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Retired judge files suit claiming health insurance law is unconstitutional

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Illinois

* The first volley…

A retired state judge has filed suit in Sangamon County to block a new state law that will begin charging state retirees premiums for their state health insurance.

Gordon Maag, a retired appellate justice who lost a bid for the state Supreme Court in 2004, wants the law declared unconstitutional.

He also is asking that the case be declared a class-action lawsuit on behalf of all retirees affected by the law.

Maag argues that the new law “purports to diminish and impair the benefits of members of pension and retirement systems of the state of Illinois, in that [the law] abolishes free health insurance to Illinois retirees who were and are entitled to free health insurance on account of working for the state for 20 or more years of service, or, in the case of retired legislators, four years, and in the case of retired judges, six years.” […]

A staff member for Attorney General Lisa Madigan, whose office will defend the new law in court, said hearings in the case apparently have not yet been scheduled.

* The fight will be over whether health insurance is a constitutionally protected benefit of membership in a pension system or whether it’s a perk granted by the General Assembly. From the Constitution…

Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.

posted by Rich Miller
Tuesday, Jul 10, 12 @ 1:32 pm

Comments

Would a ruling that this piece is constitutional clarify the parameters of a challenge to the expected upcoming COLA piece? If the Justices say that free premiums are not protected would their reasoning indicate that being forced to choose between insurance at any price or the current COLA may not be??

Comment by just asking Tuesday, Jul 10, 12 @ 1:44 pm
Is this law suit a stalking horse for the court to come out and say it is ok to charge them or is it a bona fide suit. Considering the source of the suit here.

Comment by For real? Tuesday, Jul 10, 12 @ 1:49 pm
===Considering the source of the suit here. ===

Maag is a liberal Metro East Democrat tied closely to the unions. He’s no stalking horse.

Comment by Rich Miller Tuesday, Jul 10, 12 @ 1:52 pm
Good for Justice Maag! I wish the AG would decide this law isn’t worth defending any more than the marriage law she won’t defend.

Comment by reformer Tuesday, Jul 10, 12 @ 1:53 pm
Stalking horse is quite plausible.

Comment by just asking Tuesday, Jul 10, 12 @ 1:55 pm
I think it will boil down to whether it is an earned benefit by virture of the x years of service requirement or it is just a gift. If we were talking about many years ago when there was no service requirement, it would probably be found unprotected. I’m guessing that the service requirement will land it in the protected category.

Comment by RNUG Tuesday, Jul 10, 12 @ 2:05 pm
Now we get to see which part of the Illinois Constitution this belongs to: the part that is unenforceable, the part we choose to enforce, or the part we choose not to enforce.

Can’t wait to see how it turns out!

Comment by Leroy Tuesday, Jul 10, 12 @ 2:10 pm
hope he gets a stay until it is decided. the state says it changed ist mind on paying for it. can i then change my mind and return to work? my decision to retire definitely included the health care benefit.

Comment by wizard Tuesday, Jul 10, 12 @ 2:18 pm
@ reformer = I wish the AG would decide this law isn’t worth defending any more than the marriage law she won’t defend.=
I hope she won’t defend this, but I’m not optimistic given AG’s history of aggressively supporting and defending wrongdoing against public employees.

Comment by Crime Fighter Tuesday, Jul 10, 12 @ 2:22 pm
If the suit was filed in Madison County which is known for deciding large awards for plaintiffs I believe that the retirees will prevail. Seniors vote!

Comment by Teamster Tuesday, Jul 10, 12 @ 2:44 pm
Depressing factoid of the day - legislators (with part-time legislative duties) receive lifetime entitlement to free health insurance sixteen years before (full-time) state workers.

To the electeds go the spoils.

Comment by dwb123 Tuesday, Jul 10, 12 @ 2:48 pm
Yup. I remember when Ol’ Gordon Maag was running for the State Supreme Court. He said he loved Illinois and hated frivolous and class action lawsuits.

If you remember, after his loss, he immediately, relocated to another state, but not before he filed a $110 million suit against various organizations who opposed his election. Despite his countless (and frivolous) appeals, the suit was thrown out time and time again.

