Genworth LTC Premiums Class Action Lawsuit

Genworth Financial recently was caught in a scheme in which it improperly calculated its claims experience data for Long Term Care (LTC) insurance so that it could reduce the size of its reserve funds and use the extra funds from premiums to cover unrelated costs and increase profits.  This lawsuit claims that in the aftermath of Genworth being caught, they deceptively tried to increase policyholders’ premiums to adequately fund reserves.

            LTC insurance is purchased by individuals before they become physically or mentally infirm and require daily care, as a way to protect their life savings from the escalating costs of 24-hour health care at the end of their lives.  For years, Genworth, the country’s largest provider of LTC insurance, successfully sold its LTC policies to plaintiffs and other consumers by publicly touting its long history and vast experience in this particular market, as well as its financial strength and ability to pay future claims based on its publicly stated claim reserves.  This claims were an absolute hoax.  From 2010 until 2014, Genworth executed an undisclosed scheme to buoy their stock price and enrich themselves by diverting hundreds of millions of dollars of policyholders’ premium payments away from their reserve funds and into their own pockets and the coffers of GFI and its investors.  Since the scheme was uncovered, Genworth has embarked on corrective action to “undo” the financial harm caused by the fraud by turning to LTC policyholders to replenish those reserves through either increased payments, reduced benefits, or policy termination.

            On plaintiff in this case, Erika Leifer, is from New York City.  On September 11, 2002, at age 51, Leifer purchased a long-term insurance policy from Genworth.  That policy had a quarterly premium of $500.24.  Two years later she bought a second policy with a $270.40 quarterly premium.  Since then, she has made payments to Genworth totaling over $12,000.  In a letter dated February 20, 2016, Genworth informed Leifer, now age 65, that the premiums on both of her LTC policies would be increasing by 60% and warns that, “It is possible that your premium will increase again in the future.”  They further stated, “Our decision to increase premiums is primarily based upon the fact that the expected claims over the life of your policy are significantly higher today than was anticipated when your policy form was originally priced, and as a result, a premium rate increase is warranted.”  The letter made no mention of the company’s financial reporting and reserve calculations, or the unearned dividends that were paid to Genworth’s holding company rather than used to adequately fund reserves.

            Based on the facts of the case, the plaintiffs allege that Genworth breached the Implied Covenant of Good Faith and Fair Dealing, violated the New York Insurance Law, violated the New York General Business Law, violated California’s Unfair Competition Law, and was unjustly enriched at the expense of consumers.

Article Type: Lawsuit
Topic: Consumer
Tags: Deceptive Insurance Practices, Insurance, Long Term Care Insurance, Unfair Services