Q&A: Ongoing legal cases

In 2010, AFSCME Council 31 filed suit in Cook County Circuit Court challenging the Quinn administration’s requirement that state retirees pay part of the cost of dental coverage under the state health plan.

AFSCME Council 31 argued that the state has historically bargained with the union over the terms of retiree health care and that the Department of Central Management Services cannot unilaterally make changes to those terms without first negotiating with the union.

When the state announced its intention to charge retirees for dental coverage, AFSCME immediately objected and demanded to bargain over the proposed change. But CMS insisted that it had the right to implement the change without having to negotiate with the union. The department notified all state of Illinois retirees who were participating in the dental plan that in order to maintain coverage, they would have to pay $11 per month toward the cost of the premium. More than 4,000 retirees dropped their coverage as a result.

The union filed a grievance that went to arbitration, but the arbitrator did not rule on the merits of the grievance, instead asserting that Council 31 could not enforce the rights of retirees through the grievance procedure. In the lawsuit, AFSCME is asking the court to vacate the arbitrator’s award, arguing that he was limited to using only language that is in the collective bargaining agreement to reach his decision and did not in this case, thus exceeding his authority. Further, the union argues, the decision is contrary to the provisions of the Illinois Labor Relations Act.

The circuit court ruled that Council 31 should “exhaust all administrative remedies.” The case is now back before the Illinois Labor Relations Board, which reviews complaints pertaining to the Illinois Labor Relations Act. Now, the case is awaiting the Illinois Labor Board’s director to issue a complaint.

In light of the Illinois Supreme Court's ruling in Kanerva v. Weems, AFSCME and our partners will be preparing to challenge the dental premium case anew. We will pass on further informationa s developments occur.

In spring 2012, the General Assembly passed, and Gov. Pat Quinn signed, SB 1313 (Public Act 97-695), which effectively removes the legal right to affordable health care for state and state university retirees.

While the current state contract preserves affordable health care for retired state and state university workers, the language of the law leaves open the possibility that in the future the state could try to act unilaterally to raise premiums.

Once the measure became law, AFSCME, joined by the IFT, the FOP and INA, filed a lawsuit seeking to have the law overturned on the grounds that it constituted an unconstitutional diminishment of retiree benefits and was also a violation of the AFSCME contract. This lawsuit was consolidated with three others that made a similar claim.

In March 2013, a Circuit Court judge granted the state’s motion to dismiss these lawsuits. The unions appealed this decision to the state Supreme Court, which heard oral arguments on Sept. 18, 2013.

On July 3, 2014, in a major victory, the Supreme Court reversed the lower court’s dismissal of all four lawsuits.

The court found that health care benefits for retired state and university employees are protected by the pension protection clause of the state constitution (Article XIII, Section 5) and cannot be diminished or impaired. The court sent the case back to Circuit Court for further proceedings.

In its opinion, the court indicated it supported the “plain language” of the pension protection clause without “restrictions or limitations” – an interpretation that includes health care benefits.

In August 2014, as the healthcare premium returned to the circuit court, the union filed a motion asking Circuit Court judge Stephen Nardulli to immediately declare the healthcare premium law unconstitutional or grant a preliminary injunction halting its ongoing implementation. While the judge has not yet issued a final ruling which invalidates the law, he granted the unions’ request for an injunction that returns retirees’ premium costs to the levels that were in place before this law was implemented. This means that those retirees who were not paying anything toward the cost of their premiums prior to last July will no longer be paying premium contributions beginning in October.

Before the refunds can be disbursed, an accounting will be conducted for money paid by each individual retiree, including interest owed.

At a hearing on December 18^th, Sangamon County Circuit Court Judge Steven Nardulli approved a timeline for disbursing the refunds to affected retirees. This timeline also ordered the state to calculate and include in the refund the interest that is owed to each retiree for the withheld healthcare premiums. According to this schedule retirees should receive their refund by June 2015.

The “class notices” regarding the refunds are now being sent out to all affected retirees. You do not need to reply to the notice in order to receive your refund. The court has had a website set up to provide you with relevant court orders. You can access this site at: www.kanervahealthinsurancerefund.com.

Unfortunately, a conflict has arisen regarding attorney fees in this case. Cornfield and Feldman, the firm representing AFSCME and our union partners, does not get paid on a contingency fee basis; the unions are paying these legal fees out of union funds based on the law firm’s normal hourly billing rate. 

However, other groups that sued the state on this issue signed agreements with their attorneys to allow them to receive a contingency fee, i.e. a percentage of the final award.  That means anything they are paid is taken out of the funds allocated to pay you and other retirees your refunds.  Some of these attorneys are pressing for exorbitant fees—far in excess of the hours they have actually worked—which would deplete the funds available to reimburse retirees for the excess premium payments they have made.

Judge Nardulli will determine how much these “contingency fee” attorneys will be paid.  AFSCME will object to their being paid anything beyond the normal hourly rate for work actually performed.   

As a result of these attorney fees, effected retirees are receiving class-action opt-out letters in the mail.

What that means is, while retirees will still have some attorney fees deducted from their refund, it will be in the neighborhood of 1-2% of their refund deducted for attorney fees. For most retirees this will be about $5 - $10. Therefore it is likely that most members will choose to NOT opt-out of the class action.

That means you don't have to do anything with that paperwork, and you should receive your refund in the late May-June time frame.

*Limits of This Ruling. It is important to note that this ruling only impacts premium contributions paid by retirees for their own coverage. Contributions for dependent coverage are not impacted by this case. In addition, all other facets of your health insurance plan are unaffected by this case.

Following the pension-slashing Senate Bill 1, AFSCME Council 31 along with its union allies in the We Are One Illinois coalition and a group of active and retired public employees filed suit on January 28 in Sangamon County Circuit Court in Springfield.

Our lawsuit argues that the "pension theft" law violates the pension clause of the Illinois Constitution, which unequivocally states that a public employee’s pension is a contract that the state cannot diminish or impair.

Defendants in the lawsuit are Governor Pat Quinn, other constitutional officers, the state retirement systems and their boards.

Read the full complaint here: http://www.weareoneillinois.org/WeAreOneIllinois_Complaint.pdf

We strongly believe SB1 should not be implemented before a court makes its decision on its constitutionality. Consequently, We Are One Illinois has sought for the past several weeks to reach agreement with the state Attorney General and the named defendants on a joint request to the court to enjoin the law’s implementation. Regrettably, the Attorney General refused. In our filing, our coalition reserves the right to seek an injunction.

On March 3, 2014, the Illinois Supreme Court ordered that the four separate lawsuits challenging SB1 should be combined and heard together in Sangamon County Circuit Court.

On May 14, the judge granted a temporary restraining order and a preliminary injunction, meaning the law – Public Act 98-599 – will not go into effect on June 1 as scheduled. The injunction will remain in effect until a determination is made on the law’s constitutionality, unless the court takes further action on the injunction prior to that time. This is good news for retirees, because it means that you will still receive your deserved COLA’s while the lawsuit is ongoing.

In Novmber 2014, Judge Belz sided with union attorneys and declared SB1 unconstitutional. The case will now be fast-tracked to the Illinois Supreme Court. While that case is still unfolding, do remember that the union already won an injunction against the effects of SB1. This means that as long as the lawsuit is ongoing the state will still pay you the COLA that you earned and deserve.