And now Mr. “I hate Class Action Suits” is back again…..with a class action claim.

The man appears to be devoid of any core beliefs. Shame on all the Democrats that supported this empty suit!

Comment by Downstate Tuesday, Jul 10, 12 @ 2:53 pm
I am in agreement with RNUG, and by the fact that it was codified in law…then changed after the fact for all whom had reached the 20 year service requirement regardless if still employed or retired. I’ve said before, remove those who’ve reached 20 years retired or not and it will stand.

Comment by Captain Illini Tuesday, Jul 10, 12 @ 3:10 pm
I have to go along with RNUG @2:05

I will be surprised if the courts do not rule that whatever benefits were in place at the time of retirement must be provided. I think the state will be able to change things going forward but not take away what is already earned.

Some time back a couple of Laborers retired and then went back to work as Supervisors,a position not covered under their contract at the time nor prohibited by the terms of the pension. Later the Laborers Union changed the terms of the pension to exclude that type of move and tried to stop the pensions of the two in question. The ruling came down in favor of the two workers as they retired before the change. Yes the state issue is not the same but I think it will fall the same way.

Comment by Bemused Tuesday, Jul 10, 12 @ 3:23 pm
Now that Ty Fahner is done helping Bank of America escape criminal prosecution (for now) by helping to negotiate its $12 billion payout for mortgage fraud and illegal foreclosures, maybe he can file an amicus brief on how pensions are robbing the people.

As opposed to Bank of America. I guess.

Comment by wordslinger Tuesday, Jul 10, 12 @ 3:28 pm
{Now that Ty Fahner is done helping Bank of America escape criminal prosecution (for now)}

The upcoming LIBOR manipulation litigation may be just enough to finally carry Ty over the goal line and into the retirement end zone (quite comfortably).

Comment by Quinn T. Sential Tuesday, Jul 10, 12 @ 3:50 pm
If he wins a class action suit, could anyone provide information regarding the legal fees he would receive?

Comment by Cal Skinner Tuesday, Jul 10, 12 @ 3:51 pm
Boy, first they stole $100,000 worth of his guns and now he is expected to pay part of his health insurance premiums.

http://www.sj-r.com/breaking/x1214496550/Ex-judge-angered-by-series-of-burglaries-of-farm

Comment by Anonymous Tuesday, Jul 10, 12 @ 3:58 pm
And it begins… As I recall saying, “See you in court.”

Comment by PublicServant Tuesday, Jul 10, 12 @ 4:08 pm
I think everyone might be missing the bigger issue here. If this were to be ruled unconstitutional that would pretty much seal the fate of any changes to employee pensions for those in the system.

Comment by Demoralized Tuesday, Jul 10, 12 @ 4:17 pm
You can’t say the guy doesn’t have a legitimate law suit here. Just a reminder to the retired judge: what if Illinois can’t pay his pension eventually? Is he going to go to court and force a judge to raise taxes? Although, where in the Illinois constitution does it allow judges to raise taxes?

Comment by Steve Bartin Tuesday, Jul 10, 12 @ 4:39 pm
I’m glad the courts are finally going to have a chance to give the legislature some guidance, one way or the other. Seems like the General Assembly has been paralyzed given the legal implications, especially with regard to pensions. The fine attorneys at Sidley and Austin have an opinion that some specific pension reforms will pass Constitutional muster. That’s fine and good for them but I’d prefer a majority of Supreme Court justices to tell us exactly what the limits are before we act.

At least this suit should advance the ball a bit.

Comment by 47th Ward Tuesday, Jul 10, 12 @ 5:17 pm
Isnt this the Judge that is responsible for the various plaintiffs wins in the Illinois personal injury system? Of course it doesnt matter that companies will not invest here because of the workmans compensation issues but thats no big deal
Everyone in Illinois can get a job with the government

Comment by Sueann Tuesday, Jul 10, 12 @ 5:40 pm
The rule of law is clear. The Pension Clause not only makes a public
employee’s participation in a pension system an enforceable contractual relationship, but also
constitutionally protects the pension benefit rights contained in the Pension Code when an employee joins
a pension system, including employee contribution rates. The Clause also safeguards pension benefit
enhancements that are later added during employment. Further, the Clause bars the General Assembly
from adversely changing the benefit rights of current employees via unilateral action. And, the Clause
ensures that pensions will be paid even if a pension system defaults or is on the verge of default. The
Clause’s plain language, the framers’ original intent, and voters’ understanding of the provision, as well
as court decisions interpreting the Clause, show these conclusions to be correct and Sidley’s analysis
erroneous.

