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Yesterday’s other hearing

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Attorneys for some retired state workers argued before the Illinois Supreme Court Wednesday that the retirees should not be required to pay premiums for their state-subsidized health insurance.

However, attorneys for the state continued to maintain that health insurance benefits are separate from pension benefits and thus not protected by the state Constitution. […]

“Do an Internet search for jobs with benefits,” [Edward Kionka, one of two attorneys representing retired state workers] told the court. “Everyone know that means such things as health insurance. The term benefits is much broader than pensions.” […]

Assistant Attorney General Richard Huszagh said nothing in that law established retiree health insurance as a contractual right.

“There is nothing in the group insurance act that satisfies the strict standards to establish a contractual status for those provisions,” he argued. “What the plaintiffs are asking the court to do is give the pension clause a new and expansive interpretation.”

* Here’s some analysis posted yesterday on the Appellate Strategist blog…

This morning, a seemingly skeptical Illinois Supreme Court appeared ready to side with the State in a dispute over 2012 amendments to the State Employee Group Insurance Act. Several Justices peppered the two attorneys splitting argument time for the plaintiffs with sixteen questions during their opening, many of which echoed various points made in the Circuit Court’s opinion tossing the case out of court. In comparison, counsel for the State was treated gently, receiving only five questions in all, four of them from Justice Thomas.

It’s a very detailed and involved report, so go read the whole thing.

* Our commenter RNUG, who has proved to be a heck of a pension issues analyst, disagreed…

Just finished watching to the Kanerva v Weems video and reading the analysis by Kirk Jenkins. I won’t belabor the items point by point but just say I don’t necessarily agree with Jenkins’ analysis but we’ll eventually see how accurate his reading is.

The one thing that really struck me was the arguments used by the State re what is protected by the Pension Clause. The state’s attorney made every one of the arguments a lot of us have been making that the pensions themselves can’t be diminished in any way, shape or form. Whoever ends up suing over SB0001, SB2424 or whatever gets passed can just use all the state’s own arguments to make the point the pensions can’t be diminished.

RNUG (which stands for Retired Non-Union Guy) updated and expanded his thoughts this morning…

1) The [Illinois Supreme Court], which probably doesn’t want to be in the middle of the pension clause arguments, could use this case to send a clear message that the pensions can’t be altered after the fact.

2) The questioning seemed to indicate that the judges had some problems with the points raised by both sides. If I had to guess on the ruling, it might be a split one, returning the case to the circuit court, giving the state the right to minimally alter the health insurance but finding that (at minimum) access to the State’s group health plan at a reasonable cost is, in fact. a contractually and constitutionally protected right … while leaving the details of exactly what and how to be determined by the circuit court.

If the court ruled as outlined in #2, that takes any ‘consideration’ for health insurance access off the table, negating Cullerton’s SB2424 contractual alteration argument. Some expanded comments (as done in previous pension cases) about what is protected could also dispel the notion of any ‘police powers’ argument.

* Watch the hearing for yourself…

Click to view

posted by Rich Miller
Thursday, Sep 19, 13 @ 10:02 am

Comments

I don’t understand how earning insurance following the previous law after 20 years of service is not a contractual obligation…can anybody explain this? Negating an earned benefit after the fact cannot be able to stand.

Comment by Captain Illini Thursday, Sep 19, 13 @ 10:17 am
Each of the plaintiff’s arguments supporting the Pension Clause is a dagger in the Civic Committee’s heart, and a reason to examine different solutions to the pension problem–even more costly ones–like debt reamortization.

Comment by Grandson of Man Thursday, Sep 19, 13 @ 10:19 am
I think it is always ver tricky to try and determine where judges are going based on their questions.

I so enjoy RNUG’s analysis.

I beleive the states argument that there are strong poitical barriers to increasing health care premiums for retirees is very questionable and would in no way compare those political pressures to social security as the state proposed. SS is a benifit that millions of senoirs have ( a large powerful voting block) and presumibly almost all Americans will enjoy some day. Compare that to the relative small number of state retirees and there is no comparison. The state’s attorney was saying in effect, don’t worry about the state dramaticaly increasing premiums or taking away health care because SS is not a contractual right and it is still hear. I beleive that is comparing apples to oranges.

Comment by facts are stubborn things Thursday, Sep 19, 13 @ 10:21 am
I’m sorry, I meant the state’s arguments. The state’s being sued by retirees.

