CalPERS was sued Tuesday over the big rate hikes it imposed on its long-term care insurance program, which covers stays in nursing homes.
The class-action suit was filed by a Los Angeles law firm on behalf of more than 100,000 CalPERS members who have purchased the coverage and now face big rate increases.
The lawsuit, filed in Los Angeles Superior Court, says policyholders were duped into thinking the rates would be fixed and "reasonably priced."
CalPERS approved 85 percent rate hikes for most policyholders last fall, and policyholders were officially notified of the increases in February. The rate increases take effect in 2015.
The pension fund has said the rate hikes are necessary to stabilize the program, which has suffered major losses. Unlike pensions, the insurance program isn't subsidized by taxpayers and has to pay its own way, CalPERS says.
"Wonderful people were duped into thinking they had purchased protection in the event they were no longer able to care for themselves," said attorney Gregory Bentley, of the law firm Shernoff Bidart Echeverria Bentley, in a prepared statement. "Once the exorbitant increases take place in 2015, members of the class, many on fixed retirement incomes, will be unable to make the outlandish payments, which in turn will result in the cancellation of the insurance."
CalPERS officials weren't immediately available for comment.
Call The Bee's Dale Kasler, (916) 321-1066. Follow him on Twitter @dakasler.