From AN ANALYSIS OF ARTICLE XIII, SECTION 5 OF THE ILLINOIS CONSTITUTION
By Eric M. Madiar

http://www.ilretirementsecurity.org/admin/reports/files/Pension-Clause-Article-Final.pdf

Comment by Vitaman Tuesday, Jul 10, 12 @ 5:42 pm
–Of course it doesnt matter that companies will not invest here because of the workmans compensation issues but thats no big deal
Everyone in Illinois can get a job with the government–

Gee, Sueann, did the judge do all that?

Doesn’t really show up in any stat out there, though.

A couple of minutes at the Bureau of Labor statistics show 6.6 million people in the Illinois civilian labor force with 831,000 working at all levels of “government.”

Plus, we know Illinois state government has the lowest number of state employees per capita in the union.

And it seems there’s been some investment going on, what with fourth most Fortune 500 HQs and fifth largest GDP among the 50 states.

Maybe you have the inside dope. Please share.

Comment by wordslinger Tuesday, Jul 10, 12 @ 6:17 pm
Hey Word,
No fair using real facts.

Comment by Bill Tuesday, Jul 10, 12 @ 6:27 pm
Also from Vitaman’s cited article:

“each employee must still retain the right to withhold his or her consent and continue performing under the unrevised Code provisions”

Taken to its logical conclusion, every state employee *ever* (including legislators) would have a basis for “continuing to perform” under the pension plan in place when they were hired and receive a pension as if they worked for the state for their whole career, rather than (say) 3 years.

Comment by Chris Tuesday, Jul 10, 12 @ 6:31 pm
When I commented earlier, I assumed that people knew the background on the 20 year (SERS) requirement.

To summarize the details, in the early 70’s retiree health insurance was originally won by the union in a contract and set at 8 years, same as federal rules for pension vesting at the time. Then, a few years later, the 8 years was codified as a statute.

Later, because of private sector age 50 some year olds going to work for the State to get health insurance in only 8 years, the statute was changed to vest health insurance access at 8 years but require a payment on a pro-rated per year basis unless you had 20 years, in which case it was premium free. When the 8 -> 20 change was made, it ONLY affected people who had not yet retired; they did not retroactively require retirees with less than 20 years to start paying. That action set the precedent on health insurance; it is why I think the retirees have a case.

Other people will cite when the State started charging for dental insurance and that the State has won every challenge. The difference is the dental insurance was never codified, there was no service requirement other than State employment, and the amount charged was the same for both employee and retiree. Not exactly the same case. You can say I’m splitting hairs, but that’s what the law does …

As I said earlier, I think case will be decided in favor of the retirees … but it will probably be decided initially on the basis of contract law, not the pension clause.

Comment by RNUG Tuesday, Jul 10, 12 @ 6:33 pm
Demoralized A 4:17,

On most State employee benefit issues, for the most that’s already been decided in the courts in favor of the retiree and rules in place at the time. Most the cases are cited in the Madiar report (link above by Vitaman). Some people argue you can freeze things where they are for existing employees, but retirees have almoist always won in court in IL.

The one big item that has never been settled is the retiree health insurance … so now we get to find out for sure about that.

Comment by RNUG Tuesday, Jul 10, 12 @ 6:53 pm
==Although, where in the Illinois constitution does it allow judges to raise taxes? ==

There are a lot of state expenditures that can be cut if necessary to pay the state’s previously-contracted obligations. The General Assembly will be forced to decide whether to cut those items or raise taxes when the courts hold that it can’t get out of paying pensions and health benefits.

And, in Kansas City about 25 years ago, the federal courts did order local tax increases.