Comment by Grandson of Man Thursday, Sep 19, 13 @ 10:23 am
I believe the state can do whatever it wants with premiums for retiree health insurance, like it or not. It’s separate from pensions. Pensions are the gross amount of whatever check you get (or are going to get upon retirement) every month. Health insurance is a different benefit.

Now, having said that, was it nice or ethical to tell already retired people that their meager pension check now had to go for health insurance that they were told was free? No, it was not.

But not nice plus unethical does not equal illegal. even under contract law.

Comment by mythoughtis Thursday, Sep 19, 13 @ 10:39 am
How ironic that while the points mentioned are debated in the ISC to take away benefits, IDOT says this on their site looking for engineers: “Benefit Package: IDOT CETs qualify for the state of Illinois’ benefit package. All full-time permanent staff are eligible for a wide-range of benefits, including a generously defined benefit retirement plan, defined contributions benefit options, paid life insurance, high-quality health insurance options, paid vacation time, and extras like tuition reimbursement.”

Comment by Liberty First Thursday, Sep 19, 13 @ 10:58 am
I had the pleasure of working with Roger Kanerva for several years. Remember, this is the man who beat back Walmart’s plans to build a mega-store near Springfield’s westside neighborhoods. I have confidence he will get the upper hand on this as well.

Comment by SaxMan Thursday, Sep 19, 13 @ 11:00 am
The Illinois and US Constitutions prevent states from enacting laws which impair contractual obligations. You work for me for 20 years and I will pay your health insurance premium. I accept and work 20 plus years. Offer and acceptance and consideration on both sides. If that’s not a contract I don’t know what is. That is an issue apart from whether or not pension benefits include the premium only, not the deductibles and copays.

Comment by retired and fed up Thursday, Sep 19, 13 @ 11:19 am
The judges are included in this law.

Comment by second street Thursday, Sep 19, 13 @ 11:43 am
that should have been premium when you retire.

Comment by retired and fed up Thursday, Sep 19, 13 @ 11:45 am
I separate this issue into two categories in my mind - those already retired under the previous law and those who have not yet retired. I’m of the opinion that individuals that have not yet retired are in a separate category. I’ve never believe insurance was some guaranteed benefit after I retire. But if you are already retired then as far as I’m concerned (but I’m not a judge) those benefits should be set in stone and should not be able to be changed.

Comment by Demoralized Thursday, Sep 19, 13 @ 11:46 am
I have to agree that if the court upholds the decision, then the State can offset the pension costs by continually raising the healthcare premiums until they are barely less that purchasing healthcare on the open market.

Comment by mid-level Thursday, Sep 19, 13 @ 11:57 am
As an appellate court observer for years, I think one of the barometers for the decision is not the content of the panel’s questions — which certainly will serve to show the areas of concern or clarification for various justices — but the number of questions. While it isn’t a rule by any means, I have not often heard of an argument where a side receives a significant number of questions prevailing over one that receives many fewer questions. I think that the paragraph Rich quoted from Appellate Strategist is telling in that respect. The fact that the full panel was active questioning the plaintiffs attorneys and only one justice questioned the State’s counsel leads me to think that the plaintiffs are in trouble.

Comment by Archiesmom Thursday, Sep 19, 13 @ 12:20 pm
Much to the chagrin of my wife, I listened to the hearing. While not an expert observer of the court, my observation was more in line with RNUG’s than Kirk Jenkins. Yes, there were more questions directed to the appellant’s attorneys, they appeared to be more clarifying than confrontational. I thought it was more telling when the Chief Justice asked the State’s attorney whether the insurance can be completely eliminated. To which, the attorney agreed that it could be.

Again, I don’t have the expertise of Jenkins or perhaps Archiesmom, but I can’t help but think that these judges are also dependent upon health insurance as well and that the specific nature of the questions is more telling than the number directed at one particular side.

Comment by Norseman Thursday, Sep 19, 13 @ 12:32 pm
When I was hired at SIUC in 1990, I was upset that I had to participate in Medicare, and pay the 1.45% payroll tax, when most of my colleagues (hired in 1986 or before) did not. Boy am I relieved now that I paid into Medicare all along and will at least have that when I turn 65!

