The reason to bring a class action law suit, particularly in the long term care insurance field is because you want to reach as many people as you can in one case. If there are 100 or 400 or 500 or 1000 people being affected by the conduct of the insurance company, the purpose of the class action suit is to reach all of those people and get all of those people relief in one case.
Otherwise, you first have to have all the people who are aggrieved know they have a claim, then they have to get a lawyer on their own, bring individual cases for 500 to 1000 people. It’s just more efficient and reaches more people more quickly if you do it in a class action scenario.
We have brought some class action lawsuits, we have some pending now. One in particular involved an insurance policy that was written in the early 90s. Basically the insurance company sold the policy with what’s called an inflation benefit rider. The inflation benefit rider is designed to grow the policy benefits along with inflation because obviously $100 20 years ago isn’t the same as $100 today so if somebody bought a policy with $100 a day benefit 20 years ago, they can’t get the same amount of care today with that $100 as when they bought it. The inflation rider is supposed to grow the benefits in order to keep up with inflation and changes in the marketplace. As cost of care goes up with the inflation rider the policy benefits go up hopefully keeping up with the rising cost of care.
Cost of care today for an aide can be $15, 16, 17 an hour; a lot of money. Anyways, in that particular case the insurance company was not applying the inflation benefit rider properly. They were not applying it to all the benefits in the policy so what happened was the insurance company over time was telling the insured that they were reaching their policy lifetime maximums and that the policy was over. So all of those people ended up having to go out and hire caregivers on their own; they spent tens of thousands of dollars doing that. When we got the case we looked at it and realized the way the policy was written with fuzzy language that the insurance company was not properly applying the rider to all the benefits. So we filed a lawsuit and the United States district court in southern Florida and were successful.
We got a ruling that the policy should have been growing by 8% and essentially as a result of that ruling, all of the people that had to spend money out of pocket to pay for care are going to get reimbursements. As we speak they’re all back on care and the insurance company is paying for it. The average age in that Class is 88 years old. We have people 98 years old who had been cut off from benefits for the last several years and now they’re getting their benefits paid for again and getting quality caregivers. That was a very successful endeavor, reaching a lot of elderly needy people and we’re very proud of that case. There’s really good feeling to know that people are getting taken care of.