Long-Term Care Insurance

The Situation

Long-term care insurance contracts provide funds to pay expenses associated with long-term care such as medical, personal, or social services needed to help the insured perform essential activities of daily living or to provide support due to mental deterioration. Long-term care insurance contracts often cover home health care, community care, and assisted living as well as equipment and some medical benefits. After running deficits for a period of time, a long-term care insurance provider increased premiums on a number of long-term care contracts. In response, a number of policyholders sought class certification for their claims of fraud and deceptive practices against the insurer.

NERA's Role

The insurer asked NERA experts to analyze plaintiffs’ request for class certification. NERA experts studied the contracts held by the lead plaintiffs, the contracts included in the proposed class, and the plaintiffs’ proposed damage methodology. The NERA report demonstrated that out-of-pocket damages for the named plaintiffs were small or nonexistent. In addition, the proposed damage methodology was based upon class, not individual damages, and ignored the individualized nature of actual contracts and thus potential damages under the allegations. The NERA report demonstrated that each policyholder’s damages under the alleged misconduct depended on a large number of idiosyncratic factors that were not effectively measured on a class-wide basis.

The Result

NERA’s analysis was used by counsel to support their motion to deny class certification. Class certification was denied.