NO AGREEMENT ON PENSION REFORM

Democrats To Try Again On Madigan Pension Bill

Another Vote Set On Pensions; Cullerton ‘Not Very Optimistic”

The Senate may try to vote again on the reforms proposed by Speaker Madigan in Senate Bill 1.  However, in order for the proposals to pass, 36 Senators would have to vote in favor of the amendment.  Only 16 Senators voted in favor of those amendments during the last vote.  Additionally, the Governor has also suggested a “conference committee” to forge a pension deal, however Speaker Madigan appears opposed to the idea.  The special legislative session is scheduled for June 19.

MARCONI v. THE CITY OF JOLIET

On May 2, 2013 the Third District Appellate Court issued its Opinion in Marconi v. The City of Joliet.  Plaintiffs, retired police officers and firefighters, sued the City of Joliet for reducing retirement health benefits promised to the plaintiffs at the time each retired.  The circuit court granted the plaintiffs summary judgment and held that the reductions in benefits violated Article XIII, Section 5 of the Illinois Constitution (the pension protection clause).  The appellate court reversed and remanded the matter.

The collective bargaining agreements (CBA) between the City and the police officers and firefighters provided for retirement health care benefits.  Subsequent to the plaintiffs’ retirements, the unions and the City negotiated new CBAs which resulted in changes to the group health insurance plans.  The City unilaterally applied some, but not all, of those changes to all retirees.  The plaintiffs argued that the unilateral changes in deductibles and co-payments violated the pension protection clause.

The appellate court first held that it must avoid adjudication of the constitutional issue if the case can be decided on other grounds.  The appellate court then decided whether the City had a contractual obligation to continue to provide the health care coverage promised to retirees at the time they retired and whether the City breach that obligation by unilaterally changing health care coverage.  The appellate court construed the issue as whether the plaintiffs had a vested right to the particular coverage.  If the plaintiffs did have a vested right to the coverage, then the unilateral change was unlawful.  If the plaintiffs did not have a vested right to the coverage, then the right to the coverage terminated upon the expiration of the CBA and the unilateral change was lawful.  The appellate court noted that it raised these issues on its own and that the parties never argued these issues before the trial court.

The appellate court first held that the contract analysis should be governed by Illinois law rather than federal law because the plaintiffs were employees of a political subdivision of Illinois.

Relying on a Wisconsin Supreme Court case, the appellate court concluded that the plaintiffs CBA should be interpreted with a presumption in favor of a vested right to health care coverage.  Among other things, the appellate court held that “a vesting presumption protects retirees from the vagaries of a collective bargaining process that no longer represents their interests.”  However, the appellate court also held that the plaintiffs have a vested right unless (1) the language of the CBA unambiguously suggests otherwise or (2) if the contract language is ambiguous, extrinsic evidence suggests that the parties did not intend the benefits to vest.  In the end, the appellate court held that the record did not contain enough evidence to decide these questions.  Therefore, the appellate court remanded the matter to the trial court to take evidence with respect to the vesting issues.

PGM will post updates regarding this case as they become available.

 

ENGLUM v. CHARLESTON POLICE PENSION BOARD

On May 29, 2013 the Fourth District Appellate Court issued its Rule 23 Order in Englum v. The Board of Trustees of the Police Pension Fund of the City of Charleston.  The Pension Board denied the plaintiff’s application for a line of duty disability pension contending that the plaintiff’s disability was not incurred in the performance of an “act of duty.”  The trial court reversed the Pension Board’s decision and the appellate court affirmed the trial court’s order.

The plaintiff had been dispatched to a store but found nothing unusual.  The plaintiff subsequently returned to the police station and parked his squad car.  As he exited his squad car, the plaintiff slipped on ice and fell, injuring his hand and shoulder.  The appellate court noted that the critical inquiry in act of duty cases is the capacity in which the officer was acting at the time of the injury.  The appellate court, relying on its opinion in Jones v. Bloomington Police Pension Board, held that the plaintiff was continuing his investigation when he returned to the police station.  Furthermore, the court opined that a dispatch to respond to a particular call involves a special risk.  Therefore, the plaintiff was entitled to a line of duty disability pension.

PENSION REFORM LEGISLATION FAILS

The Spring legislative session ended on Friday, May 31, 2013 with no agreement on pension reform.  The House adjourned at 7:30 p.m. and the Senate adjourned at 9:40 p.m.  House amendments to SB-1 failed to pass the Senate.  The House failed to call a vote on SB-2404.  The veto session will be held from October 22-24 and November 5-7.  Approval of any pension reform legislation after May 31 will require a 3/5 majority vote instead of a simple majority.

Cullerton Issues Statement On Pension Reform

Moody’s Warns Illinois About Its Credit Rating

Path To Illinois Pension Reform Now Even Trickier