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Spring 2012 Legal & Legislative Update

September 27th, 2012

Recent Court Decisions

Final Means Final – Even if COLA Increases Are Not Permitted for Surviving Spouse Pensions

Sola v. The Roselle Police Pension Board

–N.E.2d–, 2012 IL App (2d) 100608.

Hopefully this will be the final chapter in the lengthy saga for surviving spouse Jeannette Sola, wife of a deceased police officer. The saga began in 1993 when the Pension Board awarded Sola 3% cost of living increases (COLA) on her surviving spouse benefits. In 2001, Sola was informed by the Village of Roselle that her pension benefits for 2002 would not increase beyond the 2001 level, as a result of the Village’s receipt of a Department of Insurance Advisory Opinion, that surviving spouses were not entitled to a COLA. Sola filed a Complaint for Declaratory Judgment Relief with the Circuit Court, alleging the Pension Board was without the jurisdiction to conduct a hearing, because it did not file timely review of its original decision awarding cost of living increases to Sola, within the thirty-five (35) day time period, provided for under Administrative Review Law (ARL). The Trial Court permanently enjoined the Board in conducting a hearing. The Village filed an appeal. On appeal, the Appellate Court held that the Board had no jurisdiction as its decision was final beyond the thirty-five (35) day time period, required under ARL. The Appellate Court did not address the issue of whether the Illinois Pension Code allowed COLA increases for surviving spouses. Sola v. Roselle Police Pension Board 342 Ill. App. 3d 227 (2d Dist. 2003). This case became known as “Sola 1”.
            In The Roselle Police Pension Board v. The Village of Roselle, 232 Ill.2d 546, 905 N.E. 2d 831 (2009), the Illinois Supreme Court finally resolved the issue, holding that Article III of the Illinois Pension Code does not permit COLA increases for surviving spouses pensions. Thus the background for “Sola 2”.At the urging of the Village, in November of 2009, the Pension Board notified Sola that it would be conducting a hearing to determine whether the Illinois Supreme Court’s decision in Roselle prohibited the Board from awarding Sola the COLA increases in the future. After considering arguments and pleadings, the Pension Board found that it had no jurisdiction to modify Sola’s pension benefits and that it would continue to award increases until ordered by a court to do otherwise.

On January 13, 2010, the Village filed a complaint seeking Certiorari, Mandamus, and Administrative Review of the Board’s decision that it lacked jurisdiction to modify Sola’s benefits. On January 21, 2010 the Village filed a separate proceeding, a Motion to Dissolve or Vacate the Permanent Injunction issued by the Trial Court in Sola 1.  The Trial Court denied the Village’s Motion to Vacate the Permanent Injunction, finding that the Board had no jurisdiction to modify Sola’s pension benefits. Shortly thereafter, another court granted the Board and Sola’s Motion to Dismiss the Village’s Complaint for Administrative Review, Certiorari and Mandamus, adopting the Pension Board and Sola’s arguments that all claims must be dismissed as they were precluded on the grounds of res judicata and collateral estoppel. The Village filed timely Notices of Appeal of both proceedings, which were consolidated for purposes of Appeal.

On Appeal, the Appellate Court first addressed the Trial Court’s denial of the Village’s Motion to Dissolve or Vacate the Permanent Injunction issued in 2002 (Appeal No. 2-10-0608). The Village contended that the Illinois Supreme Court’s decision in Roselle; (1) bar Sola from receiving COLA increases; (2) COLA increases to Sola were a “systemic miscalculation” and fell outside the definition of ARL; (3) a recent amendment to the Pension Code mandates annual administrative review of cost of living awards, (referring to §5/3-141.1 of the Illinois Pension Code, mandating the treasurer to certify information used in calculating pension benefits).  With respect to the Village’s argument that the Illinois Supreme Court’s decision in Roselle definitely determined that surviving spouses were not entitled to COLA increases, as the Court correctly noted, the Illinois Supreme Court in Roselle, did not mandate a finding that the Board now has jurisdiction to review Sola’s COLA increases as Roselle never addressed the jurisdictional issue and it did not specifically overrule Sola 1. The Court also rejected the Village’s argument that the Pension Board’s awarding of COLA increases to Sola was a “systemic miscalculation”, because Sola’s benefits involved only one calculation, not a pattern of erroneous calculations. Finally, with respect to the recent Pension Code amendments contained in §5/3-141.1 of the Illinois Pension Code, the Court found that there was nothing in the Pension Code amendments indicating that the Legislature intended it to rewrite the ARL to enlarge a Pension Board’s jurisdiction to allow yearly review of benefits previously awarded.

