HB 298 introduced on January 13, 2015 would permit Illinois municipality’s to file for federal bankruptcy protection pursuant to Chapter 9 of the federal bankruptcy code.
If this bill passes it may have enormous implications for Illinois pension fund participants and beneficiaries.
On March 9, 2015 the First District Appellate Court issued its Opinion in Howe v. Retirement Board of the Firemen’s Annuity and Benefit Fund of the City of Chicago (Howe II). In Howe I, the appellate court remanded case to the Pension Board in order to issue a final administrative decision. In Howe II, the appellate court affirmed the Pension Board’s decision to deny the plaintiff’s application for a line of duty disability pension.
The plaintiff was the deputy district chief of employee relations and served mainly in a managerial capacity. The plaintiff’s duties did not include fire suppression or fire rescue. The plaintiff did perform limited paramedic duties. In his capacity as media affairs officer, the plaintiff self-dispatched to an incident. On the scene, the plaintiff tried to jump over a turnstile and injured his shoulder. The plaintiff underwent surgery but returned to duty as the deputy district chief for another six years.
The appellate court agreed that the plaintiff was not injured by an “act of duty” as defined in Article 6 of the Pension Code. The plaintiff was not compelled by a city ordinance or department rule to respond to the incident while off duty as either the deputy district chief or a paramedic.
The appellate court also rejected the plaintiff’s argument that he was disabled because he could not perform all the duties of a firefighter. In this case, the plaintiff could still perform the duties of the deputy district chief. Therefore, the plaintiff failed to prove that he was disabled from performing “any” assigned duty in the fire department.
On March 11, 2015 the Illinois Supreme Court heard oral arguments (arguments begin at the 13:40 minute mark) in In Re Pension Reform Litigation (Heaton v. Quinn). The Court did not ask many questions. However, the Court seemed dubious about the State’s argument that it could invoke its police power to break a constitutionally protected contractual agreement. The Court also questioned whether the State could invoke its police power to correct a funding crisis that it created primarily through the historical failure to properly fund State pensions. The Court also questioned why the State would request a remand to the circuit court in order to conduct discovery and to make findings of fact as to whether the State satisfied the requirements to impair a contract after the State was the party that requested an expedited schedule in the Supreme Court.
On February 25, 2015 the Seventh Circuit Court of Appeals issued its Opinion in Underwood, et al. v. City of Chicago. The plaintiffs are generally retired police and firefighters. They received subsidized or free health care benefits. The ordinance providing for the benefits expired in 2013 and the City notified the plaintiffs that they would have to pay more for their health care benefits. The plaintiffs filed suit alleging that the reduction in health care benefits violated the Pension Protection Clause of the Illinois Constitution (article 13, section 5) and the Contracts Clause of the U.S. Constitution. The City removed the case to federal court and the district court dismissed the lawsuit on the pleadings. The Seventh Circuit ultimately vacated the district court’s holding and remanded the case to the district court with instructions that it remand the state-law claims to the Illinois state court. The Seventh Circuit held that the federal court should not decide novel claims of state law particularly where the Illinois Supreme Court has granted leave to appeal in Mathews v. Chicago Transit Authority and Heaton v. Quinn.
Click HERE to listen to oral argument in this case.