Comment by Anonymice Tuesday, Jul 10, 12 @ 8:47 pm
Let me figure this out? The speaker of the House Michael Madigan gets this passed. His Daughter Lisa Madigan, Attorney General represents the state against the Retirees. Governor Quinn has ask one of the largest contributors of the Democratic party, AFSCME to illegally negotiate for the retirees. So unless the Supreme Court rules its unconstitutional, Its a done deal. But I guess its not over in the courts and retirees still have the right to sue, campaign and Vote.

Comment by Bob Tuesday, Jul 10, 12 @ 9:17 pm
Yes Bob, you you summed it up fairly well. Gotta love Illinois polotics….

Comment by Holdingontomywallet Tuesday, Jul 10, 12 @ 10:12 pm
Oops, “politics”

Comment by Holdingontomywallet Tuesday, Jul 10, 12 @ 10:16 pm
The constitutional language will be applied to contractual & pension law to determine if insurance was a “welfare” benefit or “pension” benefit. The state will argue it was a “welfare” benefit arguing the state as a sovereign entity “retains its rights” while the plantiffs will argue it is clearly a retiree benefit because the state used it to attract workers and included it in retirement packages therefore it is protected by the constitution.

Comment by Anonymous Tuesday, Jul 10, 12 @ 10:17 pm
–And, in Kansas City about 25 years ago, the federal courts did order local tax increases.–

This can be where things get tricky. Neither the federal nor state constitutions are all-sseing documents that can anticipate every situation, action and reaction, like Marlon Brando left for Christopher Reeve at the Fortress of Solitude in Superman II.

At some point, reasonable, present-day grownups have to work it out amongst themselves to avoid a stupid crisis.

Courts can make orders and the executive is supposed to enforce them. But what if the executive does not? What if a legislature doesn’t appropriate? Can an executive spend what is not appropriated? Can a court force a legislature to appropriate?

In the “Brown” decisions, the Supremes ordered the Little Rock schools to desegregate with all deliberate speed. Gov. Faubus and the Arkansas legislature ignored them (let’s here it for States’ Rights!).

Faubus called up his militia to prevent black students from going to school while they stood still as violence was visited upon the black community of Little Rock.

Pres. Eisenhower sent in the 101st Airborne and nationalized the Arkansas militia to force compliance with the Supremes order.

That Ike, what a freedom-hating commie. Must have been all that time he spent in France.

Comment by wordslinger Tuesday, Jul 10, 12 @ 10:19 pm
Anybody know anything about a second class action suit that was supposedly filed sometime today?

Comment by RNUG Tuesday, Jul 10, 12 @ 10:26 pm
Found it: Filed in Sangamon County by 5 former SERS employees. COuple of interesting arguments in it, plus the inclusion of 2002 ERI as a sub-group with specific promises

http://www.sj-r.com/thedome/x661514021/Retired-merit-comp-employees-challenge-health-premiums-in-court

Comment by RNUG Tuesday, Jul 10, 12 @ 10:34 pm
It asks to includes only Merit Comp retirees in the class action group …

Comment by RNUG Tuesday, Jul 10, 12 @ 10:37 pm
The legal discussion this evening has been fascinating and illuminating. Thx especially to Vitaman 5:42 pm, RNUG 6:33 pm and 6:53 and to wordslinger (always) for elevating the topic.

Comment by Emily Booth Tuesday, Jul 10, 12 @ 10:46 pm
“…the Dresden Nuclear Power Plant, which provides a substantial portion of the electricity supply for the Chicago metropolitan area.”

Actually at 1734 mw total capacity, Dresden is a pretty big plant, but it hardly provides “a substantial portion” of the metro area’s electrical supply by itself. Of course, it is carbon free energy.

Comment by wishbone Tuesday, Jul 10, 12 @ 11:04 pm
Oops, wrong thread.

Comment by wishbone Tuesday, Jul 10, 12 @ 11:05 pm
Anonymice @ 8:47 pm:

Actually, the courts have already said, 3 times, the State has to pay the pensions when due. They don’t have to fund the pension funds at any specific level, but the State does have to pay.

I just realized that the courts said the State had to pay but didn’t even mention a word about the funds being appropriated. Hmmm … Wonder if you could cite that ruling in the current union raise dispute?

