Anne Bucher  |  December 30, 2016

Category: Consumer News

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Genworth long term care insuranceThree plaintiffs who purchased Genworth long term care insurance policies have filed a class action lawsuit alleging the insurer wrongfully depleted the revenue needed to pay future claims.

Long term care insurance may be purchased by consumers before they become physically or mentally infirm. This type of insurance helps to cover the expenses of around-the-clock care that may be necessary in old age.

The costs of long term care are typically not covered by health insurance, Medicare or Medicaid, according to the Genworth class action lawsuit.

Plaintiffs Erika Leifer, Saul Jacobs and Helene Wenzel filed the long term care insurance company against the Genworth defendants, which include Genworth Financial Inc., Genworth Life Insurance Company, Genworth Life Insurance Company of New York, and three individuals affiliated with the companies.

According to the Genworth class action lawsuit, Genworth is the largest provider of long term care insurance. In order to sell its insurance products, Genworth reportedly touted its long history and experience in the long term care market, as well as its financial strength.

“As it turns out, Genworth’s publicly touted financial strength and ability to pay future claims was a hoax,” the insurance class action lawsuit alleges.

The plaintiffs assert the defendants were involved in “an undisclosed scheme” from 2010 through 2014 to boost its stock price while diverting money from policyholders’ premium payments into the defendants’ pockets.

According to the Genworth class action lawsuit, the defendants deliberately use outdated claims experience about the average duration of a long term care claim when calculating their reserves.

For example, instead of considering the actual claim duration of three years, Genworth calculates its reserves based on an outdated claim duration of about 2.2 years, the plaintiffs state.

They argue that this practice had a “dramatic effect” on the level of reserves Genworth was required to maintain and caused them to be underfunded for the actual expected need for nearly four years.

“The artificial suppression of its reserves, in turn, created the false appearance in Genworth’s publicly reported financial statements that the Company was far more profitable than it actually was, because the monies that should have been used to fund the actual needed reserves were instead allocated to the company’s profits,” the class action lawsuit alleges.

In November 2014, Genworth reportedly admitted that it had not properly accounted for its reserves, and that the reserves were underfunded by more than half a billion dollars. Genworth subsequently settled a securities fraud lawsuit over the issue and has compensated investors for the damages they suffered because of the fraud.

However, the policyholders who had “essentially been asked to pay for the fraud themselves” have not received any compensation for their losses, the plaintiffs argue.

Policyholders were reportedly given three “unpleasant options”: continue to pay their prior premiums but receive a lower level of benefits, pay more in premiums to maintain their prior level of benefits, or terminate their long term care policies.

By filing the Genworth class action lawsuit, the plaintiffs seek to represent a Class of U.S. residents who purchased long term care insurance from Genworth at any time prior to Nov. 5, 2014, and subclasses of California, New York and Pennsylvania residents.

The plaintiffs are represented by Kristi C. Kelly of Kelly & Crandall PLC, Brian D. Penny and Paul J. Scarlato of Goldman Scarlato & Penny PC, and Shanon J. Carson, Glen L. Abramson, Peter R. Kahana, Lane L. Vines, Patrick F. Madden, and Y. Michael Twersky of Berger & Montague PC.

The Genworth Long Term Care Insurance Class Action Lawsuit is Erika Leifer, et al. v. Genworth Financial Inc., et al., Case No. 3:16-cv-01008, in the U.S. District Court for the Eastern District of Virginia, Richmond Division.

UPDATE: The Genworth Long Term Care Insurance class action lawsuit was voluntarily dismissed on June 26, 2017.

 

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23 thoughts onGenworth Class Action Calls Long Term Care Insurance Policies a ‘Hoax’

  1. Gorg Stovar says:

    We are a couple in our 60s and 70s and have been paying premiums for our LTC since 2002. We just got a letter from Genworth that as of 07/20/ 2020 our premium will be increased by 64 %. How is this admisible by law. Are we living on a different planet ? I thought we are “the” country !! Where is the democracy where are the laws to keep thieves out of the lives of hard working taxpayers of this country. It is shameful !! How are we going to be able to pay these premiums now that we are approaching a fragile age and we can’t work. WE WANT TO JOIN THE LAWSUIT. WE NEED TO BAND TOGETHER. WE CAN CHANGE THIS BUT ONLY IF WE ARE JOINING IN IN LARGE NUMBERS.

    1. James waldrop for Alice White says:

      How do we join in such a class action? We received a similar letter.

  2. Gary Lyon says:

    Is there any law firm in Pa or that will represent pa resident with a class action suit against Genworth.
    I have had this policy since 2003 and now I am being told it is only good for the money I put into the policy. they have used my money and everybody else to increase their wealth.

  3. BURTON HOFFNER says:

    HELP!!

    What options if any are available to redress this MALPRACTICE on the part of the insurers.

  4. Paul Gage says:

    I feel that Genworth is making a concerted effort to drive aging seniors out of it’s pool of insured. They are succeeding and I have lost most of the value of my policy. Yes I would like to join a class action suit.

  5. michael sauser says:

    we purchased this long term ins in 1993 before it was owned by ge–what seemed like a responsible duty has now become a serious question as to whether we should pay our premium in dec. of 2018

  6. John Jambor says:

    Please contact us with info on how to sue Genworth.

    John and Judy Jambor
    Brighton MI

    586 292 6329

  7. Pierre Leblache says:

    Whatever the reason for this “Voluntary Dismissal Without Prejudice”, and there can be many, the Class Action lawsuit can be reinstated. If it isn’t, others may take over along not too different lines.

    1. Pierre Leblache says:

      There seems to be some new related activity, as a Pension Fund, in March 2018, has started a lawsuit, not against Genworth but against GE, its predecessor and seller before 2003 of contracts which are still active.The Genworth situation is such a clear-cut case of consumers abuse and rip-off that a Class Action lawsuit will eventually come out and remain active. It is only a matter of time.

  8. Top Class Actions says:

    UPDATE: The Genworth Long Term Care Insurance class action lawsuit was voluntarily dismissed on June 26, 2017.

    1. Don says:

      Has age discrimination been considered in class action? At 87 years of age and no longer
      insurable what should a policyholder do to right this wrong? Would welcome a reply from
      a class action attorney.

    2. Nicholas ranalli says:

      When i stared the long term care policy with,genworth I was paying 99.00 a month now I am paying 278.00 a month every time I got an increase they said you can keep the same premium if you lower the price on your policy

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