Comment by Andrew Szakmary Thursday, Sep 19, 13 @ 12:36 pm
Not only does insurnace coverage for retirees appear to be on a fast moving mud slide into a stink hole, it does not sound good for pensions either! Do the Supremes normally side with the State?

Comment by Mama Thursday, Sep 19, 13 @ 1:00 pm
I haven’t watched an Illinois Supreme Court argument in a while. They are still a very “cold” court. The number of questions per minute is incredibly low, compared to many (most?) appellate courts. Listen to an argument from the U.S. Supreme Court, or the Seventh Circuit, or many other courts and you’ll never hear lawyers talk for that long uninterrupted (unless the judges have given up and/or view the case as boring, minor, and one-sided).

Even some of the questions that were asked appear to have been read (and were probably prepared by the clerks).

As a group, the Justices were, for the most part, not engaged.

We’ve discussed here before that the Illinois Supreme Court can be a political court, and that its members have rarely been top legal minds and/or star judges. This argument did little to change my mind.

Comment by Anonymous Thursday, Sep 19, 13 @ 1:05 pm
Legal precedent is very important in a civilized society, but so is economic reality. And the reality is that there is not enough money for the state of Illinois to meet all of its obligations and it is getting worse. I suspect financial reality will affect this decision as much as legal precedent, constitutional interpretation, etc. I know this sounds crass and unfair.

Comment by skeptical spectacle Thursday, Sep 19, 13 @ 1:08 pm
The number and types of questions that are asked often mean little.

What is important is knowing the makeup of the Court. What is their personal and ideological view on this matter? Are they beholden to any one side or think they might be in the future?

Judges find excuses in the ‘Law’ to back up what they want? Otherwise there would not be 5-4 U.S. Supreme Court decisions or 4-3 ISC decisions. We are all susceptible to rationalizing our own views
and judges are no different.

Having said all this I know nothing about the individual members of the Court. If I knew that I bet I could predict the outcome of this case.

Does anyone really have any knowledge about these judges?

Comment by Federalist Thursday, Sep 19, 13 @ 1:10 pm
Not only did I have to start paying for my insurance but all co-pays and deductibles went up. I received a 3 percent raise in Jan. and got a 3 percent cut in July.

Comment by Nieva Thursday, Sep 19, 13 @ 2:35 pm
Is there any chance that the ISC will say the benefit is the right to buy into the State health insurance? That would not impair the benefit, the gross payment, but could seriously impact the net payment.

Comment by Bourbonrich Thursday, Sep 19, 13 @ 3:10 pm
If the retirees loose here and to me it’s basic contract law as stated by retired and fed up, can they take this to fed court?

Comment by Pacman Thursday, Sep 19, 13 @ 3:23 pm
@Pacman:

I’m not sure a federal court would want to get involved in a state matter like this. I might be wrong.

Comment by Demoralized Thursday, Sep 19, 13 @ 3:49 pm
Retired and fed up

You stated the exact issue. It’s called complete or substantial performance in response to an unilateral offer.
Contract Law 101. If I say to you, I’ll give you $1000 to paint my house, and then after you complete 90% of the job, I say to you well I’m only going to give you $500, you could stop working and sue for the 1000.

Comment by Martin Thursday, Sep 19, 13 @ 3:52 pm
Rich,

Thanks for the citation. Been busy; just saw it now.

The other retiree health insurance issue is still hanging out there … the switch of Medicare eligible retirees to something other than the current health coverage. The eventual decision from the hearing yesterday will mostly likely have an effect on that also.

While there legitimately isn’t much informaiton available about that upcoming choice (since the bid evaluation / awards haven’t been done yet), there was a tidbit or two in the latest RSEA (Retired State Employees Association) newsletter. RSEA is usually accurate on their facts. Unfortunately, the RSEA newsletter is not currently available online.

I’m going to quote several paragraphs from the article by Bruce Strom:

“The state’s healthcare program will include a Medicare Advantage program for retirees/survivors whoa re eligible for regular Medicare. The Medicare Advantage program is expected to incudle the choice of either nationwide Prefreed Provider Option (PPO) or Health Maintenance Option (HMO). It may also include a Medicare Supplement program.

CMS’ goal is the have contracts in place by October 1 for the insurance providers and progams that will be available to choose from. Until CMS makes its decisions and announces what the chocies are, it is not possible to say what choices will be available.

