California Court of Appeal Holds That Insurers Owe No Duty to Disclose Alternate Pricing Options to Current or Prospective Insureds

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In Levine v. Blue Shield of California, No. D056578, __ Cal. App. 4th __, 2010 Cal. App. LEXIS 1893 (Nov. 5, 2010), the Fourth District Court of Appeal, Division One, issued an important published decision that limits the scope of an insurer’s duties to inform an insured of various ways that coverage could be structured to obtain a lower rate. The court held that “Blue Shield did not owe the Levines a common law duty to disclose how they could have structured their health coverage so as to lower their health care premiums.” Levine, 2010 Cal. App. LEXIS 1893, at *28.

Levine was a putative class action against Blue Shield of California, which was represented by Manatt. Mr. Levine had obtained health care coverage for himself and his two minor sons, which Blue Shield issued as separate plans. When Mr. Levine got married, Mrs. Levine applied to be added to his plan, and Blue Shield issued the coverage. Later, Mr. Levine called the company to inquire about a rate increase, and he learned during the course of his inquiry that his monthly rates could have been lower had his younger wife been designated as the primary insured and had his minor sons been included on a family policy, rather than having their own individual plans. The Levines sued, claiming that Blue Shield engaged in fraudulent concealment, unfair competition and negligent misrepresentation in not disclosing facts regarding the lower premiums that Blue Shield was willing to accept for the coverage.

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