Comment by RNUG Tuesday, Jul 10, 12 @ 11:36 pm
Was that benefit in place when the Pension Protection clause was passed in 1970? Benefits added since the clause was passed should not be protected. The whole idea of a pension protection clause is absurd. There is no Social Security or 401K protection clause.

Comment by Mark Wednesday, Jul 11, 12 @ 2:19 am
Newsflash Mark, apples aren’t oranges either.

Comment by PublicServant Wednesday, Jul 11, 12 @ 5:15 am
Mark,

There have been different court decisions that (1) added benefits are protected, (2) rules in place at hiring AND rules in place at retiement apply. You may not like it, but that’s what the courts have said …

Comment by RNUG Wednesday, Jul 11, 12 @ 8:14 am
Anyone ever hear the saying “let sleeping dogs lay”? Now pay my health insurance like you were suppose to and leave us retired former state workers alone !!!!

Comment by sgtstu Wednesday, Jul 11, 12 @ 8:19 am
Ok, here is a question that I have not seen anyone address. If I am not a member of Afscme retiree do they leagally represent me ? I would rather take my chance in court concerning my benefits.

Comment by sgtstu Wednesday, Jul 11, 12 @ 9:03 am
If RNUG’s facts are correct, especially as to statute, then he/she is probably right that the healthcare benefit is constitutionally protected. This would be a very different kettle of fish from the pension systems that serve other public employees - e.g., the one for Cook County employees. The statute in that case very clearly states that while the Trustees may use pension fund assets to pay for the annuitants’ healthcare premiums, and then charge the annuitants the full or partial cost of those premmiums, the “benefits are not and shall not be construed to be pension or retirement benefits for purposes of Section 5 of Article XIII of the Illinois Constitution of 1970. Citation is at 40 ILCS 5/9-239.

Comment by Chicago Publius Wednesday, Jul 11, 12 @ 9:31 am
What’s going to happen to employees and retirees is unfair. However, I can’t see the endgame here is Illinois raising taxes and cutting services so that all promised benefits get paid out. If the constitution is held to promise that, the constitution will be changed. If we wait until 2014, the constitution will be amended in a way that is likely worse than anyone can imagine. It’s admittedly hard to amend the constitution, but there will be lots of money available to weaken Democrats in this state in 2014 and later.

Comment by windshouter Wednesday, Jul 11, 12 @ 9:40 am
Article 1 - The Legislative Branch
Section 10 - Powers Prohibited of States

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Windshouter–The state of Illinois would then have to get the US Constitution changed–States are not allowed to impair their obligations under contracts.

Comment by Vitaman Wednesday, Jul 11, 12 @ 10:10 am
Chicago Publius @ 9:31 am:

I believe I have the facts mostly right; I lived through all of it as a State employee. Part of the reason I remained with the State after my divorce and remarriage in the mid-80’s was the pension and benefits, so I paid attention when changes were made.

I also used to be (evenings & weekends) a part-time researcher / technical analyst and wrote and edited books for an East Coast think tank, putting technical stuff into English for non-geeks; lots of practice researching details.

I’ve spent the last two - three years reading all I can find on the issues of State pension, benefits, etc. including a lot of the court decisions cited in the Madiar report. Various people on this discussion group identified some of the stuff I read, as did media stories.

I’m not a lawyer but I’m being to feel like one after reading all that stuff. And I sure hope the outcome will be based on the precedents and logical conclusions.

Based on simalr cases in other States and one IL case, I still think basic contract law will be the linchpin of any decision and it will then be supported by the Pension Clause.

And ‘he’ is fine … as regulars know, RNUG is short for Retired Non-Union Guy. Most the commentators started replying to me that way, so I just shortened it myself.

Comment by RNUG Wednesday, Jul 11, 12 @ 10:54 am
This pretty much parallels what is in the Madiar report, but regulars might find it interesting … 84 pages …

http://www.jenner.com/system/assets/publications/8522/original/2012_IL_PENSION_HANDBOOK.pdf?1327604145

Comment by RNUG Wednesday, Jul 11, 12 @ 11:50 am