If a retiree/survivor and their dependents are eligible for regular Medicare, then they must change their insurance coverage by making a choice from one of the healthcare programs described below. If a retiree/survivor or any of their covered dependents are not eligible for regular Medicare, then they will not be required to change their current insurance coverage.”

Comment by RNUG Thursday, Sep 19, 13 @ 4:43 pm
All typos in the quotation above are the fault of the typist. I really wish spell check and edit (for at least a few minutes) was an option …

Comment by RNUG Thursday, Sep 19, 13 @ 5:00 pm
=The number of questions per minute is incredibly low, compared to many (most?) appellate courts=

And a briliant legal mind as well. Seriously? “Per minute?” You do know that on appeal, especially, there’s usually A legal question, two…maybe three?

Comment by Anonymous Thursday, Sep 19, 13 @ 10:16 pm
And that, for example, “Judge Judy’s” court is not a real court?

Comment by Anonymous Thursday, Sep 19, 13 @ 10:20 pm
Demoralized @ 11:46 am:

Actually there are a lot of different classes, which may require different rulings, all more or less lumped together from the original 5 suits to make this consolidated case … which is what makes it so hard to guess where it is going.

I’m even guilty of glossing over the differences of who received what based on when they were hired or retired. Addressing all the nuances would make my already too lengthy comments ten times longer.

Going back enough years, in terms of slightly different health insurance rules or pension rules, there is the SERS ‘non-coordinated’ retiree (State only, no SS, typically law enforcement but a couple of other categories also including some pre-1970 employees), the ‘8 yr health insurance’ SERS retiree, the (more or less today) normal ‘20 yr health insurance’ SERS retiree, and the special cases of the SERS ‘2002 ERI’ retiree and the bit later SERS ‘2004 early retirement’ retiree, both of whom may have relied on the health insurance commitment in making an irreversible decision (remember, the 2002 people basically can’t return to State employment as part of the deal). Finally, for those SURS retirees who also fall under the same rules as SERS, add all the above SERS categories again using SURS.

If it all comes down to what date someone was hired, just for fun, I can throw in a couple more categories.

What about the Vinson Bill four year term appointee who has a gap in service between appointments? Some of them engineered a deliberate gap so they could pull their retirement money out of SERS and that was perfectly legal at the time. Then they were reappointed and that was their ‘new’ date of hire according to Personnel.

What about a Vinson Bill appointee who has to resign his current position in order to be re-appointed to a different position? Speaking from experience, in Personnel’s perspective, that was a real resignation letter with no recourse if I was not appointed to a new position. Because I was immediately reappointed the next day, Personnel considered it continuous service (no gap). But was it really, or was it actually two consecutive periods of service in two different jobs with different hire dates? Later an executive order removed my position (and myself by name) from being under the Vinson Bill appointment rules, which again changed my terms of employment. Did that count as a new hire under new rules, or was it just a reclassification? I suspect a lot of the non-union people could raise one or more of these issues.

When you look at the above classes, you start to realize that, other than saying all State employees are entitled under the 20 yr rule or nobody gets anything, there may not be a ‘one size fits all’ ruling. I think some of the questions of the plaintiffs were aimed at clarifying some of those differences.

Comment by RNUG Thursday, Sep 19, 13 @ 11:03 pm
Yes Anonymous 10pmish, I do. I’ve argued in the 7th Circuit and been to the US Supreme Court many times. (You can listen to real Supreme Court online yourself: http://www.supremecourt.gov/oral_arguments/argument_audio.aspxI’ve ) I’ve seen arguments in many appellate courts.

A hot court that’s read the briefs and engaged in the issues will find many different ways to ask the key questions and spin out the implications of partial or complete rulings for either side. That way, the lawyers can help participate in thinking through the case, and not just regurgitate their briefs at the judges.

This case didn’t just have one issue. What is the meaning of “benefit?” What is the meaning of “membership?” How did the legistlative history bear on these questions? What implications would this ruling have for other cases? How has the Impairment of Contract Clause been construed? Are people who are still working in a different category than retired employees? What about retired employees who haven’t yet started drawing their pensions?

We’ve explored many of these issues in detail on this board. The Supreme Court referred to some of them.

In summary, there are really good appellate courts out there for comparison. The Illinois Supreme Court ain’t such a hot court.

Comment by Anonymous Friday, Sep 20, 13 @ 8:32 am