Volume 10, Issue 3 July 2012
Legal and Legislative Update
Recent Court Decision
Pension Boards May Be Subject to Class Action Liability; Watch for ‘Systematic Miscalculation’
Hooker v. Retirement Board of the Firemen’s Annuity & Benefit Fund of Chicago,
2012 ILApp. 111625 (1st Dist.).
In May, Illinois’ First District Appellate Court considered a case involving benefits for surviving spouses collecting under Article 6 (Chicago Fire) of the Illinois Pension Code. This is the case’s second trip to the appellate court and, based on the way the decision came out, we may have not heard the last of this case.
In 1988, Chicago Firefighter Michael Hooker suffered a debilitating injury in the line of duty. Firefighter Hooker died in 2000. The Board then awarded Mrs. Hooker the minimum “widow’s” annuity. Mrs. Hooker challenged the Board’s decision, arguing she was entitled to line-of-duty death benefits. The trial court agreed. The Board appealed, but the appellate court sided with Mrs. Hooker and against the Board. See Hooker v. Retirement Bd. of the Firemen’s Annuity & Benefit Fund of Chicago, 391 Ill.App.3d 129 (2009)(referred herein as “Hooker I”).
In 2004, while Hooker I was pending, the Illinois State Legislature passed P.A. 93-654. This act amended the code to include “duty availability pay” (“DAP”) as part of the pensionable salary of some employees, including the late Firefighter Hooker. The Board refused to include DAP into Mrs. Hooker’s benefit. In light of that consideration, Mrs. Hooker returned to the Circuit Court of Cook County. This time, Mrs. Hooker filed a class action lawsuit on behalf of all similarly situated surviving spouses. The Board argued the surviving spouses were not entitled to have DAP increase the amount of her pension because the late Mr. Hooker had never been paid DAP. The circuit court agreed with the Board and refused to certify the class. Mrs. Hooker appealed.
The appellate court reversed the trial court’s decision. In rejecting the Board’s argument, the court explained:
“We agree with the Board that for any calculation based on the salaries [firefighters] received, the Board should not include duty availability pay in the calculation. However, the legislature expressly chose to make the [surviving spouse] annuity in section 6-140 depend on the ‘current annual salary attached to the classified position to which the fireman was certified at the time of his death,’ and not on the salary the fireman received.”
In light of this analysis, the court concluded Mrs. Hooker’s pension should include DAP.
The appellate court also held the trial court erred by refusing to certify a class. The trial court and the Board believed the administrative review law, under which all pension board decisions are able to be challenged, were not subject to a class action
lawsuit. However, the appellate court held, “The Administrative Review Law does not preclude a class action to correct the Board’s systematic miscalculation of the annuities owed class members.” The court further explained, “a class action should serve as an efficient means of resolving the issue.”
Mrs. Hooker died on September 20, 2010, while the appeal was pending. The court refused to determine whether the Board was required to pay Mrs. Hooker’s estate the sum owed. The court instructed the trial court to deal with this matter.
While this case solely deals with Article 6 of the Pension Code, it provides some insight as to how pension statutes are construed by the courts. Moreover, it gives some traction to the argument that when pensions are miscalculated due to a “systematic miscalculation” they may be subject to review and correction. At the same time, this case shows when pension boards make errors they may be subject to class action liability.
With the combat operations in Iraq having come to an end just seven months ago, and the campaign in Afghanistan set to return home 23,000 servicemembers during the summer of 2012, local Police and Fire Departments will undoubtedly see employees soon returning from military absences.
The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) is federal law that establishes guidelines for employers to follow with respect to servicemembers returning to their non-military employment. In doing such, it outlines parameters which focus to protect job rights and benefits of veterans. USERRA applies to all employers, regardless of size. Its goal is to return employees to their jobs, as if they had never left.
USERRA only applies to employees who meet certain criteria, among them: proper notice must have been given prior to deployment; the total service period is not to exceed five years; the servicemember must have been released under honorable or general conditions; and the individual must report back to their job within a specified timeframe. A few of the protections forwarded by USERRA includes return to employment without loss of seniority (including pension credit), status, or pay rate.
Section 4318 (Employee Pension Benefit Plans) of USERRA specifies that a person who makes contributions to a pension plan shall make those payments beginning with the date of reemployment, with a duration of three times the military service period, not to exceed five years.
Though, USERRA is careful not to step on any toes in the legal sense; the law specifically allows other Federal law, as well as State and local law, municipal ordinance, or contract – to grant greater benefits to military members. Title 20 of the Code of Federal Regulations further enumerates that USERRA establishes a floor for reemployment rights and benefits of servicemembers. As a result, it is common for other laws to provide greater rights and benefits than is found under USERRA.
For example, Illinois state pension law provides that a police officer is entitled to creditable service for military time, provided that “upon applying for a permanent pension”, the police officer pays any contributions into the fund the amount that officer would have paid during military service, with the total amount of such creditable service not to exceed 5 years. (See 40 ILCS 5/3-110). Illinois pension law for firefighters contains identical “upon applying for a permanent pension” language, as well as the 5 year maximum limitation. (See 40 ILCS 5/4-108). These Illinois laws afford greater benefits to a military servicemember by allowing that servicemember to repay contributions to a pension fund up until the time they apply for a pension benefit – a potentially much longer period than the three times the military service period as defined under USERRA.
Another Illinois specific law is the Local Government Employees Benefits Continuation Act. It provides for any employee of a unit of local government to continue to receive the same regular compensation, plus health insurance and other benefits, minus the amount of base pay for military service, for the duration of the active military service. This includes employers continuing pension contributions on behalf of those employees to their pension fund – based on the servicemember’s full pay – even though the employer is only paying the differential. Local government employers only need not comply if 20% or more of their employees are mobilized. As with USERRA, if any other agreement or policy affords more benefits, that generosity controls.
These laws, and others, were established to protect those who return to civilian employment after giving their time while serving in the military. When appropriate, it is crucial that servicemembers are given the benefits to which they are entitled.
The foregoing article was a brief overview of some of the laws affecting returning servicemembers and their pensions. It is not comprehensive and not intended to give legal advice. For legal or fact specific situations, contact an attorney with questions.
RJR Attorney News
- Richard Reimer was a speaker at the April 27, 2012 Illinois Professional Firefighters’ Associates Spring Seminar, speaking on the Illinois Freedom of Information Act and Legal Updates.