Judge Tentatively Allows Suit Over CalPERS’ Long-Term Care Plans
A Los Angeles court has tentatively ruled that CalPERS can be sued by for allegedly mismanaging its long-term care insurance program, the Sacramento Bee's "The State Worker" reports.
The long-term care plans in question cover services, such as in-home living assistance and convalescent care, and guarantee inflation-adjusted payments for the life of the policyholders.
According to "The State Worker," many individuals who hold the policies believed their premiums would never increase.
However, CalPERS last year announced it would raise premiums by 85% for the most profitable policies starting in 2015.
Details of Lawsuit
The lawsuit alleges that:
- The pension fund's board members violated their responsibility to effectively manage members' best interests; and
- The fund breeched contracts and unfairly dealt with affected policyholders.
If the Los Angeles Superior Court complaint against CalPERS is granted class-action status, it would represent about 150,000 CalPERS members who bought the pension fund's long-term care insurance between 1995 and 2004.
Details of Ruling, Reaction
CalPERS had asked Judge Jane Johnson to dismiss the lawsuit for various reasons, citing underperforming investments and underpriced policies. However, Johnson ruled that none of the pension fund's reasons were valid.
Following the ruling, attorneys for CalPERS asked Johnson to certify her final ruling to enable an immediate appeal so that the pension fund would not be "forced to expend additional resources in connection with discovery and class certification, which could be unnecessary or lessened if the Court of Appeal agrees" with the fund's assertions.
Stuart Talley, a lawyer for the plaintiffs in the case, said such a move could delay a final resolution in the case. In an email, Talley said he intends to oppose CalPERS' request "since most of [their] class is older and cannot afford to wait years for this case to resolve" (Ortiz, "State Worker," Sacramento Bee, 5/29).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.