Judge Sides with 130,000 Long-Term Care Policyholders in Class Action Against CalPERS, Permits Case to Proceed to Trial

Judge Sides with 130,000 Long-Term Care Policyholders in Class Action Against CalPERS, Permits Case to Proceed to Trial

Los Angeles, CA – June 20, 2017 – A Los Angeles Superior Court judge sided with more than 130,000 class members, all CalPERS Long Term Care policyholders, in their class action against CalPERS for unjust premium increases, permitting their claims to proceed to trial.

The class action stems from CalPERS’ decision in 2013 to raise premiums for its Long-Term Care insurance on more than 130,000 policyholders across California.  Many of those policyholders have been in the CalPERS program for decades, and are now retired, on fixed incomes.  Despite CalPERS’ promise that rates were to remain level and generally could not be increased, CalPERS chose to raise rates by as much as 85%.

The class members contend the increase was unjustified, due to CalPERS’ failures in establishing the program and because the increases were not permitted by the contract.  The plaintiffs asserted five causes of action against CalPERS: breach of fiduciary duty; breach of contract; breach of the implied covenant of good faith and fair dealing; rescission; and declaratory and injunctive relief. The court previously certified the breach of fiduciary duty and breach of contract claims for class treatment.  CalPERS filed a motion for summary judgment seeking to eliminate the case in its entirety, but the Hon. Ann I. Jones denied the motion, specifically denying summary adjudication for the second cause of action for breach of contract, the third cause of action for breach of implied covenant of good faith and fair dealing, and the fifth cause of action for declaratory and injunctive relief.

“CalPERS’ unjustified 85% premium increase was unconscionable, violated the terms of the policy and destroyed any semblance of protection members were promised when they purchased these long-term care policies. We are now encouraged that justice may finally be realized.”  said attorney Michael J. Bidart of Shernoff Bidart Echeverria LLP. “CalPERS should be made to honor the promises it made to its faithful members.”

With respect to the breach of contract claim, CalPERS argued the policy language gave it the right to raise premiums for any reason, and that the plaintiffs had to file their action years earlier when CalPERS initiated its first rate increase in 2003.  But plaintiffs contended that the policy did not permit the 85% rate increases that targeted only certain members based on whether they purchased inflation protection or lifetime benefits, and the contract expressly prohibited rate increases “as a result” of the inflation protection benefit. Plaintiffs also contended that they were not required to file suit until CalPERS raised the rates by 85% in 2013, and CalPERS had previously not advised plaintiffs that members receiving specific benefits were being targeted. Ultimately, Judge Jones sided with the plaintiffs on this issue.

“Shockingly, after paying premiums for many years for future long-term care protection, very good, hardworking people were left hanging out to dry as a result of these astronomical rate increases,” said attorney Gregory L. Bentley of Bentley & More LLP. “CalPERS targeted their own members with promises of protection they did not keep. It is not right, and is unacceptable.”

The case is Elma Sanchez, Holly Wedding, Richard M. Lodyga and Eileen Lodyga et al. v. CalPERS et al., Los Angeles Superior Court, Case No. BC517444.

The attorneys on the case are Michael J. Bidart of Shernoff Bidart Echeverria LLP; Gretchen M. Nelson from Nelson & Fraenkel LLP, Gregory L. Bentley of Bentley & More LLP; and Stuart C. Talley from Kershaw, Cook & Talley, PC.

For more information, and for updates on the case, please go to http://www.calpersclassactionlawsuit.com/.