CalPERS Agrees to $820M Long-Term Care Insurance Rate Suit Settlement
What You Need to Know
Policyholders are suing over an 85% premium increase imposed on some policyholders in 2013.
The average age of the class members is now 76.
An earlier settlement proposal failed when too many policyholders opted out.
A state court judge in California has given preliminary approval to a $820 million settlement that could resolve nine years of litigation between the California Public Employees’ Retirement System and 80,000 CalPERS long-term care insurance benefits policyholders.
The policyholders have been suing CalPERS since 2013, after the state public employee pension agency increased premiums by 85% for LTCI policies with automatic inflation protection that were purchased between 1995 and 2004. The settlement amounts to about $10,000 in value per class member.
In addition to agreeing to pay $740 million to the class members, CalPERS has agreed to pay about $80 million for attorneys’ fees and expenses, administrative costs, and extra awards for the current and former CalPERS LTCI policyholders who served as the “named plaintiffs,” or lead plaintiffs, for the class.
CalPERS managers said they did nothing wrong, but they have agreed to the settlement to end the court fight.
Judge William Highberger, a California Superior Court judge in Los Angeles, expressed support for the proposed settlement earlier this month. He scheduled a July 26 hearing on a final approval motion.
The History
To agents selling ordinary individual LTCI coverage, CalPERS once looked like a formidable foe.
In 2004, for example, it told state public employers that it could charge 20% less than comparable private LTCI plans. “Most of these savings result from the direct marketing and self-funded, not-for-profit aspects of the program,” CalPERS said.
