A new civil suit alleges that Anthem Blue Cross, one of California’s largest health insurers, is using rate hikes to force its policyholders into lower-benefit and higher-deductible health plans, thus violating state law.

Consumer Watchdog, which bills itself as a non-profit, non-partisan consumer advocacy group, filed the suit, dubbing the WellPoint subsidiary’s practice of closing blocks of health plan business, and decreasing benefits, while escalating premiums a “death spiral,” according to the suit filed in California Superior Court.

A WellPoint spokeswoman told IFAwebnews.com that since it has yet to receive the suit, it could not provide comment on its details.

Mary Feller of San Rafael, Calif., one of the plaintiffs representing the class action, said in a statement that, “Blue Cross has a gun to our heads.

“We could either stay with our old coverage or switch to a new policy with much lower benefits,” she said. “What Blue Cross did not tell us was that staying with our better policy would mean a 39% rate increase.”

Anthem recently announced it would delay a proposed premium increase leading some of its customers to receive up to a 39% rate hike, amid pressure from the California Department of Insurance and the U.S. Department of Health and Human Services. The proposed increase, delayed until May 1, became the national poster child for premium hikes by insurers recording high profits in Washington, D.C., as President Barack Obama and Congress continue to debate a final, comprehensive health reform bill.

Consumer Watchdog alleges, in part, that since older patients or those with pre-existing conditions cannot switch to a comparable or better policy amid rate hikes, they are “trapped” in the closed policy and subject to more costly care, “until they are forced to accept greatly inferior coverage or drop coverage altogether,” the group said.

“Not only did I get hit with a 33% premium increase, my only option was a policy with almost twice the deductible and far fewer benefits,” said Donna Freed, another plaintiff in the case, said in a statement. “If Blue Cross is allowed to price longtime policyholders out of coverage, what is the value of having insurance.”

The consumer advocacy group forwarded its complaint against Anthem to President Obama and other congressional leaders, urging them to hold another public hearing on the “death spiral” issue.