Madigan seeks dismissal of challenge to new retiree health insurance law

By Bethany Krajelis | Nov 16, 2012

The state’s top prosecutor has asked a Sangamon County judge to dismiss four lawsuits over a law that requires state retirees to start paying premiums for their health insurance.

In a motion to dismiss filed Nov. 2, Illinois Attorney General Lisa Madigan's office argues that the constitutional challenge to the relatively new law should be thrown out for failure to state a claim and lack of jurisdiction.

Filed over the summer in three different jurisdictions, all four suits claim that Public Act 97-695 violates the state Constitution’s Pension Protection Clause by requiring retirees to pay premiums for their health insurance.

The law, which took effect July 1, requires retired state employees, as well as former judges, lawmakers and university workers, to pay premiums for their health insurance, something the state previously paid for after four to 20 years of service depending on position.

Gordon Maag, a former justice on the Fifth District Appellate Court, brought the first challenge to the law in late June in Sangamon County.

Three more class action complaints were filed in July and August in Sangamon, Madison and Randolph counties. They were consolidated in September in Sangamon County.

The suits claim the law changes benefits for members of the state’s pension and retirement systems in violation of the Pension Protection Clause, which dubs membership in these systems as an “enforceable, contractual relationship, the benefits of which shall not be diminished or impaired.”

Madigan’s office, however, contends that’s not the case.

The attorney general’s office represents the state officials named as defendants in the complaints and is typically responsible for defending the constitutionality of Illinois laws.

“Plaintiffs’ claims under the Pension Protection Clause should be dismissed because the clause protects only pension benefits and does not prevent the government from raising the cost of other employment benefits, including health insurance,” Madigan’s office asserts in its motion.

It adds that, “this construction of the clause is supported by the language and history of the clause, the General Assembly’s decision to codify retiree health benefits in the Employees Insurance Act, rather than in the Illinois Pension Code,” and case law.

In addition to that argument, two of the four complaints claim the new law violates the Constitution’s Contracts Clause because it impairs an employment contract between the state and its employees.

Madigan’s office, however, rejects this argument, saying that “the Employees Insurance Act is not a contract and consequently, the modifications to it did not impair any contractual obligations.”

And even if the Act can be considered a contract, her office states in its motion that “the General Assembly did not substantially impair it because its decision to modify the premium schedule was foreseeable and consistent with the authority it always has exercised over the terms and conditions of state-sponsored health insurance coverage.”

In its motion, Madigan’s office also contends that some of the suits’ claims for damages and against state officials need to be dismissed for lack of jurisdiction under the State Lawsuit Immunity Act.

Assistant Attorney General Richard Huszagh submitted the motion on behalf of the attorney general’s office, along with colleagues Paul Berks, Marni Malowitz, Kate Pomper and Patrick Fitzgerald.

The plaintiffs in the four suits are represented by several lawyers, including area attorneys Peter and Thomas Maag in Wood River and Ethan Flint in Glen Carbon.

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