According to the Sacramento Bee:
CalPERS has agreed to pay up to $2.7 billion to settle a lawsuit over price hikes the retirement system imposed on long-term care policyholders eight years ago.
The agreement, announced Tuesday in a joint news release, settles a class-action lawsuit policyholders filed in 2013. They filed the lawsuit after receiving notices that their premiums would rise 85% in two increases in 2015 and 2016.
The $2.7 billion will be used to refund affected policyholders’ premiums and provide other benefits, according to the release. Settlement amounts will be based on whether people used their policy benefits and how they responded to the increase, according to the release.
“We are pleased that our class members are able to get relief from the February 2013 rate increase,” attorney Gretchen Nelson, of Nelson & Fraenkel, said in the release. “This settlement will help our clients, many of whom are retired and on fixed incomes, to achieve a refund of premiums and move on with their lives.”
Los Angeles Superior Court judge William Highberger will review the proposed settlement and could grant preliminary approval July 22, according to the release.
The settlement applies to about 80,000 people who purchased long-term care insurance that came with an “inflation protection” benefit."
“We believe this settlement is in the best interest of all long-term care policyholders and represents a sincere effort to resolve very complex issues in a fair manner,” Matthew Jacobs, CalPERS general counsel, said in the release. “It’s the right path forward and enables the CalPERS long term care program to continue helping policyholders who are counting on the program for critical care in a time of need.”
It is not clear from the Bee article how the settlement will affect current CalPERS LTC program policyholders who are facing up to 90% increases in premiums over the next two years. The LTC fund currently has a $2.1 billion deficit, and the settlement presumably would bring the fund deficit to about $4.8 billion.