Los Angeles, CADenied disability claims might be one of the most common reasons for filing a California insurance lawsuit but it certainly is not the only reason. True, many an insurance lawsuit alleges denied disability insurance or denied ERISA disability, but how long-term insurance plans are managed can also be the source of a lawsuit filing.
The class-action lawsuit was filed in Los Angeles County Superior Court against CalPERS (California Public Employees’ Retirement System) and alleged more than 100,000 retirees were misled about their long-term care insurance, CBS LA (8/6/13) reports. The lawsuit claims that for the past 10 years the long-term insurance was under-funded, resulting in a premium increase. The issue is that policyholders claim they were told their rates were fixed and reasonably priced, and would not increase based on the policyholder’s age or health.
CalPERS recently announced that premiums of many policyholders would increase up to 85 percent in the next two years. With an 85 percent increase, some customers could go from paying just under $200 a month up to almost $800. But since most policyholders are seniors and have fixed incomes, they will not be able to afford the insurance, which will result in their insurance being canceled and the premiums they have paid being useless.
Named as plaintiffs, according to court documents found online, are Elma Sanchez and Holly Wedding. They allege that promotional materials marketed the insurance as “30% less than comparable commercial plans” because the program is not-for-profit.
But the plaintiffs argue, “From the very beginning, the premiums for the insurance were grossly underpriced and were not sufficient to provide the level of benefits promised under the program…In short, CalPers, which had no prior experience providing long-term care coverage, over-promised and under-delivered.” Furthermore, they allege, CalPers did not conduct a proper analysis, which would have revealed how much future benefits would cost.
Making the situation worse, in 2009, CalPers stopped enrolling people in its insurance program, but did not inform policyholders about that decision nor did it explain to policyholders the consequences of those actions.
The plaintiffs say CalPers know its long-term care policies were “grossly underpriced” and it would be forced to raise premiums but did not warn policyholders, who, if they had known the truth, would have purchased different insurance. “CalPers’ irresponsible conduct resulted in Plaintiffs and the Class renewing their policies until they were too old to purchase alternative coverage with another company,” the lawsuit alleges. They are now left with the decision to either stop paying or pay premiums they cannot afford.
The lawsuit seeks to represent others similarly situated who purchased LTC1 and LTC2 policies from 1995 to 2004.
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