CalPERS $2.7B Class Action Settlement Concerning Long-Term Care Policy
Certain residents of California who purchased a CalPERS long-term care policy between 1995 and 2004 may be eligible to receive benefits from a nearly $2.7 billion class action settlement.
The class is composed of residents of California in 2013 who bought an LTC policy from CalPERS — the California Public Employees’ Retirement System — from 1995 to 2004 that included automatic inflation protection and were subject to CalPERS’s 2013 announcement of an 85 percent increase in premiums.
Individuals who previously held an LTC policy and exchanged it for an LTC3 policy prior to the increase are not included in the class, even if the transfer occurred after the CalPERS board agreed to the premium increase in October 2012.
Additionally, the class excludes people who opted out of the Court-certified class on Jan. 28, 2016.
According to its website, CalPERS has approximately 1.5 million members and is the state of California’s largest purchaser of health benefits.
CalPERS shall provide $2.4 billion into a qualified settlement fund provided no one requests exclusion.
Furthermore, CalPERS will also contribute $282.5 million to a “CAF Fund” to cover contingency, administrative, and legal costs.
If a larger than the projected quantity of class members opt-out of the settlement, the fund can cover one of the costs. If that happens, CalPERS may be able to collect up to $150 million from the CAF Fund.
After administration, money left in the CAF Fund will be paid to class members proportionately depending on their settlement award (if any).
Suppose the initial settlement category does not change before the final settlement date, then the class members may receive a form specifying their initial settlement category and their entitled sum.
Final CalPERS LTC Settlement Categories
- Category A: Class A members will see a total of all premiums paid for their CalPERS LTC coverage through Dec. 31, 2020. Category A members will also receive all post-December 2020 premiums. Each A-Class member will get a minimum $10,000 reimbursement and must surrender their LTC coverage. The premium return can be applied to any available replacement LTC policy. For a complete refund of premiums paid or for the new LTC coverage, Category A class members must keep paying CalPERS until the settlement takes effect, which may include paying the forthcoming premium increase or lowering benefits as specified in CalPERS’ notice of the increase.
- Category B: In this case, class members who paid any portion of the disputed increase will receive a refund equal to all increased premiums paid before they went on a claim and will not be obliged to relinquish their insurance.
- Category C: Class members who reduced their benefits due to the disputed increase before filing a claim will be entitled to an additional year of benefits determined on their Schedule of Benefits as of the final settlement date and will not be compelled to relinquish their policy.
- Category D: The refund is equal to one-half of the premiums paid from the start of their LTC policy until the date the policy expired, less any amounts owed.
- Category E: Those who allowed their LTC policy to lapse between Jan. 1, 2015, and the final settlement date will receive the greater of any additional premiums paid or $2,500.
- Category F: Class members who died after Feb. 1, 2013, and before the final settlement date, were current policyholders or on a claim at the time of death, and who lost benefits due to the challenged increase will receive the greater of all extra premiums paid or $2,500.
- Category G: Subject to the final settlement date, the estates of class members who died after Feb. 1, 2013, paid the challenged increase and never reduced their benefits in response to that increase will be eligible to collect all additional premiums paid.
- Category H: Who paid the contested increase, filed a claim before the final settlement date, and before the final settlement date exhausted their benefits will be reimbursed for the extra premium.
- Category I: Class members who are on a claim as of the final settlement date should make an election to either surrender or keep their CalPERS LTC insurance. If a class member chooses to keep their policy or does not make an election, they will not be entitled to any compensation. Except for the claims discharged under the settlement, they keep their contractual rights and benefits. If they want to surrender their policy, the defendant must contribute to the settlement fund, and the class member must receive at least $10,000, less any benefits received.
The settlement notice (PDF) contains more information about the requirements for each group.
Anyone who did not get a notice who believes they should be included in the class should contact the settlement administrator at 1-866-217-8056.
The attorneys in this action intend to arrange webinars to answer questions from class members. These will take place on August 20 and 25, as well as September 3 and 10, 2021.
The settlement will conclude with a final hearing on Jun. 8, 2022.
The deadline for filing an objection or withdrawing from the settlement is Dec. 13, 2021.
The deadline to submit an Award Acknowledgement and Election Form for a Replacement Long-Term Care Policy (Category A) is Sept. 22, 2021.
The deadline for submitting a Lapse Claim Form (category D or E) is Dec. 13, 2021.
Editor’s Note on CalPERS LTC Settlement 2021:
This article is written to inform you of the class action settlement of CalPERS to its policyholders. You might also be interested in the Wells Fargo GAP Lawsuit Settlement that amounted to $500 Million.
Case Name & No.: Holly Wedding, et al. v. California Public Employees Retirement System, et al., Case No. BC517444
Jurisdiction: Superior Court for the State of California for the County of Los Angeles
Products/Services: Long-term care policy
Allegations: CalPERS LTC Policy premium had an 85% increase and is subject to refund
Status: To be settled
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