On March 15, 2017 the Fourth District Appellate Court issued its Rule 23 Order in Bertoni v. Springfield Police Pension Board. In early 2012 three police officers purchased 2 years of prior military service pursuant to section 3-110(b-5) of the Pension Code. The pension board subsequently determined that it had miscalculated the amount the three police officers owed the pension fund in order to purchase the prior military service. The police officers filed for injunctive and declaratory relief. The trial court determined that the pension board had not issued a final administrative decision and was not precluded from recalculating the amount the police officers owed in order to purchase their prior military service. The trial court therefore entered judgment for the pension board and the appellate court affirmed.
The pension board notified all officers of the ability to purchase prior military service. The pension board calculated the amount the three officers owed in order to purchase prior military service. The police officers paid the pension fund the calculated amount. The pension board “acknowledged receipt” of the amount paid. The pension board did not formally vote to accept the payment in exchange for the additional two years of service. During an audit, the pension board was notified that the amounts contributed were insufficient. The pension board voted to give the police officers the options to pay additional money to purchase the prior service, receive partial creditable service credit in proportion to the amount paid, or to receive a refund and essentially withdraw the military service purchase.
The appellate court held that the board’s original “acknowledgement of the receipt” of the amount the police officers paid to purchase the prior military service did not constitute a final administrative decision subject to the 35-day administrative review law (ARL). Citing Howe, the pension board was required to take an affirmative majority vote on a motion to approve a written decision in order to trigger the 35-day ARL time period. The appellate court also held that the facts in Sola I were distinguishable and therefore the case did not apply. Additionally, citing Baldermann the plaintiffs argued that “equitable considerations” prevented the pension board from taking advantage of its mistakes in order to recalculate the amount the plaintiffs owed. Ultimately, the appellate court rejected the “equitable considerations” argument and found that equitable considerations did not weigh in favor of the police officers.
On March 14, 2017 two Republican Senators indicated that they intend on filing a pension overhaul bill that will not be tied to the “grand bargain” budget bills. Click HERE to view the press release.
On February 17, 2017 the Illinois Supreme Court issued its Opinion in Grimm v. Calica. Section 3-103 of the Administrative Review Law (“ARL”) provides that a complaint for judicial review of an administrative decision “…must be filed within 35 days from the date that a copy of the decision sought to be reviewed was served upon the party affected by the decision.” The ARL also provides that “a decision shall be deemed to have been served either when a copy of the decision is personally delivered or when a copy of the decision is deposited in the United States mail, in a sealed envelope or package, with postage prepaid, addressed to the party affected by the decision at his or her last known residence or place of business.” For agencies governed by the Administrative Procedure Act (“APA”), mailing a decision to the party’s attorney starts the jurisdictional clock. (Pension Board’s are not governed by the APA). The plaintiff filed her complaint 36 days after the decision was served. However, the plaintiff argued that the statutory bar should not apply because the agency’s decision was misleading and violated her due process rights. The trial court and the appellate court agreed with the plaintiff. The Supreme Court affirmed in a 5-2 decision.
The agency issued its final decision by letter. The letter was addressed to the plaintiff’s attorney and sent via certified return receipt mail. The letter provided: “This represents the final administrative decision of the Department. If you disagree with any part of it, you may seek judicial review under the provisions of the ARL [citation omitted] within 35 days of the date this decision was served on you.” The plaintiff filed her complaint 36 days after the date on the letter.
The trial court held that the “interests of justice” excused the plaintiff’s tardiness. The Supreme Court rejected the trial court’s “interests of justice” equitable argument. The appellate court held that the letter was misleading and violated the plaintiff’s due process rights. The Supreme Court agreed. The agency argued that due process did not require the agency to even inform the plaintiff of the 35-day ARL time period and that even if it did, the agency’s letter provided the plaintiff with adequate notice. The Supreme Court agreed that due process did not require the agency to inform the plaintiff of the 35-day ARL time period. However, because the agency did inform the plaintiff of the 35-day ARL time period, due process required that the agency provide clear notice that was not misleading. The Supreme Court held that the agency’s letter was “misleading as to its mailing date.” As such, the agency’s notice violated the plaintiff’s due process rights and the statutory bar to review in section 3-103 of the ARL did not apply.