Ultimately the Court held that the Village failed to show there had been a change in law or fact warranting a modification of the initial injunction and the Pension Board remained without jurisdiction to revisit the COLA award to Sola. Since the Trial Court did not abuse its discretion, the Trial Court’s denial of the Village’s Motion to Dissolve or Vacate the Injunction was affirmed.

The Appellate Court next turned to the Trial Court’s dismissal of the Village’s Complaint for Administrative Review, Certiorari and Mandamus (Appeal No. 2-10-1107). On Appeal, the Village asserted that the Trial Court erred entering the injunction in 2003, as a result of the law in effect at that time, and that the merits of whether the Board was improperly awarding Sola COLA increases was never addressed. The Appellate Court acknowledged that the Village was correct that when the injunction was entered, it was entered in the law in effect at the time (prior to the Supreme Court’s decision in Roselle); however, the Trial Court did rely upon ARL, which has not changed and limits the Pension Board’s authority to review its final administrative decisions. According to the Court, the Board had no power to ignore the Trial Court’s injunction, which is affirmed by the Appellate Court in 2003 (Sola 1).

Affirming the Trial Court’s dismissal of the Village’s Complaint for Administrative Review, Certiorari and Mandamus, the Court applied two (2) legal doctrines, res judicata and collateral estoppel, both of which applied to administrative decisions. The doctrine of res judicata provides that, final judgment entered by a court of competent jurisdiction on the merits is conclusive as to the rights of the parties and their privies, and it constitutes an absolute bar to a subsequent action involving the same claim, demand, or cause of action. For the doctrine of res judicata to apply, three requirements must be met (1) a final judgment of the merits is rendered by a court of competent jurisdiction; (2) an identity of causes of action; and (3) an identity of parties of their privies.

The doctrine of collateral estoppel has a more limited preclusive effect and may be applied when: (1) the issue decided in the prior adjudications is identical with the issue in the current cause of action; (2) there was a final judgment on the merits in the prior adjudication; and (3) the party against whom   collateral estoppel is asserted was party to, or in privity with, a party in the prior adjudication. The Court found that this case fell squarely within both doctrines, because there was a final judgment on the merits rendered by the Court in Sola 1 (where the Court held the Board lacks jurisdiction to modify Sola’s pension benefits); the subject matter of Sola 1 is identical to the subject matter of this claim and the parties are identical to the parties in Sola 1. The Court declined to address issues raised by the Village as to whether the Pension Board owed a fiduciary duty to the participants and beneficiaries and found no basis in law to reconsider the Court’s previous holding in Sola 1.

Accordingly, Sola will continue to receive COLA increases, without interruption by the Board. This case illustrates that once a Pension Board makes a “final administrative decision” concerning benefits, the Pension Board and other Parties’ ability to modify that decision is extremely limited.

 Court Reverses Pension Board Decision Based on Officer Credibility

 Mingus v. Board of Trustees of the Police Pension Fund of Peoria

2011 IL App (3d) 110098, 961 N.E.2d 1285.

This case involves Appellate review of a Pension Board’s determination to deny a Police Officer a line of duty disability pension. The Plaintiff, John Mingus, was a thirty-two year veteran of the Peoria Police Department. On December 8, 2006, while on patrol in full uniform in a marked squad car, the Officer encountered a vehicle that had slid off the road due to hazardous conditions. With the assistance of two citizens, the Officer pushed the vehicle out of the snow bank and back onto the road way, in an attempt to get the vehicle out of the location as soon as possible due to the safety hazard. While pushing the vehicle, the Officer felt an immediate pain and pop in his groin area, which was later determined to be a hernia.  Following attempts to correct the hernia, the Officer eventually filed for line of duty disability benefits.

At the hearing before the Pension Board, there was no dispute that the Officer was disabled. Rather the issue at the hearing appeared to be the specific facts of the incident. The Pension Board concluded that there were discrepancies in the Officer’s testimony concerning the action he took. At the hearing, the majority of the questions directed towards the Officer were why he did not take a different course of action, such as calling a tow truck; why he didn’t ticket the driver of the vehicle; and why he allowed two civilians to assist him, if the situation posed a safety hazard as he claimed.

