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* From the Madison-St. Clair Record…
The Illinois Supreme Court on Thursday is expected to decide whether a law requiring state retirees to start paying premiums for their health insurance is constitutional.
The anticipated ruling in Roger Kanerva et al., etc. v. Malcolm Weems, etc., et al. will not only resolve the constitutional question for thousands of retirees affected by the new law, but will likely provide court watchers and state leaders a glance into how the justices may react to a pension dispute expected to wind up before them in the near future.
At issue in Kanerva is Public Act 97-695, a law Gov. Patrick J. Quinn signed in 2012.
The law, which took effect July 1, 2013, requires retired Illinois employees, judges and university workers to pay premiums for their health insurance, something they previously didn’t have to do after serving the state for four to 20 years depending on their positions.
The Supreme Court in 2012 consolidated four suits brought over the law in the Sangamon County Circuit Court. The suits were filed in Madison, Sangamon and Randolph counties by several plaintiffs, including former Fifth District Appellate Court Justice Gordon Maag and members of the state retirement systems.
The opinion is expected to be released shortly after 9 o’clock tomorrow morning, according to a document posted on the Supreme Court’s website.
* More background on the case…
The putative class representatives bring various challenges to the 2012 amendments. All argue that the amendments violate the Pension Protection Clause of the Illinois constitution, which provides that “Membership in any pension or retirement system of the State, and unit of local government or school district, or any agency thereof, shall be an enforceable contract relationship, the benefits of which shall not be diminished or impaired.” Illinois Constitution, Article XIII, Section 5. Two plaintiffs argue that the law violates Article I, Section 16 of the state Constitution: “No . . . law impairing the obligations of contracts . . . shall be passed.” One alleges that the statute is an unconstitutional delegation of legislative authority to the Director of CMS. One seeks an award of money damages, and three of the four seek to enjoin enforcement of the 2012 amendments.
The Sangamon County Circuit Court allowed defendants’ motions to dismiss all four complaints. With respect to the Pension Protection Clause, the court held that since health benefits are not actuarially predictable (in contrast to pension benefits, which are akin to an annuity), they are not analogous to pension benefits, and not covered by the clause. The Court rejected the challenges under the Contracts Impairment Clause, holding that since it was foreseeable that the terms and conditions of the group insurance plans would change yearly, no enforceable contractual rights were vested in retirees.
The court rejected the separation of powers challenge, holding that the statute had a clear legislative purpose, identified the persons covered, provided the means for the agency to meet the purpose of the statute, and appropriately limited the agency’s discretion. Finally, the Court dismissed the claims of one class plaintiff who sought damages, holding that such claims must be brought first in the state Court of Claims.
Thoughts?
posted by Rich Miller
Wednesday, Jul 2, 14 @ 9:36 am
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Apart from the power to turn legions of union members and other bambis into conspiracy theorists like myself, the ruling has big implications for the governors race, especially Raunner. If pension reform isn’t constitutional I don’t think the media, or voters, will give him quite the pass on solving the budget msss without keeping the “temporary” income tax hike - you can’t get *that* tough with unions for their future contracts to make that up without either decimating the safety net or cutting middle class entitlements.
Comment by lake county democrat Wednesday, Jul 2, 14 @ 9:47 am
In the contract, the state agreed to pick up an increasing percentage of the health insurance premium up to a 100% pickup after 20 years of service. People retired, relying on that contract, and they satisfied that contract by providing that service. The rejection of the contract impairment is where the circuit court erred. When the state entered into the contract, they too knew that “terms and conditions of the group insurance plans would change yearly”. Knowing that they entered into a contract that would cover premiums whatever they might become in the future. I’m confident that it will be overturned based in part, if not solely on the contractual impairment argument.
Comment by PublicServant Wednesday, Jul 2, 14 @ 9:47 am
I seem to recall that when the last “early-out” pension deal was offered to state employees, the acceptance process involved signing a document that included the benefit of “free” (no-cost to the retiree) healthcare insurance premium as part of the deal. That would surely meet contract law definition of a contract, would it not? Perhaps some of the older, wiser commenters on here would care to chime in?
