Seventh Circuit: Ex-Gov. Quinn OK to terminate workers comp arbitrators who sued the state over reforms

By D.M. Herra | Aug 28, 2017

A federal appellate court has affirmed Illinois governors are within their rights not to reappoint workers’ compensation arbitrators, even if they claim their dismissal was retaliatory.

The U.S. Seventh Circuit Court of Appeals addressed a 2013 suit brought by Kathleen Hagan, Gilberto Galicia, Joseph Prieto and Richard Peterson, arbitrators for the Illinois Workers’ Compensation Commission, against former Ill. Gov. Pat Quinn and two of his advisors.

In 2011, the arbitrators had filed a due process suit to block House Bill 1698, a workers’ compensation reform bill. Among the changes the bill made to existing law was ending the six-year appointments of arbitrators and implementing a rotating three-year appointment schedule. A federal judge eventually granted summary judgment to the state defendants, ruling the arbitrators could not show a clearly established right violated by the legislation.

While that suit was pending, the plaintiffs’ terms ended and Quinn declined to reappoint them. They sued, alleging their dismissal was retaliation for the earlier suit and violated their First Amendment rights. Quinn chief of staff Jerome Sterner and advisor Velisha Haddox were also named as defendants.

The federal district court dismissed the claims on the grounds the plaintiffs’ employment was not a matter of public concern protected by the First Amendment. The appellate court affirmed the dismissal, citing legal precedent that allows elected officials to replace high-level or confidential employees if those employees engage in activity that could undermine political goals – like challenging new legislation.

“Plaintiffs publicly challenged the implementation of House Bill 1698 as unconstitutional. They had a constitutional right to do so, but their exercise of that right came with consequences for their positions in state government that the Constitution also permits,” the judges wrote. “Plaintiffs sought to undercut a key component of the administration’s workers’ compensation reform initiative. That was reason enough for the governor to choose not to reappoint them as arbitrators. Given their positions in government, the First Amendment offers them no redress for the governor’s choice.”

Case law holds that government employers can dismiss employees based on their political beliefs if they hold “policymaking or confidential” positions. If people in these positions have a different political agenda than the elected official they work for, they could undercut the official’s attempts to implement new policies. There is no definition of what constitutes a “policymaking” position, but the court found the arbitrators fit the test because they have wide discretion in adjudicating disputes. Because their decisions are appealable to the Workers’ Compensation Commission and, ultimately, to the state courts, they have the ability over the long term to shape the direction of state policy.

The plaintiffs’ original lawsuit, the court ruled, aimed to undercut the governor’s policy – making it the type of speech that, for policymakers, is not protected under the First Amendment. If the plaintiffs were correct in asserting the due process suit was the only reason the governor chose not to reappoint them, he was within his rights, according to the appellate decision.

Neither the district nor appellate court ruled on state law claims also made in the First Amendment lawsuit, saying those questions should be left for an Illinois state court to decide.

Case No. 15-1791 was submitted to the Seventh Circuit Court of Appeals from the U.S. District Court for the Central District of Illinois. It was decided without oral arguments. Circuit Judge David F. Hamilton authored the opinion, with judges Joel M. Flaum and Daniel A. Manion concurring.

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