At the conclusion of the hearing, the Pension Board specifically found that the Officer’s testimony was not credible regarding the safety hazard or the need for immediate action, and that it appeared the Officer had skewed his testimony in attempt to support his claim. The Pension Board denied the Officer’s request for a line of duty disability pension, but awarded him a non duty disability pension. The Officer filed a Complaint for Administrative Review and the Trial Court affirmed the Board ruling. An Appeal followed.

On Appeal, the Court applied the “manifest weight of the evidence” standard. Following the Illinois Supreme Court’s holding in Marconi (citation omitted), the Court held that the determination of whether an Officer is entitled to a line of duty disability pension is a question of fact. Under the manifest weight standard, a pension board’s determination will only be reversed if there is no competent evidence in the record to support that determination, and it must be clearly evident from the record that the Board should have reached an opposite conclusion. The Court then went on to review the “special risk” requirements set forth in various cases including the Illinois Supreme Court’s decision in Johnson v. Retirement Board of the Policeman’s Annuity and Benefit Fund (citation omitted).

What is and what is not an “act of police duty” has been fertile ground for litigation in Illinois Courts. The Courts have defined “act of police duty” as any act of police duty involving special risk, not ordinarily assumed by a citizen, in the ordinary walks of life, imposed on a policeman by the statutes of this State or by the ordinance or police regulations of the City, in which this article is in effect or by special assignment, or any act of heroism performed in the City, having for its direct purpose to saving of life or property of a person other than a policeman. The term “special risk” does not encompass only inherently dangerous activities. Applying the manifest weight of the evidence standard, the Court held that the Pension Board erred in denying the Officer a line of duty disability pension.

According to the Court, the undisputed facts show that the time of the injury, the Officer was on duty, in full uniform and in a squad car patrolling the roads. During that patrol, the Officer came across a young driver who had skidded off the road in an icy area, and went into a ditch. The front of the drivers vehicle remained on the portion of the paved road way. Unlike an ordinary citizen, the Officer here was required to stop and attend to the situation. The Court further held that, the Board apparently lost sight of the fact that the Officer was required to stop and assist the motorist and instead focused on the alternatives available to the Officer to address the situation after he had stopped to assist. Although credibility determinations by a Board will often be relevant to an issue in a case, the Board’s finding in this case, that the Officer’s testimony was not credible as to the need for immediate action for safety reason, went to an issue that was not material. The Court held that it did not matter whether the Officer was incorrect or even incredible in his assessment of the situation and decision that immediate action was necessary. Rather, what was necessary for the Court’s determination was that, as a Police Officer, Mingus was required to stop and assist the motorist. Everything that occurred after that point was merely a matter of the Officer exercising his discretion in how best to handle the situation.

Accordingly, the Appellate Court reversed the Trial Court’s ruling and remanded the case back to the Pension Board with directions to award Officer Mingus a line of duty disability pension. This case illustrates that, when a Pension Board denies a disability pension based upon credibility determinations of a Police Officer, those credibility determinations must be material to the elements that an Officer is required to establish in order to obtain eligibility for a line of duty disability pension, pursuant to §5/3-114.1 of the Illinois Pension Code. v

 Pension Board Given Latitude with “Manifest Weight” Standard

 Goodman v. Morton Grove Police Pension Board

 –N.E.2d–, 2012 IL App (1st) 111480.

This case involves a Police Officer seeking a line of duty disability/non duty disability, as a result of an injury to his left knee, which allegedly occurred while conducting a traffic stop.

The Plaintiff, Morton Grove Police Officer Jason Goodman was employed as a Police Officer since May 1998. Prior to being appointed to the Morton Grove Police Department, the Officer injured the same knee while in the Army, which required arthroscopic surgery in 1995. He was awarded a partial disability pension of 10% from the Army in August of 2007 and was later honorably discharged in 1998. The Officer apparently did not have any issues with respect to his left knee until the injury which occurred on August 22, 2006.

While making a traffic stop on August 22, 2006, he sustained an injury to his left knee when he exited his squad car, stepped in a crevice in the pavement, and his knee gave out. The Officer was taken to the hospital. Ultimately, the Officer had surgery to repair a rupture of the anterior cruciate ligament and degenerative changes in the medial compartment.  He completed physical therapy and returned to full duty, but continued to experience pain and decreased range of motion.  He had problems running, using stairs, squatting or stooping, and other activities requiring him to bend his knee.

