A glitch with CalPERS' new half-billion-dollar computer system has delayed death benefit checks to widowed spouses and incorrectly triggered letters notifying some members that their health insurance has been canceled.

Officials with the California Public Employees' Retirement System and the private firm that installed the new hardware and software in mid-September say they are working to correct the problem. They don't yet know how many members have been affected.

The snafu is adding more distress to the lives of CalPERS members like 85-year-old Mary Gotelli, whose husband died Oct. 3. Not long after, she received a letter from her supplemental insurance carrier telling her she no longer was covered.

"She's stressed out," said her son Ray Gotelli, who drove to Sacramento from his Brentwood home Tuesday to see if he could straighten out the mess at CalPERS headquarters.

On Wednesday morning, CalPERs called Gotelli and his mother with the news that her case has been resolved.

"My mom started crying on the phone," Gotelli said. "But this doesn't relieve the larger issue. They're scaring older people – and doing it while they're grieving."

CalPERS officials emphasize that the cancellation letters are erroneous and say no recipients will go without medical coverage.

Some members may see their income interrupted, too, if the death benefit is apportioned differently than the pension payments were.

"This is one of our highest priorities," said CalPERS spokesman Brad Pacheco. "We don't want to compound the grief of a member who has just lost a loved one."

Although CalPERS doesn't yet know how many members have received letters, the agency is "triaging" cases as they surface to get death benefits paid as quickly as possible, he said.

The problem starts with the new computer system that launched in September.

The mix of new hardware and software installed by New York-based Accenture aims to consolidate nearly 50 different antiquated systems into one, dubbed "my|CalPERS."

The venture has had a rocky history, coming in two years late at an estimated $507 million. That's $228 million over the original budget, including $74 million in features added later. CalPERS figures the true cost overruns total $154 million.

No one expected a flawless introduction, but since flipping the switch in September, programmers have updated the system with 1,340 fixes or enhancements and rolled out 16 systemwide updates.

The changeover has driven members and employers to the phones and extended Cal-PERS' member services on-hold times to 90 minutes or more, although that has dropped in recent weeks, according to a fund report.

CalPERS board member J.J. Jelincic said at last week's board meeting that he received a call from a member complaining about a two-hour phone wait.

"The fact that I got the call from a retiree rather than staff telling me there were two-hour calls is troublesome," he said.

Processing the death benefits paperwork takes time under the best circumstances because of all the documentation that needs to be collected, Pacheco said.

Switching systems has doubled how long it can take Cal-PERS to process death benefits, from 45 days before the program launched to 90 days. Before my|CalPERS, the fund usually had about 4,500 death applications in the queue at any one time and paid 98 percent of them within 45 days. Now it has 7,000 and expects it will take 60 days to 90 days to process them.

If converting a pension payout to an initial death benefit payment is delayed too long, the health premiums that should be deducted from it won't be paid. Once a payment is missed, Pacheco said, insurers send a cancellation letter.

CalPERS members complained about delayed death benefits earlier this month on the fund's Facebook page:

"I know from my experience it is very difficult and having to deal with this and grieving at the same time is very hard," said Debi Court in a Nov. 10 post. Her husband died in September.

Another woman, Chris Kruger, posted last Thursday that she had been waiting even longer: "My son and I have had NO health benefits since 8/1. I just continue to pray neither become ill. … I applied for death benefits one week after my husband's death AND am STILL waiting to collect benefits."

The Bee was unable to reach them to talk further about their complaints.

In those cases and others, CalPERS replied on Facebook posts that it was looking into the matter.

CalPERS spokesman Pacheco said the fund also is working with its health insurance vendors, including Kaiser Permanente and Blue Shield of California, to hold off on cancellation notices. "We're telling carriers, 'Don't cancel these members,' " Pacheco said.

Johnny Wong, spokesman for Blue Shield of California, said the company has been working with CalPERS on the issue for several months, but referred other questions to the fund. Kaiser spokesman Edwin Garcia said the company has decided it won't cancel members' coverage.

Mary Gotelli received her notice of health insurance cancellation in October after her husband died. She reached CalPERS from her Sun City West home in Arizona and the fund sent a form to fill out and return to keep her coverage in place, her son Ray said. She sent it backed certified mail.

Then nothing.

After several frustrating calls to CalPERS that weren't picked up, including one where Mary Gotelli was on hold for "more than 90 minutes," Ray Gotelli said, he decided to visit CalPERS headquarters in downtown Sacramento.

"I decided it would probably be faster to drive the 66 miles to Sacramento than to wait on the phone," Ray Gotelli said.

But after visiting with a member services representative that afternoon, he was no closer to a solution.

"I told them, 'You're scaring the crap out of people," he said. "They said they have some things that have been piling up."

Member services staff said Tuesday that the fund would have the problem fixed within 60 to 90 days, Gotelli said. Meanwhile, they said, his mother would have to pay her medical expenses out of pocket and keep the receipts for reimbursement later.

On Wednesday the fund called to tell him the matter was straightened out. With no documentation confirming that yet, he still wonders.

"I'll fully believe it when she gets her medicine," he said.

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