Comment by Gantt Chart Wednesday, Jul 2, 14 @ 9:52 am
The first and most obvious observation - it’s been pending for 288 days as of tomorrow, which is a VERY long time in comparison to the Court’s recent history. This suggests that a dissent is quite likely. Based solely on the questioning at oral argument, one would expect the Court to affirm (side with the State, holding that the amendments don’t violate the Pension Clause). There is a pathway to a narrow decision here. The Sangamon County Circuit Court held that health benefits aren’t actuarially predictable, so they’re not analogous to pension benefits - meaning they don’t fall under the Pension Clause at all. If the Court were to agree, it could affirm without telling us all that much about its views on the broader pension issues.
Comment by kcjenkins Wednesday, Jul 2, 14 @ 9:54 am
It’s anyone’s guess but… the Court may suggest that pensions can’t be diminished but the health insurance can AFTER whatever the length of the contract expires. A contract is a contract. It’s the foundation of property rights and a free society.
Comment by Steve Wednesday, Jul 2, 14 @ 10:00 am
==The Sangamon County Circuit Court held that health benefits aren’t actuarially predictable, so they’re not analogous to pension benefits - meaning they don’t fall under the Pension Clause at all.==
I sincerely hope the SC doesn’t buy into that argument, since the so-called “pension” clause doesn’t say it protects only “pension” benefits. If you are going to parse a law, you have to use the actual words of the law. But we will see what the people in the black robes think about all this soon.
Comment by Anon. Wednesday, Jul 2, 14 @ 10:02 am
Also, there is a larger issue here which may wind up in federal court. If government workers can convince a federal judge that a contract concerning their health insurance was breached… they might prevail. After all, at a certain level this is possibly the domain of a federal court dealing with a contract on a big scale. Before Pat Quinn was Governor he said something like this on Milt Rosenberg’s show on Extension 720.
Comment by Steve Wednesday, Jul 2, 14 @ 10:11 am
==The first and most obvious observation - it’s been pending for 288 days as of tomorrow, which is a VERY long time in comparison to the Court’s recent history.==
Historically they’ve taken much longer on the big issues. Tort reform sat there for 2+ years.
Comment by anon Wednesday, Jul 2, 14 @ 10:12 am
There is nothing stopping the state from changing the percentages (now 2% for Medicare retirees and 4% for non Medicare retirees ) to whatever the deem fit on the next contract (10% of gross pension? More?). For that reason, tomorrow’s decision will determine whether many if us can stay retired, or if we will be forced to look for work to pay for our health insurance ( not talking about six figure pensioners - talking about the vast majority of us who make far less on our pensions and planned our financial future without the expectation of paying for our insurance premiums . ) I know many who post on here think it’s great that the terms of our insurance have changed( stick it to those government workers!), but the repercussions to so many families of this decision are huge.
Comment by Roadiepig Wednesday, Jul 2, 14 @ 10:27 am
Obviously a long argued opinion. Hopefully, they’ll rule in favor of the employees.
Comment by Norseman Wednesday, Jul 2, 14 @ 10:30 am
“The Sangamon County Circuit Court held that health benefits aren’t actuarially predictable, so they’re not analogous to pension benefits…” —-
One can argue that the benefit under the contract is one of “being covered” rather than any particular payout calculation; the real cost is the cost of the coverage - not the payouts to providers. One could probably also argue that the contract covers some minimum baseline of covered services and associated co-pays etc, not to be diminished.
Comment by Mister M Wednesday, Jul 2, 14 @ 10:33 am
Further context - Kanerva has been pending 288 days as of tomorrow. The Court’s average time under submission in non-unanimous civil cases has been between 184 and 208 since 2008. During the same period, unanimous decisions have averaged between 103 and 130 days under submission.
Comment by kcjenkins Wednesday, Jul 2, 14 @ 10:33 am
Roadiepig - I would guess that most Illinois residents would say that if you’re too young to be on Medicare, you’re too young to be not working and expecting others to pay for your health insurance.
