LTCi Carrier Defends Dismissal of Class Action Lawsuit Alleging ERISA Violations Arising from LTC Insurance Premium Rate Increases | JD Supra

The party’s judge dismissed the plaintiff’s lawsuit challenging ERISA against The Prudential Company of America (“Prudential”) and Tufts University (“Tufts”), due to the increase in the cost of the ERISA long-term care group. the insurance plan is sponsored by the employer, Tufts, and is provided by Prudential.

On July 12, 2022, United States District Judge Richard Stearns ordered Tufts and Prudential to withdraw their actions, Parmenter v. Prudential Insurance Company of America, et al., no. 1:22-CV-10079, Dr. No. 43 (D. Mass. July 12, 2022), originally filed on January 20, 2022 in the United States District Court for the District of Massachusetts.

The plaintiff alleged that Prudential issued certificates of universal term insurance to group certificate holders under various ERISA-mandated employee benefit plans, and that the certificate promised that Prudential would only increase premiums in the future “subject to approval by [state of insurance] Insurance Commissioner.” The plaintiff also argued that on January 21, 2019, Prudential informed him that long-term insurance is going up by 40%, and that in 2020, he used the non-recovery method in response to a one-minute, 19% increase in cost. The plaintiff said that in the countries In several places where plans like his are offered, including the Commonwealth of Massachusetts, state insurance regulators do not have a valid license for long-term insurance, and that Prudential breached its fiduciary duty under ERISA by forcing premium increases, even when state insurance commissioners did not approve. price increases.

The plaintiff also stated that, prior to signing up for the financial plan, he was attended by Prudential where he was represented that any future increases must be approved by the Massachusetts Commissioner of Insurance, and that Prudential did so. interfered with his reliable work. In doing so, the plaintiff sought to represent a class of “all former or current Prudential ERISA long-term insurance policyholders, who (1) were granted coverage under the long-term care group’s provision that increases in premiums shall be permitted only upon approval by their home insurance agent and (2) who were licensed in a state where term insurance rates were unregulated at the time Prudential raised premiums.” Id. to Dr. No. 22.

In a written statement, the Court rejected the plaintiff’s arguments, saying that he could not make a sufficient allegation of breach of duty. The court first found that the plaintiff’s argument that Prudential breached its duty because it did not obtain approval from the Massachusetts Commissioner of Insurance before establishing a premium rate on its policy was without merit. Specifically, the Court explained that “so far the Commissioner has refused to exercise his authority to regulate employer rates,” and agreed with Prudential that the plaintiff’s interpretation was that Prudential could not raise its rates in Massachusetts until the Commissioner began. reviewing and approving such an increase would be “absurd,” because it “could lock up participant pay for years, ‘perhaps decades.'[,] while the cost of medical care and inflation continue to rise.’” Instead, the Court concluded that Prudential had provided a “clear” definition of the certificates offered – that premium increases under long-term insurance plans. approved by the Commissioner “if and when the Commissioner decides to require such approval.” In addition, the Court found that the plaintiff’s claims that Prudential and Tufts misrepresented the matter before filing its plan did not meet the requirements set forth in Federal Rule of Civil Procedure (9)(b) ) for ERISA claims for breach of fiduciary duty for fraud. Specifically, the plaintiff was required to state the time, place, and counterclaim, but the plaintiff failed to state the time or place.

In the end, since the plaintiff failed to “allege a reasonable cause of action” by any of the defendants, the Court granted the defendants’ motions to dismiss the case with prejudice, thereby marking a major victory for long-term insurance. companies.