You can clearly see the rock & the hard place between which long-term care subscribers were left.
Blog readers may recall that state employees - including UC employees who do not normally have dealings with CalPERS - were offered long-term care by CalPERS. But after a few years, the rates were jacked up substantially. Subscribers either had to pay the new rates, accept degraded policies, or drop coverage. It appears there will now be a class action lawsuit against CalPERS as a result. From the state worker blog of the Sacramento Bee:
Plaintiffs, 1. CalPERS, 0.
A court fight over a massive two-year rate hike on some CalPERS long-term care policies drew a step closer to reality with a recent court ruling that one case can represent 133,000 people who purchased plans.
The decision by Los Angeles Superior Court Judge Jane L. Johnson late last month concludes that those purchasers’ concerns are best handled as a class-action matter that pools legal resources and lumps all the plaintiffs together.
Sacramento attorney Stuart Talley said Monday, “This means we can proceed as one lawsuit for everybody instead of (133,000) separate lawsuits.”
Of course, it’s a huge win for Talley’s legal team. Now one case has the potential to award millions of dollars, so the lawyers’ cut for trying and winning the one case jumps up too.
The California Public Employees’ Retirement System had hoped the judge would go the other way. Since many (most?) people who bought policies are likely older and on fixed incomes, it’s highly unlikely many would have fought on by themselves, significantly lowering the financial stakes for CalPERS...
The CalPERS/long-term care story should be taken as a cautionary tale by anyone contemplating long-term care insurance. If a public entity such as CalPERS can't be trusted, imagine what will happen to you in the gentle arms of a private insurer.