Comment by Anonymous Wednesday, Jul 2, 14 @ 11:02 am
What specific contract did retirees have and when did it expire? And P.S. I never gave permission for AFSCME to enter into any contract negotiations for me.
The reality is that when I was hired in the 1970’s it was legislative mandated benefit and that did not change when I retired in 2006.
Who knows how the ISC will rule.
Obviously, those already retied who have met previous regulations should not be affected.
The rub could come for those not retired or do not have the 20 years that was required. The ISC could say “what you have up until the changes were made you still have but nothing afterwards.” E. G. a person with 10 years of employment before the new law was changed would still have to pay 50% of the premium.
Again, just guessing.
But it will be a real test of Madigan’s power. After all, four of the justices are Democrats and Madigan worked hard to support their election. Combined with any Republicans on the court he may have a majority for sweeping or at least major changes.
Comment by Federalist Wednesday, Jul 2, 14 @ 11:05 am
- Anonymous - Wednesday, Jul 2, 14 @ 11:02 am:
Roadiepig - “I would guess that most Illinois residents would say that if you’re too young to be on Medicare, you’re too young to be not working and expecting others to pay for your health insurance.”
I hope you realize that there are many older retirees who are not and never will be under Medicare. They were hired before April 1, 1986 and thus not Medicare eligible. State insurance is all they have.
If you do not know this you should. Hopefully the ISC is aware of this.
Comment by Federalist Wednesday, Jul 2, 14 @ 11:09 am
Wasn’t precedent set when the requirement was raised to 20 years of service? Previous retirees with less than 20 years were not assessed premiums when that change took effect. No legislation was signed before July 2012, & the effective date was set for July 1, 2013. Imposing premiums after the fact appears to undercut the working agreement between employer & employee. The agreement was lifetime health insurance for 20 years service. It did not include the proviso “unless we change our minds”.
Comment by s k hicks Wednesday, Jul 2, 14 @ 11:22 am
- Anonymous - Wednesday, Jul 2, 14 @ 11:02 am:
Roadiepig - I would guess that most Illinois residents would say that if you’re too young to be on Medicare, you’re too young to be not working and expecting others to pay for your health insurance.
I guess I should expect a comment like this-anonymous and all- but if you don’t understand the complexities of retirement ages pertaining to dangerous/physical labor jobs (prison guards/highway maintainers/state police) I guess one should expect generalizations like this. I for one am still in the workforce ( in a job that doesn’t include health care benefits). 30+ years of dodging people talking on cell phones and losing several coworkers in my local and district to accidents takes a physical and mental toll on a person. I assume you are one who also think prison guards and police officers should work until they are physically are unable to do the job or die trying ? I left with a lowered pension rather than becoming another statistic, and when I signed my papers at SERS my retirement benefits included paid insurance premiums for myself (I pay the employee full amount for my wife). Those were the terms of my employment and the state deciding “it’s too hard to do what we promised” (hopefully) is not allowed to continue.
Comment by Roadiepig Wednesday, Jul 2, 14 @ 11:23 am
“The Sangamon County Circuit Court held that health benefits aren’t actuarially predictable, so they’re not analogous to pension benefits”
How are they not actuarially predictable? Sure, you have to make assumptions but you do the same with pension benefits when you decide how long someone might live, how long their survivor might live, etc. But a really good indicator is recent historical cost.
Comment by thechampaignlife Wednesday, Jul 2, 14 @ 11:27 am
- Anonymous - Wednesday, Jul 2, 14 @ 11:02 am:
Roadiepig - I would guess that most Illinois residents would say that if you’re too young to be on Medicare, you’re too young to be not working and expecting others to pay for your health insurance.
Mandatory retirement for State Police is 60. My arguement was how can you charge me more for health insurance because I am not old enough for Medicare but you terminated me at 60 years of age?
If you are going to charge more for non-Medicare age retirees, then give us the option to work until we are 65.
Comment by Tsavo Wednesday, Jul 2, 14 @ 11:30 am
“there is a larger issue here which may wind up in federal court”
What’s the federal question?
Comment by Chris Wednesday, Jul 2, 14 @ 12:33 pm
@ Roadiepig “A prison guard’s life expectancy averages just 59 years.”
