June 22, 2017
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Sacramento Bee Covers SBE’s Victory in CalPERS Class Action
The Sacramento Bee reported on Shernoff Bidart Echeverria LLP’s victory in the class action lawsuit it filed against CalPERS in 2013.
The lawsuit alleges the following:
- CalPERS claimed that it had the requisite experience to properly underwrite the LTC policies so as to insure that the funds were carefully and prudently managed. In uniform promotional materials, CalPERS repeatedly touted the financial stability and strength of its LTC program.
- CalPERS suddenly and unexpectedly advised its policyholders that its LTC insurance program was grossly underfunded and that CalPERS, unbeknownst to Plaintiffs and the other members of the Class, had stopped enrolling new members in 2009.
- CalPERS admitted that it had engaged in an improper investment strategy. For years CalPERS had been pursuing an aggressive 65% equity investment strategy, until, in 2013 it abruptly shifted to a more stable and conservative 15% investment strategy. The net result was that the LTC policy fund had been, and would remain, grossly underfunded.
- CalPERS was expressly warned by an outside consultant in 1996 that its decision to invest such a large percentage of the LTC fund in equities was not prudent and created a substantial likelihood that rates would have to be increased in the future.
- CalPERS failed to warn policyholders of the program’s financial problems and, in fact, told policyholders the opposite; that the program was strong and financially sound.
The article can be found by clicking CalPERS Class Action.