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August 30, 2013 / Teresa Mkhitarian

Lawsuit Filed Over Underfunded California Insurance

A class action lawsuit has been filed in Los Angeles County Superior Court against California Public Employees’ Retirement System (CalPERS), alleging that more than 100,000 retirees were misled about their long-term care insurance.

According to the lawsuit, the insurance was underfunded for the past 10 years, which resulted in a premium increase. Policyholders claim they had been told that their rates were fixed and reasonably priced and would not increase based on the policyholder’s age or health. Recently, however, CalPERS announced that premiums of many policyholders would increase up to 85 percent in the next two years.

Further, in 2009, CalPERS stopped enrolling individuals into its program but did not inform policyholders of this decision or the consequences. Since most policyholders are seniors with fixed incomes, they may not be able to afford the insurance, resulting in their insurance being canceled and rendering their premium payments useless.

The plaintiffs in this class action are seeking restitution for the money they have paid into the insurance as well as rescission of their policy agreement with CalPERS. Breaches of contract and failing to act fairly and in good faith during the contracting process are actionable under California law.

If you or someone you know has faced similar trouble with their insurance company, please contact Khorrami Boucher Sumner Sanguinetti, LLP for a confidential consultation.


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