A lawsuit was brought against CalPERS, the California Public Employees’ Retirement System, on Tuesday over the agency’s recent Long Term Care Insurance rate increases.
Retirees Bring Class Action
The class action suit against CalPERS was filed in Los Angeles Superior Court on behalf of more than 100,000 California residents. The lawsuit claims the government agency deliberately deceived consumers who purchased Long Term Care Insurance policies by assuring the premium rates would remain “reasonably priced”.
CalPERS began selling Long Term Care Insurance policies in 1995. Last fall, premium rate increases of 85% were approved for implementation in 2015. CalPERS attributed the need for rate increases to severe underfunding that stemmed from lenient underwriting standards of the past, longer life expectancy, and better medical technology.
When the rate hikes were announced in early 2013 for nearly all of the 150,000 policyholders, Californians expressed outrage at the decision. Many claimed they would be forced to drop their policy or heavily reduce their benefits, effectively wasting money and sacrificing the security they once had.
“Duped” by CalPERS
Shernoff Bidart Echeverria Bentley LLP, the Beverly Hills based law firm handling the case, released a prepared statement on Tuesday:
“Wonderful people were duped into thinking they had purchased protection in the event they were no longer able to care for themselves. Unfortunately, the peace of mind so many sought turned out to be a worthless bill of goods.”
“Once the exorbitant increases take place in 2015, members of the class, many on fixed retirement incomes, will be unable to make the outlandish payments which in turn will result in the cancellation of the insurance. All of the hard-earned money entrusted to CalPERS will go down the drain. It’s not right.”
According to the company website, Shernoff Bidart Echeverria Bentley LLP leads the nation in protecting policyholders from insurance company abuse. The firm has been protecting the rights of insurance consumers, both individuals and businesses, for over 35 years after having set the legal precedent requiring insurance companies to act in good faith.