A proposed class action claims Prudential has falsely represented that it would only increase premium rates for group long-term care insurance plans if approved by a state’s commissioner of insurance.
The 11-page lawsuit alleges The Prudential Insurance Company of America has blatantly run afoul of the terms of its insurance policies by increasing group long-term care rates without government approval in states, such as Massachusetts, where the commissioner of insurance has no rate approval authority for such plans.
Overall, the complaint alleges that Prudential and co-defendant Tufts University, who offered Prudential’s insurance as part of its employee benefit plan, knew or should have known that certain states were unregulated as far as group long-term care rate increases, thus “making it impossible” for the insurer to obtain government approval for rate increases.
Per the suit, Prudential’s rate increases are a “blatant violation of the policy terms” and have caused plan participants and insureds to pay more for premiums. Some insureds have also had their policies lapse for non-payment and been forced to exercise non-forfeiture provisions to avoid a policy lapse in exchange for a substantial decrease in their policy’s benefits, the lawsuit claims.
“If Defendants had acted lawfully under [the Employee Retirement Income Security Act] and in accordance with the terms of the insurance contracts, Plaintiff and the Class members’ rates would not have experienced increased premiums or other losses,” the complaint charges.
Prudential, the lawsuit explains, sells long-term care insurance plans that usually cover the long-term care costs associated with daily living that are not covered by Medicare or health insurance policies. According to the case, Prudential has represented in its group long-term care insurance policies that it would only increase future premium rates “subject to the approval of the [state of issuance] Commissioner of Insurance.”
What Prudential failed to disclose to plan participants, the suit alleges, was that in several states where the company issued insurance, the commissioner of insurance has no authority to approve rate increases for group long-term care insurance.
According to the case, Prudential has failed to honor its contractual promise to only increase rates with government approval by raising its premiums in unregulated states like Massachusetts, where it is impossible to obtain authorization to do so.
The suit claims Prudential has “freely admit[ted]” to incorrectly marketing its group insurance plans and apologized that its guidance during Tufts University’s long-term care enrollment presentation was “not tailored for this specific presentation of Group Long Term Care coverage to be issued in Massachusetts.”
The plaintiff, a participant in the Tufts University employee benefits plan, claims to have received a January 2019 letter from Prudential in which she was notified of a 40-percent rate increase for her group long-term care coverage. Per the case, the Massachusetts Commissioner of Insurance did not approve this rate increase or other allegedly unlawful increases. The suit says the plaintiff ultimately chose to exercise the non-forfeiture feature of her policy and accept a dramatic decrease in the value of her benefits in order to avoid paying future premiums.
“She only exercised this option because of the continued illegal rate increases Prudential demanded from her to keep the policy in force,” the complaint argues.
The lawsuit looks to represent current or former Prudential group long-term care insurance certificate holders who were issued coverage under a policy that indicated rate increases will only occur with the approval of their state’s insurance regulator and were issued their certificate of coverage in a state where group long-term care insurance rates were unregulated at the time Prudential initiated a premium rate increase.
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