The Officer had a second surgical procedure – a microfracture surgery. He also underwent another course of physical therapy, but continued to have the same problems. The Officer’s treating physicians recommended a third surgical procedure, which the Officer declined.  His treating physician concluded that he had reached maximum medical improvement and concluded that the Officer was unable to return to duty as a police officer. Since there was no light duty position available, the Officer filed an application for disability benefits.

The Pension Board apparently attempted to obtain records from the Veterans Administration Hospital concerning the Officer’s previous injury and medical treatment. These attempts were unsuccessful. Ultimately, the Pension Board had the Officer evaluated by three (3) physicians selected by the Pension Board as required under §5/3-115 of the Illinois Pension Code; Dr. Michael Jacker, Dr. David Raab, and Dr. Chadwick Podromos. Dr. Jacker concluded that, the Officer had sustained a work related injury and that his outlook for recovery in return to employment as police officer was “guarded” even with surgery.  Dr. Jacker recommended a Functional Capacity Evaluation (FCE). Dr. Raab concluded that the Officer was “likely disabled” due to the October 22nd knee injury, not his injury or surgery from 1995. Dr. Raab further concluded that the Officer should be “functional” with regard to his ability to return to duty, but also recommended an FCE to determine his ability to work as a police officer. Dr. Podromos concluded that the Officer’s persistent pain was likely due to the femoral condyle articular cartilage lesions. Dr. Podromos concluded that the Officer was disabled and could not perform full unrestricted police duties.

Following the three independent medical examinations by the three Pension Board physicians, the Officer underwent a FCE. The FCE resulted in a comprehensive report, finding that the Officer was compliant and passed 35 of 37 reliability criteria. Citing the job description “Police Officer 1” from the Dictionary of Occupational Title (DOT), the evaluator concluded that the Officer should be able to continue to perform his duties as police officer, with certain limitations on lifting and carrying.

Following the FCE, Dr. Raab was provided with a copy of the FCE and asked for an addendum to his initial evaluation. Based upon the FCE, which Dr. Raab found to be valid, Dr. Raab concluded that the Officer could perform at the medium physical demand level. Since a police officer is classified as “medium duty” under DOT regulations, Dr. Raab agreed that the Officer could perform full duty as a police officer. The other two (2) Pension Board physicians, Dr. Jacker and Dr. Podromos, apparently did not review the results of the FCE. Following a hearing, the Pension Board issued its written decision and order, denying the Officer’s disability application in its entirety. The Board challenged the Officer’s credibility. The Board elected to place greater weight on Dr. Raab’s medical report and his review of the FCE. The Board did not issue a decision on the issue of “causation” (i.e. whether the disability was “duty related”).

As a result, the Officer filed a Complaint for Administrative Review. The Trial Court remanded the matter to the Board for hearing on the issue of causation. The Board issued an Order indicating that, if the Trial Court Order were affirmed on review, the Officer’s disability resulted from an “act of police duty”. Subsequently, the Trial Court entered an Order, reversing the Pension Board’s decision as against the manifest weight of the evidence. The Board appealed.

On Appeal, the Court applied the manifest weight standard (see previous case). According to the Court, there was no issue that the Officer sustained an injury from the performance of act of duty, or that he suffered continued issues from the injuries. The sole issue was whether the injury rendered the Officer disabled for service in the Police Department. The Court first addressed the Officer’s challenges that the Board was biased against him. The Court rejected that argument, finding that the Officer did not present any evidence that his disability application was adjudged prior to the hearing, other than his citing of the Board’s discussion of his credibility and the fact that it ultimately ruled against him. However, the Court found that, whether the Officer lacked credibility was not a determination necessary to resolve this case.

The Court found that there was competent evidence in the record to support the Pension Board’s determination that the Officer was not disabled, and capable of performing full and unrestricted police duty. The Court found that Dr. Raab’s medical opinion, based upon his review of the FCE and full review of all documents, was sufficient. The Court was not persuaded by the Officer’s argument that, the FCE was deficient for failure to gauge his ability to run and for following the DOT job description, rather than a job description furnished by the Police Department or Village. The Court was also not persuaded by the Officer’s arguments that the other two (2) Pension Board doctors had not reviewed the FCE. Accordingly, the judgment of the Trial Court was reversed.

