Plaintiffs in retiree health insurance suit respond to Madigan's motion to dismiss

The Illinois Constitution’s Pension and Benefits Protection Clause does not limit “benefits” to retirement income, a handful of state retirees assert.

These retirees -- five plaintiffs in one of four lawsuits over a new law that requires retirees to start paying premiums for their health ins


urance – filed a memorandum Monday in opposition to the state’s Nov. 2 motion to dismiss.

The suits claim that Public Act 97-695 is unconstitutional because it violates the Pension and Benefits Protection 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.”

Filed over the summer in Madison, Randolph and Sangamon counties, the four suits that seek class action status were consolidated in September in Sangamon County.

Madigan’s office, which represents the state officials named as defendants, asked Circuit Judge Steven Nardulli last month to throw out the constitutional challenge for failure to state a claim and lack of jurisdiction.

In its motion to dismiss, Madigan’s office argues that the Protection Clause the plaintiffs focus on in their arguments “protects only pension benefits and does not prevent the government from raising the cost of other employment benefits, including health insurance.”

The plaintiffs in one of the two suits originally brought in Sangamon County, however, contend that the “clause refers to ‘benefits’ without limiting them to ‘retirement income.”

Springfield attorneys John Myers and Don Craven filed the memo Monday on behalf of Roger Kanerva, Susan Haury, Frances Welters, Colleen Votsmier and Neil Hoover.

Pointing to the dictionary definition of “benefits,” the Kanerva plaintiffs assert in their memo that it is of such common knowledge that “medical insurance is a benefit of employment” that “citation is hardly needed to prove the point.”

According to the memo, “a large subclass of the Kanerva plaintiff class consists of retirees who took early retirement under the Early Retirement Incentive (ERI) program in 2002, in reliance on promises made by the state that their medical benefits would be sacrosanct in retirement.”

This aspect highlights one difference between the claims brought by the Kanerva plaintiffs and those brought by plaintiffs in the other four suits.

In addition to arguments made under the Protection and Contract clauses, the Kanerva plaintiffs make promissory estoppel claims that focus on the ERI subclass.

By relying on the state’s alleged promise to pay their premiums, “those retirees gave up years of increased earning potential and froze their pensions in place at a lower level.”

The Kanerva plaintiffs also claim that the new law is “an unconstitutional delegation by the General Assembly of legislative power not accompanied by intelligible standards to the director of the Department of Central Management Services.”

The law requires CMS to set health insurance premium rates for retirees, but does not provide specific standards, the plaintiffs contend in their memo.

To bolster their argument, the Kanerva plaintiffs point to a June event in which CMS director Malcolm Weems and Janice Bonneville, his deputy director of benefits, spoke to retirees.

They were “refreshingly candid about the vagueness of the law,” the memo states, noting that speeches from the CMS pair can be found on YouTube (Illinois Channel TV uploaded it on July 15).

“Even if CMS were best suited to set rates, the Constitution requires the legislature, and the legislature alone, to legislate,” they assert.

In addition, the Kanerva plaintiffs claim that Alaska and Hawaii court rulings should be instructive in this case, not the New York case cited by the defendants in support of their argument.

Courts in Alaska and Hawaii in 2003 and 2010 respectively held that medical insurance benefits are considered benefits protected by their state constitutions, the memo states.

The New York case cited by Madigan’s office is from 1985, according to the plaintiffs’ memo, which states that “In short, New York precedent, like the late Rodney Dangerfield, gets little respect here in Illinois.”

Plaintiffs in the three other suits over the state retiree law were also scheduled to file responses Monday to Madigan’s motion to dismiss.

Gordon Maag, a former Fifth District Appellate Court justice, brought the first challenge to the new law in June in Sangamon County. His lawyer's firm, the Maag Law Firm in Wood River, declined to comment