The dissent argued that the plaintiff did not have a constitutional right to notice and the notice provided was adequate because it tracked section 3-103 of the ARL and provided the correct statement of law.
Pension Board’s should be mindful of this case when issuing and serving final administrative decisions.
On March 3, 2017 the Fourth District Appellate Court issued its Opinion in Pisani, et al. v. City of Springfield. The plaintiffs are a class of employees in a union. The City had a vacation buyback provision in its ordinance that applied to the plaintiffs. The ordinance permitted an employee to cash in unused vacation time before retirement which would thereby boost the employee’s pensionable salary. In 2015 the City repealed the ordinance. The plaintiffs filed suit for declaratory and injunctive relief claiming that the repeal of the ordinance violated Article XIII section 5 of the Illinois Constitution (ie. the pension protection clause) and Article I section 16 of the Illinois Constitution (ie. the contracts clause). The trial court entered judgment for the City. The trial court held: (1) the the buyback provision was not a benefit of the contractual relationship resulting from membership in a pension fund but is a local employer generated policy; (2) the buyback provision is not a benefit derived from membership in a pension fund but is derived solely from the City’s ordinance; and (3) the negative impact of the ordinance on a person’s pension annuity was incidental. The appellate court affirmed.
The appellate court held that the ordinance amendment did not change the “pension contract” but instead “changed a vacation day policy–a change that only had an incidental, indirect effect on pension benefits. Changes in the terms and conditions of employment that indirectly affect the amount of a pension by affecting a number that is plugged into the pension formula are not ‘diminishments or impairments’ of pension benefits, within the meaning of the pension protection clause.”
The appellate court held that the pension code is the “formula” and the “earnings” and “final rate of earnings” are “variables” with “no fixed numerical values” that are plugged into the formula. A change in salary or final rate of earnings is not a diminishment of benefits within the meaning of the pension protection clause. Additionally, the appellate court held that the plaintiffs have a contractual pension relationship with the State and not with the City. “Because the vacation buyback provision was in [the City’s] ordinance instead of in Illinois statutory law, it was not a benefit of the ‘contractual relationship’ to which the pension protection clause refers.” The pension protection clause is therefore inapplicable to a change in terms and conditions of employment, even though the change would cause a reduction in a person’s pension.
In an interesting discussion, the appellate court discussed “pension spiking” and noted that the objective of pension spiking is to make the final rate of earnings artificially large, so as to increase the amount of the annuity.
The appellate court also held that the repeal of the ordinance did not violate the contracts clause. However, the appellate court did not specifically address the contracts clause but instead premised its holding on the plaintiffs’ failure to argue the contracts clause in its brief.
On February 22, 2017 the Second District Appellate Court issued its Rule 23 Order in Westphall v. Board of Trustees of the Aurora Firefighters’ Pension Fund. The firefighter claimed that two on duty incidents caused or contributed to his disabling back injury. The Pension Board denied the firefighters’ application for a “line of duty” disability pension and instead awarded the firefighter a “not in duty” disability pension. The trial court and the appellate court affirmed.
The plaintiff’s treating physicians opined that the acts of duty caused or contributed to the plaintiff’s disabling condition. Two Pension Board IME providers concluded that the acts of duty caused or contributed to the plaintiff’s disabling condition. One Pension Board IME provider concluded that the acts of duty did not cause or contribute to the plaintiff’s disabling condition. The municipality’s workers’ compensation IME provider concluded that the acts of duty did not cause or contribute to the plaintiff’s disabling condition. The appellate court held that the Pension Board’s causation finding was not against the manifest weight of the evidence. Two doctors concluded that the alleged acts of duty did not cause or contribute to the plaintiff’s disabling condition. The appellate court held that the plaintiff’s arguments were merely attempts to have the reviewing courts reweigh the evidence, reconcile conflicts in the evidence, and to substitute their judgment for the Pension Board’s judgment.
