Thursday, January 9, 2020

No. 348: Long-Term Care Insurance—Updates on the Lawsuit Against the California Public Employees' Retirement System

In No. 227 (July 27, 2017) and No. 325 (August 5, 2019), I discussed a class action lawsuit filed more than six years ago against the California Public Employees' Retirement System (CalPERS), a unit of the California state government. The case relates to large premium increases CalPERS imposed on owners of long-term care (LTC) insurance policies. Here I show two updates on the case. (See Wedding v. CalPERS, Superior Court of California, County of Los Angeles, Case No. BC51744.)

In August 2013, several plaintiffs filed their original complaint after CalPERS notified them of an 85 percent increase in the premiums for their LTC insurance policies. In March 2017, CalPERS filed a motion for summary judgment or, in the alternative, summary adjudication. In June 2017, the judge then handling the case 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. The trial was set to begin early in 2018, but it did not. The next judge in the case set the trial to begin in October 2019, but it did not. The trial is now set to begin in April 2020.

The October 2019 Update
The website provides interested parties with information about the case. The two-paragraph October 2019 update reads:
Plaintiffs and Plaintiffs' counsel attended the first scheduled mediation session on September 4, 2019 with Judge Layn Phillips, retired U.S. Attorney and a former federal judge from Oklahoma. He is one of the most sought after mediators in the nation and is known for his success in resolving highly complex cases. The mediation was attended by Plaintiffs' counsel Gretchen Nelson, Stu Talley, Greg Bentley and Steve Schuetze and the Plaintiffs, Holly Wedding, Eileen and Richard Lodyga. CalPERS was represented by its General Counsel, Matt Jacobs along with outside counsel, Daralyn Durie, Ragesh Tangri, Michael Proctor and Allyson Bennett of the Durie/Tangri law firm. In addition, Plaintiffs and CalPERS each had their respective actuary experts either present in person or telephonically to assist in answering questions that arose during the mediation. The negotiations were complicated since a potential resolution will likely require assessments as to the potential effect on the Long Term Care Fund, if, for example, there is a roll back of premiums or restoration of benefits to policyholders.
On October 7, 2019, we attended a second mediation session with Judge Phillips where further discussions were held as to various methods for achieving a resolution and ultimately it was agreed to have another mediation session in November, either on November 12 or November 14. The trial has been continued to April 13, 2020 to provide the parties with sufficient time to continue their discussions.
The December 2019 Update
The case website also provides a three-paragraph December 2019 update. It reads:
In the CalPERS Long Term Care Class Action matter, the parties have now attended three mediation sessions before the Hon. Layn Phillips (Ret.) and his associate Michelle Yoshida, Esq. The third mediation session occurred on Thursday, November 14, 2019, and attorneys Michael J. Bidart, Greg Bentley, and Stuart Talley appeared for the class, and Daralyn Durie, Ragesh Tangri, Michael Proctor, and Allyson Bennett appeared for CalPERS along with CalPERS's actuaries. Both sides have been working diligently on attempting to reach a resolution, and the parties' actuaries have been conferring to reach a consensus as to the potential cost to the Fund of various measures in connection with the parties' settlement efforts.
The class is comprised of persons who either paid the 85% premium increase, or reduced their benefits and dropped inflation protection and/or lifetime coverage in lieu of paying the 85% increase. A third group is comprised of policyholders who dropped their long-term coverage altogether. On behalf of the portion of the class who paid the 85% increase we are seeking to reach a settlement where those persons would have a portion of that increase rolled back both in the past and the future. For those who reduced their coverage in lieu of paying 85% we are seeking to obtain a partial restoration of benefits at no additional premium increase. Those who dropped coverage have different considerations and any settlement would likely involve some monetary compensation. The additional cost to the LTC Fund is significant, and any settlement requires additional funding from the State.
The parties have agreed that Judge Phillips can be appointed as Special Master who, in coordination with the Court, can directly contact the necessary State officials in an attempt to work toward a resolution.
General Observations
In No. 346 (December 20, 2019), I wrote about an LTC insurance premium increase class action lawsuit in which the settlement involved attorneys' fees and expenses that dwarfed the benefits provided for the victimized policyholders. I fear that the CalPERS case may be headed for a similar result. I plan to write further about developments in this case.