Monday, August 5, 2019

No. 325: Long-Term Care Insurance and the Lawsuit against the California Public Employees' Retirement System

In No. 227 (July 27, 2017), I discussed a class action lawsuit against the California Public Employees' Retirement System (CalPERS). The case relates to large premium increases CalPERS imposed on owners of long-term care (LTC) insurance policies. During the past two years I have received many inquiries about the status of the case. An inquiry I received recently prompted me to prepare this update on the case. (See Wedding v. CalPERS, Superior Court of California, County of Los Angeles, Case No. BC517444.)

Early Developments
In August 2013 several plaintiffs filed the original complaint after CalPERS notified them of an 85 percent increase in the premiums for their LTC insurance policies. In January 2014 they filed an amended complaint. In March 2017 CalPERS filed a motion for summary judgment or, in the alternative, summary adjudication. In June 2017 the then judge in the case handed down a ruling. She denied the motion for summary judgment but granted the motion for summary adjudication. She allowed the case to proceed with three of the original causes of action, and it appeared the trial would begin early in 2018. The complimentary package I offered in No. 227 is still available.

The Current Situation
The case now is in the hands of California Superior Court Judge William F. Highberger. On July 1, 2019, he filed a draft of a proposed statement of decision. Here is the concluding section:
The Court rules for Plaintiffs on the interpretation of the "Inflation-Protection" clauses in the EOC [evidence of coverage document] and for CalPERS on the premium-adjustments permitted by the "Guaranteed Renewable" clauses (subject, however, to the override of the Inflation-Protection promise where the two terms appear to conflict). The Court agrees with CalPERS on the Cross-Claim for Declaratory Relief that CalPERS can subject insureds with Inflation-Protection benefits to future rate increases (and retroactive rate increases which are less than the disputed 85 percent increase actually imposed) insofar as CalPERS can persuade the fact-finder (now or in future litigation) that such rate increases are driven by cost factors other than the inherent escalation of daily/monthly limits on Inflation-Protection benefits over time as long as those increases are spread over the entire risk pool and not selectively imposed to a greater-than-average degree on the Inflation-Protection insureds.
Objections to this Proposed Statement of Decision must be served and filed within fifteen (15) calendar days plus two (2) court days for e-service from this date.
A Trial-Readiness Conference is set for August 21, 2019 at 10:00 a.m. with Joint Report due August 19, 2019. Final Status Conference set for October 3, 2019 at 10:00 a.m. Jury Trial (10 days) set for October 30, 2019 at 10:00 a.m. If the parties are making any progress with their settlement negotiations, the Court will be cooperative in continuing the trial date.
General Observations
When I wrote about this case in 2017, it had been going for four years. At the time, I did not believe that the parties would allow the case to go to trial, but I did not say so. Now that the case has been going for six years, I feel the same way. I think the parties, especially CalPERS, will not allow the case to go to trial. Should the parties reach a settlement, I think the terms of the settlement will be made public. I plan to continue reporting on the case.

Available Material
I am offering a 35-page complimentary PDF containing the draft of Judge Highberger's proposed statement of decision. Email and ask for the August 2019 package about the Wedding v. CalPERS case.