Once again, this case illustrates the “manifest weight standard”. However, this raises the question as to whether all of the Pension Board physicians should be provided with all records in order to eliminate any argument that certain doctors where not provided with the identical information.

 Court Says Ex-Spouse’s Apportionment of Pension under QDRO is Final

 In re Marriage of Kehoe and Farkas

 –N.E.2d–, 2012 IL App (1st) 110644.

This case involves a Police Officer in dispute with his ex-wife concerning disposition of marital pension assets. (Hard to believe, isn’t it?)

Frank Farkaas was married to the petitioner Loretta L. Kehoe for six (6) years while he was employed as a Schiller Park Police Officer. In 1988, a judgment for dissolution of marriage was entered, with a Marital Settlement Agreement and Qualified Domestic Relations Order (QDRO) incorporated into the judgment.  As part of the Agreement, the Parties agreed that the ex spouse would be entitled to one half of the value of the Officer’s pension from the date of his employment as a Police Officer with the Village of Schiller Park, to the date of separation of the Parties, which was August 31, 1985. The QDRO was to take effect upon the Officer’s retirement. The Officer apparently thought that was the end of it and moved on.

The Officer retired effective November 17, 2009.  The Schiller Park Police Pension Board contacted the ex-spouse and informed her that because of the change in Illinois Law, Illinois Police Pension Funds will only pay benefits pursuant to a Court entered Qualified Illinois Domestic Relations Order (QILDRO), and that the Board was not required to honor a QDRO. The Officer’s ex-spouse sent him a QILDRO consent form, which he refused to sign. The ex-spouse then filed a Motion for Entry of a QILDRO, setting forth a formula which calculated the ex-spouse’s benefits by dividing the Officer’s Pension as of the date the pension went into pay status, as opposed to the date set forth in the judgment and initial QDRO. The Officer objected to her method of calculation of the pension arguing that the ex-spouse was only entitled to one half of the value of the pension from the date of marriage to the date of dissolution.

The Trial Court entered a written Order denying the ex-spouse’s Motion for Entry of QILDRO and ordered the Officer to pay the pension as per the original QDRO, 50% of the date of his pension as of the date of separation. The ex-spouse filed a Motion to Reconsider, which was denied. An Appeal followed.

On Appeal the ex-spouse made a number of arguments. The Court found that it was entitled to interpret the terms of the Marital Settlement Agreement in the same manner as a contract. In other words, the Court’s objective was to give purpose and intent to the original Marital Settlement Agreement, at the time they entered into the Agreement, which should be given a fair and reasonable interpretation based upon all the language and provisions of that Marital Settlement Agreement and QDRO. Of significance was the specific detail language of the original Marital Settlement Agreement and QDRO, which the Court found was not silent as to the method in which the pension would be divided and the formula for determining pension apportionment at the time of dissolution of marriage. In essence, what the ex-spouse sought to do was to change the methodology previously agreed upon in the Marital Settlement Agreement and QDRO, by increasing her entitlement to allow the ex-spouse to receive benefits from the entire growth and value of the Officer’s pension from the date of dissolution to the date of the Officer’s retirement.

Fortunately for the now retired Officer, the Court soundly rejected the ex-spouse’s arguments. §5/1-119 of the Illinois Pension Code, which went into effect July 1, 1999, contained specific statutory provisions per allowing an alternate payee of a voided QDRO, to petition the Court for an amended Order such as a QILDRO, which can comply with the new statutory provisions. However, that provision does not permit the ex-spouse another opportunity to formulate a method of apportionment, which would entitle her to greater share of the pension benefits that was originally agreed to in the Parties’ Settlement Agreement and QDRO. Accordingly, the Court affirmed the Trial Court’s finding that the ex-spouse was not entitled to more pension benefits than she originally agreed to in the original Marital Settlement Agreement and QDRO. However, the case was remanded to the Trial Court for entry of an appropriate QLDRO, spelling out the terms of the original Settlement Agreement and initial QDRO. Justice Garcia dissenting.

What apparently saved the day here was, the detailed and specific provisions of the Marital Settlement Agreement and QDRO, which prohibited the ex-spouse from revisiting this issue, once the QLDRO provisions went into effect.

