The California Public Employees’ Retirement System is being urged to settle a $1.2 billion class-action lawsuit over premium increases for its long-term care insurance policies. 

Superior Court Judge William Highberger has tentatively ruled he’s inclined to decide CalPERS wrongly raised its rates for about 85,000 class members who purchased its inflation protection benefit plans, the Sacramento Bee reported

The plan featured steady increases to benefits covering rising long-term care costs but promised to keep premiums the same. CalPERS’ marketing materials for the plan also featured a graph with a flat-line projection for future premiums. The judge agreed that the language of the marketing materials suggested premiums would not increase. 

The lawsuit was first filed against CalPERS in 2013 by California citizens who purchased their LTC policy between 1995 and 2004. The class includes about 100,000 policyholders who allege the retirement system violated contracts when it raised premiums by 85% after promising to keep prices stable. 

The plaintiffs allege the premium hikes cost policyholders about $1.2 billion in damages. CalPERS has previously said the system’s contract allowed it to raise rates. 

“While we respectfully disagree with Judge Highberger’s tentative ruling that the insurance policies limited CalPERS’ ability to increase premiums, he did opine that increases are permitted in certain situations,” CalPERS spokesman Joe DeAnda said in the report. 

The judge did not address the approximate 18,000 policyholders who didn’t purchase the extra benefit and are part of the suit’s class.

If not settled, the lawsuit is scheduled to go to trial in October.