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Supreme Court takes state retiree health insurance case under advisement

By Bethany Krajelis | Sep 18, 2013

Retirees suing the state over a new law requiring them to start paying premiums for health insurance have essentially asked the Illinois Supreme Court to give the Pension Clause a new and expanded interpretation, an attorney for state said today.

In arguments before the high court, Assistant Attorney General Richard Huszagh likened the legal stance of the plaintiffs challenging the constitutionality of Public Act 97-695 to trying to fit “a square peg in a round hole.”

The issue came to the state Supreme Court on direct appeal from Sangamon County, where four lawsuits over the relatively new law – two from Sangamon County and one each from Madison and Randolph counties -- were consolidated last year.

A judge there in March dismissed the consolidated suit, rejecting the plaintiffs’ argument that the law is unconstitutional because it violates the Illinois Constitution’s Pension Clause, which refers to membership in the state’s pension and retirement systems as an “enforceable, contractual relationship, the benefits of which shall not be diminished or impaired.”

Siding with the state, Sangamon County Associate Judge Steven Nardulli wrote in his order that “health insurance benefits are not guaranteed pension benefits protected by the Pension Protection Clause” and as such, “plaintiffs do not have a vested contractual interest in free health insurance.”

In asking the court to affirm the lower court’s dismissal of the suit, Huszagh told the justices that the plaintiffs are basically trying to “slice and dice” the language of the Pension Clause to fit their argument that health insurance benefits are pension benefits protected by the Constitution.

Edward Kionka, a Carbondale attorney on the plaintiff’s legal team, however, urged the justices to reverse Nardulli’s order and strike down the law, which took effect July 1, as unconstitutional.

“The issue could hardly be simpler,” Kionka told the justices during today’s arguments, explaining that the question at the crux of the case is “what does the word ‘benefits’ mean” in the Pension Clause?

To bolster his argument that health insurance benefits are benefits covered by the clause, Kionka pointed to the drafters of the 1970 Constitution, as well as the voters’ approval of it.

He said that the Pension Clause, which is included in Article 5 of the state Constitution, simply uses the word “benefits” as opposed to “pension benefits.” If the drafters intended for the clause to only cover pension benefits, Kionka said they would have specifically drawn that distinction but chose not to.

Justice Charles Freeman, who posed a handful of questions during today’s arguments, asked Kionka whether this matter presents the first time in which an Illinois case seeks to use Article 5 to apply a benefit other than a pension benefit.

Both Kionka and Huszagh referred to the case as one of first impression in the state.

Kionka told the court that when the legislature passed the new law, it basically “broke a promise” it made to its employees that they would get free health insurance if they worked for the state for a certain amount of time.

Many employees, he said, relied on this promise when they accepted their employment and decided how long to work before retiring.

On behalf of the plaintiffs in one of the four suits that was brought by union members, Chicago attorney Stephen Yokich told the justices many of these plaintiffs have a contractual right under collective bargaining agreements, in addition to a constitutional right to these health insurance benefits.

Yokich said retirement is “special” as it takes years to achieve and the benefits that come along with retirement, including free health insurance, are a form of deferred compensation. The Pension Clause, he said, protects these benefits by preventing them from being impaired or diminished.

He also told the justices the legislature in 1998 passed an amendment to the State Employees Group Insurance Act that created a sliding scale for health insurance premiums.

The language of this statute, Yokich said, was incorporated into an agreement between the state and the union, which provides some of the plaintiffs a contractual right to health insurance benefits.

Huszagh, however, urged the justices to resist the “great temptation” to suggest that a statute isn’t just a statute and is actually a contract. He said the legislature’s job is to pass statutes, not to make contracts, but that if lawmakers wanted to do the latter, they would explicitly say so in legislation.

Today’s arguments over the new law spurred dozens of questions from the justices. It also brought out Gordon Maag, the former Appellate Court Justice who filed one of the four suits in the consolidated matter.

Maag, who unsuccessfully ran for the Fifth District seat on the state high court against Justice Lloyd Karmeier, sat in the second row of the courtroom behind the plaintiffs’ attorneys.

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