware of the policy’s age-based reductions after it learned in December 2022 that a 71-year-old’s death benefit had been cut in half because the insured was over 70.

“Dearborn never informed P&G Keene, the insured person, or anyone else from P&G Keene that the death benefit for those with life insurance with Dearborn reduces to 65% once the insured turns 65 and further reduces to 50% once the insured turns 70,” the filing says, claiming that the plaintiff then had to contact Blue Cross Blue Shield of Illinois to confirm that Dearborn had, in fact, been enforcing this policy for years.

The lawsuit argues that not only should Dearborn have disclosed this policy to P&G Keene, but it also should have proportionately reduced the premiums the plaintiff paid for life insurance for senior individuals.

Specifically, “P&G Keene should only have paid 65% of the full premium for life insurance for individuals between 65 and 59 [sic] and P&G Keene should have only paid 50% of the full premium for life insurance for individuals 70 and over 70,” the case contends.

In December 2022, the plaintiff emailed Blue Cross Blue Shield of Illinois requesting a refund for the life insurance premium overpayments it paid from 2017 to 2022, the complaint says. In response, the health insurance company wrote in February 2023 that it “cannot refund overpayment” back to 2017, but P&G Keene could instead receive “a credit of one year of premium overpaid,” the filing relays.

“In other words, Dearborn and Blue Cross Blue Shield of Illinois did not offer P&G Keene a refund for past overpayments of life insurance premiums,” the complaint shares. “Instead, Dearborn and Blue Cross Blue Shield of Illinois offered only credit for one year on a future payment of a premium for a future year.”

The lawsuit looks to represent any individuals or entities that, during the applicable statute of limitations period, paid insurance premiums to Dearborn, Blue Cross Blue Shield of Illinois, Blue Cross Blue Shield Association, Health Care Service Corporation or their representatives or subsidiaries for people 65 and older where said individuals or entities paid the same price for insureds under 65 for such insurance even though: (1) for individuals age 65 to 69, the death benefit for those policies was 65 percent of the full benefit for those under 65, and (2) for individuals age 70 and older, the death benefit for those policies was 50 percent of the full benefit for those under 65.

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