CalPERS Update #11: CalPERS to Offer 2nd Settlement in Class Action Lawsuit

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By Bonnie Burns, Training & Policy Specialist

A public announcement of a second settlement is pending in the class action lawsuit against CalPERS long-term care insurance program. There will be a hearing on a motion for preliminary approval of a settlement conference on March 10th at 1:30 PM in Department 10 at 312 North Spring Street, Los Angeles, CA 90012. CalPERS will have the option, as they had in the first settlement, to opt out of this one depending on certain results of the settlement.  

There are approximately 79,500 current class members. Unless you formally opted out of the lawsuit, you are still a class member. If you weren’t a class member from the beginning of the lawsuit, you aren’t a class member now. You can’t join the lawsuit or benefit from the settlement if you are not a current class member. If you are uncertain about whether you are a class member or not, please contact the administrator for class members. Their contact information is at the end of this notice. 

The basic outline of the second settlement gives class members certain options similar to those that were in the first settlement offer.  

Those class members in Category A who are still paying premiums for their CalPERS policy and are not on claim at the time the final settlement is approved by the court can choose to surrender their policy in return for 80% of the total premiums paid up to the date of the final settlement. Or they can keep their policy and receive $1,000 cash payment on the date the final settlement is approved by the court. 

Those class members who are on claim (Categories B and C) and request a premium refund can retain their policy and receive a cash payment of $1,000. They can, if they choose to, give up their policy and receive 80% of premiums paid minus any benefits received, although it is difficult to think anyone would choose to do this while on claim. 

Those class members who lapsed their policy (Categories D and E) and who file an attestation that they lapsed their policy because of the premium increase, can receive up to 40% of all premiums paid, minus any benefits; or 80% of additional premiums paid since the date of the lawsuit but no less than $2,000, depending on the date of the lapse. 

The estates of those class members who died since February 2013 (Categories F and G) who had reduced their benefits as a result of the premium increase, can receive either 80% of all additional premiums paid; or 80% of any additional premiums paid but no less than $2,000, whichever amount is larger.  

Class members who die or go on claim before the date of the final settlement may fall into a different category for purposes of the final settlement. Actuaries predict that approximately 2,100 class members may die annually and move to a different settlement category based on the age range of the CalPERS long-term care population. 

CalPERS has the right to withdraw from the settlement if more than 1% of the class members opt out of the settlement, something that will not be known until all of the class members have made their choices. If the lawsuit goes to trial, the facts of the case will be difficult for jurors to understand. If a jury decides in favor of the class, CalPERS has multiple rights to appeal an unfavorable decision. The cost of a jury trial and the cost of any appeals will inflate the costs to the plaintiffs’ law firms well beyond their current estimated cost of approximately $5 million and add years to the final determination of the lawsuit. 

California Health Advocates will publish updates as we become aware of new information about this lawsuit and settlement actions. 

Lawsuit homepage: 

Administrator Contact Information 
If you have any questions regarding this Settlement, you may contact the Settlement Administrator. Please ensure that you include your name and your return address on all correspondence. 

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Wedding v. CalPERS 
P.O. Box 6790 
Portland, OR 97228-6790  

Read our previous CalPERS updates below:

Karen Joy Fletcher

Our blogger Karen Joy Fletcher is CHA’s Communications Director. With a Masters in Public Health from UC Berkeley, she is the online “public face” of the organization, provides technical expertise, writing and research on Medicare and other health care issues. She is responsible for digital content creation, management of CHA’s editorial calendar, and managing all aspects of CHA’s social media presence. She loves being a “communicator” and enjoys networking and collaborating with the passionate people and agencies in the health advocacy field. See her current articles.