On February 8, 2017 the Second District Appellate Court issued its Rule 23 Order in Village of Vernon Hills v. Board of Trustees of the Vernon Hills Police Pension Fund. In this case, the police officer was a “watch commander” and fell while running between houses during a home invasion call. The police officer applied for a line of duty disability pension. The Village filed a petition to intervene. The Pension Board denied the Village’s petition to intervene. The Pension Board voted 3-2 to grant the line-of-duty disability pension application.
The Pension Board then held a hearing regarding the police officer’s salary attached to rank for pension purposes. The police officer earned $119,000 per year as of his last day in active service on May 22, 2014. The Village subsequently learned the police officer engaged in improper secondary employment. On November 19, 2014 the Village disciplined the police officer and reduce his annual salary to approximately $92,000 by demoting him to the first step for a watch commander. The Village and two pension board trustees requested a DOI advisory opinion. The DOI concluded the November 2014 salary attached to rank applied The Pension Board voted 3-2 to apply the May 2014 salary attached to rank.
The Village filed a complaint for review. The trial court affirmed the Pension Board’s decision. The appellate court held that the Supreme Court’s decision in Village of Vernon Hills v. Heelan did not provide municipalities with an automatic right to intervene in pension hearings. In other words, the Pension Board did not violate the Village’s due process rights by denying its petition to intervene. The appellate court held that Heelan did not overrule the intervention standards set forth in Stickney and Williams. Furthermore, the appellate court held that the Pension Board did not abuse its discretion under Stickney and Williams when it denied the Village’s petition to intervene.
The appellate court held that the Pension Board’s decision awarding a line of duty disability pension was not against the manifest weight of the evidence. The record contained evidence supporting the Pension Board’s decision that the police officer was disabled. Additionally, the evidence in the record did not support the Village’s argument that the “watch commander” position was only required to perform sedentary activities. Furthermore, the evidence in the record did not support a finding that the Village had offered the police officer a permanent sworn light duty position.
Finally, the appellate court held that the Pension Board’s salary determination was not clearly erroneous. The appellate court held that the Pension Board was not bound by the DOI’s advisory opinion, particularly where the advisory opinion was inconsistent with the Pension Code and the administrative code. Citing the dictionary, the appellate court held that the police officer’s date of “suspension of duty” under 3-114.1 was the last day he actually worked. The fact that the police officer continued on the payroll and used his accumulated benefit time did not change the “suspension of duty” date for pension purposes. The appellate court relied on an administrative code provision which held that the payment of accumulated benefit time is not pensionable. Therefore, the Pension Board’s decision to apply the salary attached to rank as of May 22, 2014 was not clearly erroneous.
On January 23, 2017 the First District Appellate Court issued its Opinion in Board of Trustees of the City of Harvey Police Pension Fund v. City of Harvey. In 2006 the Pension Board sued the City for failing to properly fund the police pension fund. The parties entered into a settlement agreement. As part of the settlement agreement, the City agreed to pay a certain amount to the pension fund and it agreed that each year it would levy and contribute the annual actuarial requirement as required by the Pension Code. The settlement agreement also provided that the trial court retained jurisdiction to enforce the settlement agreement. The City subsequently breached the settlement agreement. The Pension Board filed a motion to compel enforcement of the settlement agreement. The trial court entered judgment for the Pension Board and the appellate court affirmed.
The appellate court held that the trial court had jurisdiction to enforce the settlement agreement because the settlement agreement and the original court order disposing of the 2006 lawsuit contained language providing that the trial court retained jurisdiction to enforce the settlement agreement. The appellate court held that the City waived its damage calculation argument by failing to present the argument to the trial court. Finally, the appellate court held that the award of attorney’s fees was not an abuse of discretion.