Settlement talks over $1.2 billion CalPERS lawsuit are extended with retired judge at helm

Jan. 28--A retired judge is now managing settlement talks between CalPERS and a group of people suing the retirement system over its long-term care insurance policies, according to court filings.

The development shows settlement efforts in the $1.2 billion class-action lawsuit haven't faded since they started in September. Policyholders filed the lawsuit in 2013 after the California Public Employees' Retirement System notified them it was going to raise their insurance premiums by 85 percent.

Judge William Highberger, who is overseeing the lawsuit in Los Angeles County Superior Court, appointed Layn Phillips, a retired judge, as a "settlement master" in December to oversee the talks, according to a court filing.

The appointment expands the role of Phillips, who oversaw at least three settlement talks from September to November as a mediator.

Included in his new role is the authority to communicate with Gov. Gavin Newsom's office and the state Finance Department regarding settlement talks, according to Highberger's order appointing him.

A CalPERS spokesman said Monday the system does not discuss mediation.

CalPERS has said that any money that might be paid as a result of the lawsuit, whether in a settlement or a judgment, wouldn't affect the $400 billion fund from which the system pays retirees' pensions.

In past statements, CalPERS said the money likely would come from rate increases on long-term care insurance policyholders.

Phillips will have had an opportunity to meet with the state by the time of the next status conference, scheduled for Feb. 26, said Michael Bidart, the lead attorney for the plaintiffs.

About 100,000 people who were affected by the rate increases are included in the lawsuit's class. Judge Highberger urged the two sides to try to reach a settlement last July, after issuing a tentative ruling saying he was inclined to side with a group of 85,000 plaintiffs who purchased "inflation protection" for their long term care plans.

The plans came with automatic increases to benefits, such as the amount the plan would pay for nursing home care, to account for price increases over time. CalPERS promised in marketing materials that the increases wouldn't come with corresponding premium increases. Attorneys in the lawsuit have said CalPERS broke that promise.

The law firms representing the plaintiffs have set up a website where they post updates on the case, calpersclassactionlawsuit.com. A recent posting includes a general discussion of what the attorneys are seeking for specific groups of affected policyholders.

The trial in the lawsuit, originally scheduled for October, was rescheduled for April. Bidart said the trial date likely would be pushed back again to late summer or the fall.

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