Untimely spike in health insurance premium may be due to illegal segregation and pooling of riskier policy holders.

For many years, our firm has defended the rights of policyholders who have been forced out of their health insurance coverage because of constant and exorbitant price hikes in premiums.

As we continued to pursue discovery in these cases, we found that some health insurance providers engage in a practice known as "death spiraling." This practice involves a complicated process where companies move their unhealthy policyholders from their original risk group to another risk group that has all, or a greater number of unhealthy policyholders, thus justifying higher rate increases due to higher risk. The company will continue to pull the healthy policyholders to another group, keeping them out of the "unhealthy group" all in an effort for the company to "price out" and rid itself of the unhealthy policyholders, so they insure only healthy people who file small or few claims. This insidious practice has left thousands of people throughout this country without health insurance because they cannot afford the artificially inflated premiums.

A similar fraudulent practice has occurred with the sale of nursing home policies, home healthcare policies, and long term care policies to the elderly, but these policies involve more of a 'bait and switch' method. These policies are sold at 'actuarially defective' prices (too low a premium to sustain the policy) and then the premium is 'hiked' so high in the following months and years that the policyholder cannot afford it any longer. Often times, the company will 'hike' the premium on an elderly person's policy at a time when they need it the most. This fraudulent practice results in a large cash flow to the companies in the early years of the policies and on elimination of risk to the company when they price these loyal paying consumers out of the policies.We continue to pursue these cases throughout the country and are currently litigating a number of these claims.

The Alabama Supreme Court recently affirmed our firm's class action settlement case on the death spiral theory against American Medical Security and North American Life Insurance Company. Our firm, as lead counsel attained relief for some 30,000 policyholders who had been a victim of alleged tiering, a similar method of the death spiral theory.