Read more : http://www.ehow.com/info_7737123_effects-working-prison-guard.html#moreread
Comment by Sgtstu Wednesday, Jul 2, 14 @ 12:46 pm
The opinion may be a bit sliced and diced with some nuance. I hope they rule that if retired by the July 2013 date — that the law was passed — you get to keep what you were promised…at the very least. The sate argued that if this was pensions then it would be a different story…they made a good case on the state employees behalf.
Comment by facts are stubborn things Wednesday, Jul 2, 14 @ 1:06 pm
The timing seems interesting since the premium payment is scheduled to double this month.
Comment by Anonymous Wednesday, Jul 2, 14 @ 1:28 pm
The federal question involves contract issues.
Comment by Retired and fed up Wednesday, Jul 2, 14 @ 1:29 pm
- facts are stubborn things - Wednesday, Jul 2, 14 @ 1:06 pm:
I’m hopeful that they at least recognize the promise of premium-free health insurance for all of those who actually earned this by putting in 20+ years of service prior to the effective date of the law.
Comment by kimocat Wednesday, Jul 2, 14 @ 1:37 pm
Sgtstu - Wednesday, Jul 2, 14 @ 12:46 pm:
I’m on your side of this issue. “Anonymous” was the one who made the comment about being under Medicare age and not working and expecting others to pay my insurance. I worked under contracts that specified 20 years and insurance premiums would be paid for life once I was eligible and retired (rule of 75 in my case). I fulfilled my end of the contract. We can only hope that the Supremes require the state to do the same…
Comment by Roadiepig Wednesday, Jul 2, 14 @ 2:08 pm
@- kimocat - Wednesday, Jul 2, 14 @ 1:37 pm:
I agree with you. The only reason I stated those retired, is that those retired are a special class who have made an irrevocable decision for the most part. Seemed to me the absolute line in the sand so to speak. I believe the SC should rule that everyone keeps what they have earned up to the time the law was changed. If you had 10 years in then 50% of your premium would be free and the other 50% subject to the 2% or 4% of pension requirement…for example.
Comment by facts are stubborn things Wednesday, Jul 2, 14 @ 2:09 pm
When I started to work in 1987 insurance was free after 8 years. When it was changed to 20 years we all were unhappy but had to live with it. Now I have been retired 4 years and my pension is being cut to pay for insurance that was supposed to be a life benefit. 4% as of now but who knows what they will try later. This doesn’t count all the other increases in we have had on co-pay and higher costs on drugs. I would have worked till age 65 if this had been the rule 4 years ago. You don’t have a choice on this issue either unless you spouse has a plan that you can sign up on.
Comment by Nieva Wednesday, Jul 2, 14 @ 2:23 pm
As a community college member of SURS, I’ve been paying .5% of my salary to pay for health insurance upon retirement. If the court upholds the law what happens to the money I’ve contributed?
Comment by G'Kar Wednesday, Jul 2, 14 @ 2:32 pm
With regard to the money SURS members paid if it is refunded you will have to pay federal income tax and I believe the penalty if you are under age 60 is still an additional 20% on top of the federal income tax.
Comment by Retired and fed up Wednesday, Jul 2, 14 @ 2:51 pm
==If the court upholds the law what happens to the money I’ve contributed?==
Squeezy will send you a thank-you card.
Comment by Anon. Wednesday, Jul 2, 14 @ 3:57 pm
Been gone all day playing tour guide but I’m going to post what I sent to Rich last night. Apologies since it partially covers what others have posted.
I don’t know what the ISC will say, but I just have this feeling that it will be a split decision, finding some classes (most likely already retired and/or a subset such as 2002 ERI) are entitled to the coverage and others not yet retired are not. In effect, copying the treatment the State followed in the past when they changed the premium free insurance rules from 8 years to 20 years for those who were not yet retired.
Not trying to get anyone’s hopes up, but if the ruling was completely against the retirees and totally favorable to the State, I would have thought it would have been issued long before now. Delaying it this long, possibly a deliberate delay until after the GA ended their session / budget for FY15, implies to me that the court did not want to affect any political actions being taken by the GA during the recent session and at least part of the ruling will go against the State.
