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Life Health > Long-Term Care Planning

Policyholder Sues Pru Over Implementation of 100% LTCI Rate Hike

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What You Need to Know

  • Harry Seiden bought his long-term care insurance policy in 2003.
  • He notes that the policy did not warn him that he or his policy were part of a class.
  • A lawyer for Prudential contends that the filed rate doctrine bars suits challenging approved rates.

A Delray Beach, Florida, resident has filed a lawsuit raising questions about what a long-term care insurance issuer has to do to make an LTCI rate increase apply to a specific LTCI policy.

In the lawsuit, Florida resident Henry Seiden is asking the courts to protect him from a series of three LTCI rate increases imposed by The Prudential Insurance Company of America. The increases would raise his premiums by a total of 100% over three years.

Seiden argues that his policy was not part of the class of LTCI policies involved in the rate hike, and that Prudential has not added the rate hike agreement with the Florida Office of Insurance Regulation to his policy.

Angel Cortiñas, a lawyer for Prudential — a subsidiary of Prudential Financial — asked the court to dismiss the Seiden suit because the filed rate doctrine blocks Florida insureds from suing over premiums approved by Florida insurance regulators; because Seiden’s policy is clearly part of the class of policies affected by the rate hike; and because a policy provision lets Prudential increase the policy premiums.

Seiden and representatives for Prudential did not respond to requests for comments about the case.

The Policy

Seiden, a lawyer, bought his Prudential LTCI policy in 2003, then accepted an inflation protection benefit increase offer in 2009.

An exhibit shows that he had a policy based on form GRP 98516, with lifetime benefits, 5% compound annual inflation protection and a 0-day benefits elimination period.

The original premium amount was $5,318.09 per year. Adding the inflation protection increased the price to $5,812.72 per year.

Prudential told him about an increase of about 25% in 2017. That increased the annual cost for the coverage to $8,937.14, from $7,149.66.

In 2021, Prudential told Seiden that it would implement three 26% increases, starting in June 2021, with the increases pushing the annual cost of the premiums up to $18,877.74 in June 2023. The three increases compounded annually, and they led to the amount of the total annual premium doubling.

The Suit

Seiden is representing himself in the suit against Prudential.

He originally filed a complaint objecting to the rate increase in a state court in Palm Beach County, Florida, in April.

Prudential succeeded in getting jurisdiction of the case, Seiden v. Prudential (Case Number 22-cv-81271) moved to the West Palm Beach Division of the U.S. District Court for the Southern District of Florida.

Prudential said the case belongs in federal court because it and Seiden are citizens of different states, and the amount in controversy exceeds $75,000.

Seiden says the policy states that his LTCI policy was an individual LTCI policy.

“Nowhere did the policy state or give notice that plaintiff’s policy or plaintiff were part of a class,” Seiden alleges in his complaint.

In addition, “defendant’s proposed change was not valid because the change was not made a part of plaintiff’s policy contract as required by the plain terms of the policy,” and Prudential signed an agreement with state regulators “without plaintiff’s knowledge,” according to the complaint.

The filed rate doctrine does not apply because Florida found that the 2020 Prudential rate increase filing was unreasonable, Seiden adds.

Prudential’s Response

Prudential said through its lawyer that Seiden’s effort to ward off the filed rate doctrine by referring to an unreasonable LTCI increase request is not relevant because Florida regulators ended up approving the rate increase.

Seiden provided a copy of his policy along with his complaint.

The policy number shows that the policy is part of the class of LTCI policies affected by the premium increases approved in 2017 and 2020, and a renewability provision in the policy states that:

Prudential cannot change the terms of your policy on its own, except for the following. It may increase the premiums you pay.

“The plain language of the policy expressly authorizes premium increases without further ‘consent’ or other action, as plaintiff alleges is required,” Prudential says.

The allegation in the Seiden complaint that an increase in premiums will be valid only when approved by a Prudential officer and made part of the contract, and other allegations, are “implausible in the face of these plain contract terms,” the company contends.

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Correction: In an earlier version of this article, the total impact of the rate increases occurring from 2021 through 2023 was described incorrectly. Combined, the three rate hikes increased the total premium about 100%.


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