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A pension fund providing long-term care insurance is on the receiving end of a class-action lawsuit that could cost it $1 billion.
The lawsuit claims that, starting in 2013, California Public Employees’ Retirement System (CalPERS) increased its rates for long-term care insurance. The rate hike peaked at 85% in 2015.
According to Michael Bidart, the attorney representing the pension fund members in the suit, the structure of the rate increases breached the contracts his clients signed when they bought the policies beginning in 2003. The signed agreements included assurances that rate hikes would be evenly distributed among long-term care insurance customers, and that those who purchased inflation protection policies would not see their rates increase.
Bidart estimated that the plaintiffs could receive as much as $1 billion in damages from the case.
“There are just so many people,” the attorney said.
Meanwhile, CalPERS reportedly said in its most recent appeal that it would raise rates on the plan by as much as 124% should it lose the lawsuit, The Mercury News reported.
In July, those with the long-term plan started receiving checks worth about $80 - the money coming from a settlement reached by CalPERS’ consultant Towers Watson back in 2017. That settlement separated the firm from the case but did not bring an end to the larger claims aimed at CalPERS.
A Los Angeles County Superior Court judge last week set the trial for June 10 next year, The Mercury News reported.