 

Florida Trial Court Rejects Florida Legislature’s Attempts to Reduce Pensions

 Williams, et al. v. Scott, et al.

Case No. 2011 CA 1584, Circuit Court of Leon County Florida; Judge Fulford, Judge presiding; issued March 6, 2012.

 While not an Illinois case, this case is interesting for those of you who are following the nationwide pension “jihad.” This is a Florida Trial Court case granting summary judgment in favor of members and participants of the Florida Retirement System (FRS), challenging the provisions of Senate Bill 2100 that mandate a deduction of 3% from the gross compensation of employees in FRS to serve as contributions towards the employers retirement benefits under the plan, and to eliminate Cost of Living Adjustments (COLA) for service credits earned after July 1, 2011. The case discussed herein is the Trial Court’s granting of a Motion for Summary Judgment (meaning since there are no contested issues of fact, plaintiffs are entitled to judgment as a matter of law, and there was no trial) in favor of the Plaintiffs, and an Appeal will no doubt follow.

In 1974, the Florida legislature changed the FRS to a mandatory, non contributory pension system. At the same time the legislature added a provision to the Florida statutes, which provides as follows:

“The rights of members of the retirement system established by this chapter shall not be impaired by virtue of the conversion of the Florida retirement system to an employee non contributory system. As of the effective date of this act, the rights of members of the retirement system established by this chapter are declared to be of a contractual nature, entered into between the member and state, and such rights shall be legally enforceable as valid contractual rights and shall not be abridged in any way.”

Does this sound familiar? This statutory provision is similar, but not identical, to the provision of Article 13, §5 of the Illinois Constitution, which protects membership in Illinois Public Pension systems. Anyway, throughout the thirty-seven (37) years since the adoption of that provision by the Florida legislature, FRS remained a non contributory system and also provided retirees annual COLA increases throughout their retirement.

In 2011 the Florida legislature, when faced with a budget short fall turned to the employees of FRS, and passed Senate Bill 2100 effective July 1, 2011. Most of the changes applied only to employees enrolled in FRS after the Bill’s effective date. However, Senate Bill 2100 had two significant changes to FRS: to employees who were FRS members prior to July 1, 2011; 1) the mandatory 3% employee contribution and 2) the elimination of COLA increases.  Senate Bill 2100 significantly decreases the amount employers must contribute to FRS for the benefit of their employees by more than half for nearly every membership class.

The Plaintiffs challenged the legality of Senate Bill 2100 on a number of theories. First that the changes to FRS violated the contractual rights conferred upon them by the above referenced Florida statutory provision, and thus constituted impairment of contract in violation of the Florida Constitution. In addition, the Plaintiffs also asserted that the changes constituted taking in violation of Article X, § 6 of the Florida Constitution and that the changes violate their rights to engage in collective bargaining protected by Article I, § 6 of the Florida Constitution.

The trial court first addressed the “impairment of contract claim.”  The changes at issue in this case constituted a complete change in the plan from a non-contributory to a contributory plan, and the elimination of COLA adjustments, were held to be qualitative changes to the plan, not changes to the individual components of future accruals within the plan.  The Court held that the above-referenced Florida provision cannot be read to allow the Legislature to redefine established unconditional contractual rights.  Such a reading would render the express contract created by the above-referenced statutory provision “wholly illusory,” said the Court.  While the Legislature is capable of making prospective alterations to benefits, neither that statutory provision, nor case law, authorizes the Legislature to change the fundamental nature of the plan itself.   In addition, the Court held that the plaintiffs’ claim did not end with an impairment inquiry.  For an impairment of a contract to be unconstitutional, it must also be “substantial.”  In this case, the unrebuted evidence presented by the Plaintiffs’ demonstrated that the costs of the changes to the individual plaintiffs’ ranged from $12,445.81 to $329,683.56, over the span of their working years and retirement if they received no further salary raises.  In addition, the elimination of future COLA increases alone would result in a 4% to 24% reduction in the plaintiffs’ total retirement income.  The Court held the “cost” impact was “substantial” as a matter of law.

The final step of the impairment analysis was a determination by the Court whether the impairment was both reasonable and necessary to serve an important public purpose.  In order for the State to justify impairment of its contractual obligations, it must demonstrate a “compelling state interest.”

