VILLAGE OF NORTH RIVERSIDE V. BORON

On December 19, 2016 the First District Appellate Court issued its Opinion in Village of North Riverside v. Boron.  Mr. Boron is the director of the Illinois Department of Insurance. The Village failed to properly fund its police and firefighter pension funds.  The DOI held a noncompliance hearing pursuant to section 1A-113 of the Pension Code.  The DOI held that the Village had not shown “good and sufficient cause” for its noncompliance.  The Village argued that it had mitigating circumstances for its noncompliance and that it intended to take remedial action in future years.  The Village argued that the recession in 2008 and 2009 resulted in decreased tax revenues.  The Village also argued that its largest source of tax revenue, a restaurant supply company, left the Village in 2012.  The Village also argued that is tax-capped as a non-home rule municipality.  However, the DOI noted that there were six years between 2000 and 2011 in which the Village did not make any contributions to its fire and police pension funds.  However, the Village fully contributed to the IMRF because the IMRF has an “enforcement provision.”  Additionally, the evidence showed that tax receipts actually doubled between 2000 and 2012.  The Village also continued to subsidize garbage collection and water services.  The DOI held that the Village did not offer “good and sufficient cause” for noncompliance and ordered the Village to comply.  The Village filed a complaint for administrative review.  The trial court affirmed the DOI’s decision.  The Village appealed.  The appellate court affirmed.

The appellate court rejected the Village’s argument that the “good and sufficient cause” standard was too vague and therefore unconstitutional.  The appellate court held that the breadth of the provision actually inured to the Village’s benefit because it could produce almost any mitigating evidence it wanted.  The appellate court noted that the Village was simply unsuccessful in meeting its burden to show “good and sufficient cause” to underfund its pension funds.  Whether the Village presented “good and sufficient cause” is a mixed question of law and fact and the court will not reverse the agency’s decision unless it is clearly erroneous.  In this case, the DOI’s decision was not clearly erroneous.

The appellate court accepted the DOI’s conclusion that the “Village had simply made choices to allocate funds elsewhere in derogation of its statutory duties.”  Additionally, many of the violations actually occurred before the recession.   The Village’s admission that it fully funded the IMRF showed “…a conscious choice in the Village’s allocation of resources and acknowledges a deliberate effort to allocate resources in places other than the police and firefighter pension funds.”  The Village continued to divert new tax many away from the pension funds and it continued to subsidize garbage pick up and water services.  The appellate court held that the Village “…spent its money on discretionary endeavors its prioritized more than contributing to the police and firefighter pensions.  That is a violation of the Pension Code….”

BREMER v. CITY OF ROCKFORD

On December 30, 2016 the Illinois Supreme Court issued its Opinion in Bremer v. City of Rockford.  In Krohe, the Supreme Court held that a firefighter or police officer is “catastrophically injured” for purposes of PSEBA if the firefighter or police officer is awarded a “line of duty” disability pension under section 4-110 or 3-114.1 of the Pension Code.  In Bremer, the firefighter was awarded an occupational disease disability pension under section 4-110.1 of the Pension Code.  The City denied the firefighter’s application for PSEBA benefits finding that he was not catastrophically injured because the pension board did not award the firefighter a line of duty disability pension.  The firefighter filed a two count complaint seeking a declaratory judgment that he was “catastrophically injured” for purposes of PSEBA and seeking attorneys fees under the Attorneys Fees in Wage Actions Act.  The firefighter amended his complaint to add a third count that is not relevant for purposes of Article 3 and 4 pension funds.

The trial court held that the firefighter was “catastrophically injured” but denied his claim for attorneys fees.  The parties appealed.  The appellate court held that a person who was awarded an occupational disease disability pension is “catastrophically injured” for purposes of PSEBA.  However, the appellate court held that there was an issue of material fact as to whether the firefighter’s catastrophic injury resulted from his response to what he reasonably believed to be an emergency.  The appellate court also held that the firefighter was not entitled to attorneys fees under the Wage Act because health insurance premiums are not wages due and owing.

The Supreme Court entered judgment for the City on all counts.  The Supreme Court reiterated that Krohe held that the phrase “catastrophic injury” in section 10(a) of PSEBA is synonymous with “…an injury resulting in a line-of-duty disability under section 4-110 of the Pension Code.”  The Supreme Court reiterated its holdings in Nowak and Heelan that the phrase “catastrophic injury” in PSEBA is expressly equated with the award of a line of duty disability pension.  The Supreme Court noted that the phrase “catastrophic injury” is a term of art defined by reference to the legislative history. The firefighter must show more than that he suffered an injury resulting from his service as a firefighter or an injury that occurred in the course of his employment.  The Supreme Court held that an occupational disease disability pension under section 4-110.1 is not a “line of duty” disability pension under section 4-110.  Additionally, because PSEBA creates a liability for the City that is in derogation of the common law, courts must construe PSEBA strictly in favor of the City. The Supreme Court held that it could not expand the definition of “catastrophic injury” in PSEBA to add an “occupational disease disability” pension in addition to a “line of duty” disability pension.  Ultimately, the Supreme Court held that the City was entitled to summary judgment on the PSEBA claim as a matter of law.

Justice Kilbride dissented in part.  He did not believe that the City was entitled to summary judgment as a matter of law.  Rather, he believed that the matter should be remanded to give the firefighter an opportunity to present evidence showing that he was “catastrophically injured.”  Justice Kilbride noted that the injured firefighter may have been able to satisfy the elements for either a line of duty disability pension and an occupational disease disability pension because the two disabilities are not mutually exclusive.

Click HERE to listen to the oral argument before the Supreme Court