Or I could be looking through rose colored glasses and we retirees will just get the short end of the stick …
We’ll just have to wait and see what the decision is Thursday. I probably won’t be around to analyze it because I expect to be playing tour guide tomorrow also.
Comment by RNUG Wednesday, Jul 2, 14 @ 4:10 pm
Hi Rnug, Employee 1 starts work in 1982 and works 30 years retiring in 2012. Employee 2 also starts work in 1982 and plans on working 35 years with retirement in 2017. Why do figure Employee 2 could be penalized by not getting fully paid health benefits like Employee 1?
Comment by Vinny Wednesday, Jul 2, 14 @ 4:34 pm
Your heading shoul read, “IL Supreme Court will tip its hand on Insurance Premiums tomorrow”. SC can not issue a ruling on pensions before the circuit court hears the case on pensions. Please correct me if I missed something here.
Comment by Mama Wednesday, Jul 2, 14 @ 6:34 pm
I want to believe that the Court will rule in favor of retirees who followed the rules of the game and retired with the assurance that health care premiums for those with 20 years or more of service would be free. I want to believe it. But I keep thinking of the sarcastic last line of Hemingway’s The Sun Also Rises–”Wouldn’t it be pretty to think so.”
Comment by lovecraft Wednesday, Jul 2, 14 @ 7:09 pm
Does this really speak to the pensions? It seems to me this is a) OPEB, not the pensions themselves, and b) doesn’t really dig beyond statutes. So in effect, we’re still going to be in the dark about the core of the pension funding situation unless they drop some pretty serious and broad hints in the opinion.
Comment by Angry Chicagoan Wednesday, Jul 2, 14 @ 8:03 pm
Tomorrow’s ruling on insurance benefits may give an indication as to how the court might rule on the pension case when it gets to them. That’s what the headline means. If the SC finds that the constitution protects health insurance benefits tomorrow, the odds are pretty darn good that they’ll rule in favor of public employees on pension case. Conversely, a total loss will make us very nervous depending on their rationale for the ruling.
Comment by Norseman Wednesday, Jul 2, 14 @ 8:22 pm
- Mama - Wednesday, Jul 2, 14 @ 6:34 pm:
If the ISC finds for the retirees (health insurance is either an enforcable contract or a protected benefit), it would be almost impossible for the same court to find that the pension rules and AAI are not also protected. In fact, if you read and listened to the State’s arguments about how the insurance was different than the pensions, the State pretty much conceded the pensions are protected.
Comment by RNUG Wednesday, Jul 2, 14 @ 8:39 pm
Here is a guess. They declare that prior to retirement premium-free health insurance is not a protected benefit that derives from membership in a pension retirement system covered by the Constitution. However once a persons retires, it becomes a protected benefit.
They further declare that persons in the systems who are not yet retired may have changes going forward, but the health insurance premiums for them as retirees must take into account the benefit accrued to date (1/20 per year) and must take into account money withheld, specifically for coverage of health insurance benefits in retirement (TRS members and some in SURS?).
Comment by east central Wednesday, Jul 2, 14 @ 10:08 pm
Someone high up in SUAA has stated that the Court is likely to rule against retirees on health care premiums and for them on the pension. I’m so happy that they might let the legislature hack off only one of the legs of my retirement security instead of both. Of course, I likely will have many years in retirement so God knows what future legislatures might cut. We retirees could end up looking like the Black Knight in Monty Python and the HOly Grail–armless and legless.
Comment by lovecraft Wednesday, Jul 2, 14 @ 10:18 pm
If the ISC does not rule in favor of the employees, I can’t wait to see how they explain a contract did not exist, How is you work for us 20 years and in return we will give you free insurance when you retire. To me it seems like basic contract law 101. But the cynic that I am believes there will be some convoluted decision.
Comment by Pacman Thursday, Jul 3, 14 @ 6:01 am
Ruling is in. Circuit Court reversed
Comment by JohnQ Thursday, Jul 3, 14 @ 9:09 am