The Court found the fact that the State faced a significant budget shortfall alone was insufficient.  The undisputed record contained evidence that there were other reasonable alternatives which existed to preserve the State’s contract with FRS members.  The Court held that the State could reduce its financial obligations whenever it wanted to spend money for what it regarded as an important public purpose, the contract clause would provide no protection at all.

The Court also soundly rejected the “takings claim” and “collective bargaining claim” asserted by the plaintiffs.  Summary Judgment was entered on behalf of plaintiffs, and the defendant’s Motion for Summary Judgment was denied.  The Court struck down that portion of Senate Bill 2100 imposing a three percent (3%) mandatory employee contribution and eliminating the COLA increases for future service, as unconstitutional, as applied to FRS members who were members prior to July 1, 2011, and the State was permanently enjoined from implementing those provisions of Senate Bill 2100 as to those Plaintiffs.  (Stay tuned!)

 Illinois Supreme Court Clarifies Eligibility for PSEBA Benefits During Training

 Gaffney v. The Board of Trustees of the Orland Fire Protection District, et al. and Lemmenes v. The Orland Fire Protection District, et al.

2012 IL 11012.

Both Michael Gaffney and Brian Lemmenes were injured during two separate training exercises while working full and unrestricted duties as Orland Park Firefighters.  Both firefighters were awarded line-of-duty disability pensions as a result of those injuries.  Subsequent to the granting of line-of-duty disability pension benefits, both firefighters sought statutory benefits in the form of “continuing health coverage” under the Public Safety Employee Benefits Act (“PSEBA”), which requires employers of full-time firefighters to pay health insurance premiums for the firefighter and his or her spouse and dependent children if the firefighter suffers a catastrophic injury as a result of a response to what is reasonably believed to be an emergency.  In the lower courts, Gaffney was denied the PSEBA benefits and Lemmenes was granted the PSEBA benefits.

Gaffney had injured his shoulder in 2005 during a training exercise in which he was required to participate. It was a live-fire exercise, but he knew that it was a training exercise. There was no dispute that he had sustained a “catastrophic injury” which ended his career.  His crew responded with the engine’s lights and siren activated. The hose which Gaffney and his crew were advancing became entangled while his crew was advancing from the second floor to the third floor with “no visibility” through smoke and obstacles. Gaffney followed the hose back to where it was entangled in a loveseat. He moved the loveseat by flipping it backward, injuring his shoulder. Gaffney asserted his catastrophic injury occurred while he was responding to what he reasonably believed to be an emergency, i.e., the unforeseen event when the hose became entangled in the loveseat and he was required to go back and untangle it.  On the contrary, Lemmenes was required to participate in a training exercise which took place in 2002. It did not involve a live fire, but was a simulation in which there was no smoke, but participants’ headgear was “blacked out” so they could not see. They were instructed to “respond as if it were an actual emergency.” In a purported mission to rescue someone who was trapped in a burning building, Lemmenes injured his knee when attempting to pull the victim out.  There was no issue as to whether or not something was foreseeable in this circumstance.

After his denial of PSEBA benefits, Gaffney filed a circuit court complaint seeking a declaratory judgment that he was entitled to the benefits. The circuit court found that training exercises were not covered and, therefore, that Gaffney could not reasonably have believed there was an emergency. It agreed with the Board’s denial of benefits, and the appellate court affirmed the denial of PSEBA benefits.    For Lemmenes, after initial refusal of his request for benefits, Lemmenes sought a declaratory judgment in the circuit court, and was awarded a summary judgment, which the appellate court affirmed granting the PSEBA benefits.

The Illinois Supreme Court reviewed the precedential law on which the appellate court had relied upon as a standard for the meaning of the undefined statutory term “emergency.”  This had previously been defined as “that which is urgent and calls for immediate action.” The Illinois Supreme Court ultimately agreed with this, but added an additional element to the definition of “emergency” — the element of unforeseeability.

The Supreme Court ruled that in the case of a firefighter, whose job is responding to situations involving imminent danger to persons or property, the word “emergency” means an “unforeseen circumstance that involves imminent danger to persons or property and that requires an urgent response,” i.e., the hose that became tangled in the Gaffney case.  The Court also held that an unforeseen circumstance calling for urgent and immediate action can arise in a training exercise (like Gaffney), and it noted that the General Assembly had not chosen to exclude training exercises from the coverage of the benefit statute. Therefore, the circuit court’s and appellate court’s judgment rejecting benefit eligibility was reversed as to Gaffney, and granting benefit eligibility was reversed as to Lemmenes where there was no issue of whether or not there were foreseeable circumstances that were urgent and required immediate action. v

Illinois Supreme Court Clarifies When PSEBA Benefits Become Payable

 Nowak v. City of Country Club Hills

2011 IL 111838.

In Nowak, the Plaintiff, Don Nowak, worked as a full-time law enforcement officer for the City of Country Club Hills (the City).  On August 21, 2005, plaintiff was injured in the line of duty while attempting to make an arrest. He never returned to work as a police officer. For 12 months following the date of his injury, plaintiff received 100% of his salary, as required by section 1(b) of the Public Employee Disability Act (PEDA). For a short time thereafter, he continued to receive his full salary and benefits through a combination of accrued sick and vacation time, two weeks’ light duty, and temporary total disability payments under the Workers’ Compensation Act.  During the 12 months that plaintiff received his full salary under PEDA, the City continued to deduct 20% of the applicable health insurance premiums from his paycheck pursuant to the then in place collective bargaining agreement between the parties.  After plaintiff’s PEDA benefits expired, plaintiff continued to participate in the City’s health insurance plan and continued to pay 20% of the applicable health insurance premiums to the City on a monthly basis.

In February 2008, plaintiff applied for disability benefits. On October 14, 2008, the City’s police pension board (the Board) awarded plaintiff a line-of-duty disability pension under the Illinois Pension Code, effective September 1, 2006. The City immediately began paying 100% of plaintiff’s health insurance premiums, as required by section 10(a) of the Public Safety Employee Benefits Act (PSEBA).  Following the Board’s decision, plaintiff requested reimbursement from the City for the health insurance premium contributions he had paid since the date of his injury. The City refused plaintiff’s request. Nowak then filed a civil complaint seeking reimbursement of those contributions. The parties submitted a stipulation of facts and filed cross-motions for summary judgment. The circuit court denied plaintiff’s motion and entered summary judgment in favor of the City.  Plaintiff appealed, and the appellate court reversed and held in favor of Nowak.

On appeal, the Illinois Supreme Court ruled that an injured police officer’s employer does not become statutorily obligated to pay the entire health insurance premium for him and his family until it is determined that he will never return to work because of permanent disability caused by a catastrophic injury, i.e., when he is awarded a line-of-duty disability pension.  Therefore, the employer is obligated to pay for PSEBA benefits retroactive to the date the line-of-duty disability pension was awarded by the Pension Board, not the date the officer was actually injured.  Therefore, the Illinois Supreme Court reversed the appellate court and upheld the circuit court’s decision which denied Nowak’s claim.  The municipality is only obligated to begin paying once the Pension Board determines that the Plaintiff is catastrophically disabled, i.e., when the Board grants a line of duty disability pension.

It is important to note in Nowak that the granting of a line of duty disability pension benefit is only the first prong under PSEBA benefits.  In Nowak, the City accepted the PSEBA claim immediately and began to pay out benefits, the only question was when the obligation to pay benefits attached.  Normally, under PSEBA, a claimant must be found to be “catastrophically injured” and also satisfy the second prong in that the claimant must meet one of four possible requirements. The body of the Statute is below:

In order for the law enforcement, correctional or correctional probation officer, firefighter, spouse, or dependent children to be eligible for insurance coverage under this Act, the injury or death must have occurred as the result of the officer’s response to fresh pursuit, the officer or firefighter’s response to what is reasonably believed to be an emergency, an unlawful act perpetrated by another, or during the investigation of a criminal act. Nothing in this Section shall be construed to limit health insurance coverage or pension benefits for which the officer, firefighter, spouse, or dependent children may otherwise be eligible. 820 ILCS 320/10(b). v

RJR Attorney News

 

  • Richard J. Reimer has been included in the roster of Illinois Super Lawyers since 2008, recognized by his peers for excellence in employment and labor law, and listed in the “Top Attorneys in Illinois” by Chicago Magazine, February 2012.
  • Keith A. Karlson attended the International Association of Firefighters (IAFF) Attorneys’ Conference in Hollywood Beach, Florida on February 17-19, 2012.
  • Keith A. Karlson received the William Hart Amicus Volunteer Award from the Illinois Trial Lawyers Association on June 10, 2011.