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Illinois retiree health premiums

Illinois retiree health premiums

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Published by Dean Olsen
Sangamon County Associate Judge Steven Nardulli issued an order March 19, 2013, that ruled the imposition of health-care premiums for Illinois state government retirees constitutional. His order was appealed to the Illinois Supreme Court, which was expected to rule on the matter Thursday, July 3, 2014.
Sangamon County Associate Judge Steven Nardulli issued an order March 19, 2013, that ruled the imposition of health-care premiums for Illinois state government retirees constitutional. His order was appealed to the Illinois Supreme Court, which was expected to rule on the matter Thursday, July 3, 2014.

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Published by: Dean Olsen on Jul 02, 2014
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07/04/2014

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 In the Circuit Court for the Seventh Judicial Circuit Sangamon County, Springfield, Illinois  ______________________________________________________________________________ GORDON E. MAAG, et al., individually and ) on behalf of all others similarly situated, ) Plaintiffs, ) Case No. 2012 L 162, v. ) consolidated with PAT QUINN, in his official capacity as governor ) Case No. 2012 MR 582 of Illinois, et al., ) Defendants. )  ______________________________________________________________________________ ROGER KANERVA, et al., on behalf of a Class ) of Persons Similarly Situated, ) Plaintiffs, ) v. ) Case No. 2012 MR 582 MALCOLM WEEMS, director of the Illinois ) Department of Central Management Services, et al., ) Defendants. )  ______________________________________________________________________________ GARY McDONAL, et al., and all other persons ) similarly situated, ) Plaintiffs, ) Formerly Madison County v. ) Case No. 2012 L 987 PATRICK J. QUINN, III, in his official capacity ) as Governor of Illinois, et al., ) Defendants. )  ______________________________________________________________________________ DEBRA BAUER, et al., ) Plaintiffs, ) Formerly Randolph County v. ) Case No. 2012 L 35 MALCOLM WEEMS, Director of the Illinois ) Department of Central Management Services, et al., )  ______________________________________________________________________________ Order The State Employee Group Insurance Act, 5 ILCS 375/1, (2012) (
SEIGA
”)
allows the Director of the Department of Central Management Services
(“CMS”)
to allocate the cost of health insurance premiums between the State and retired public employees. (Public Act 97-695, effective July 1, 2012.) The stated legislative pu
rpose is to “... facilitate the maintenance of the
 
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  program of grou
 p health benefits provided to annuitants, survivors and retired employees” by
altering the allocation of premiums between the State and retirees. 5 ILCS 375/15 (a) (2012). Public Act 97-695 delegates to the Director of CMS the authority to determine, on an annual basis, the amount that the State shall contribute to the basic cost of group health insurance  benefits on behalf of retirees. To calculate the amount, the Director may rely upon the actual cost of medical services adjusted for age, sex or geographic or other demographic characteristics which affect the costs of such programs. 5 ILCS 375/10(a) (2012). Among retirees, premium  payments will be determined by the Director of CMS. The Director may consider whether an employee is eligible for Medicare.
Complaints
All Plaintiffs assert that the 2012 amendments to the SEIGA are an unconstitutional violation of the Illinois Constitution Pension Protection Clause, Illinois Constitution Article XIII Section 5. The
 Bauer 
 and
 Kanerva
 Plaintiffs assert that the amendments to the SEIGA violate the Illinois Constitution Impairment of Contracts Clause, Illinois Constitution Article 1 Section 16. They further allege that the Board of Trustees of the State Employee Retirement System
(“SERS”) and CMS have breached their contract regarding health insurance for retirees.
 The
 Kanerva
 complaint asserts that the SEIGA constitutes an unconstitutional delegation of authority from the Legislature to the Director of Central Management Services because the delegation does not provide sufficient legislative direction. The
 McDonal 
 complaint seeks money damages from various State officials. The
 Maag, McDonal
and
 Kanerva
complaints seek to enjoin the Governor, Treasurer and Comptroller from implementing the 2012 amendments to the SEIGA. The Defendants have moved to dismiss each of the complaints pursuant to 735 ILCS 5/2-615 and 735 ILCS 5/2-619(a)(1). Both Plaintiffs and Defendants have referenced a vari
ety of unsworn “facts,” asking the court to take judicial notice of those “facts.”
The court has reviewed the various propounded
“facts”
, such as a study by the Henry Kaiser Foundation, an audit promulgated by the Auditor General, and a CD of a discussion of a retirement benefits at a State University Retirement System forum. The court determines that in the context of the pleadings before the court, and for  purposes of these 2-615 and 2-619 (a)(1) motions, the facts propounded are not within the  purview of this court to take judicial notice. After oral argument, this court requested that each of the parties present questions which may be certified in the event a particular claim or defense is not successful. The articulation of those questions has been of significant assistance to the court in formulating the issues to be addressed.
 
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Discussion
The purpose of the State Employee Group Insurance Act (
SEIGA
) is to provide a
“…program of group life and group health insurance for person in the service of
the State of
Illinois and certain of their dependents.” In actuality, the
SEIGA covers many persons who are not State employees. Employees of local governments, rehabilitation facilities, domestic violence shelters, child advocacy centers, employees of universities and community colleges, and spouses and children are eligible for coverage. The SEIGA also covers former employees including retired judges, legislators, university employees, other State employees covered by certain of the State pension systems, and teachers, along with their survivors. Originally, the SEIGA paid the entire cost of each eligible e
mployee and annuitant’s
group health insurance. In 1991, the SEIGA was amended to provide that each employee was to contribute to the cost of health insurance premiums, subject to a defined limitation. In 1995, the General Assembly eliminated the cap on employee contributions to health insurance premiums. In 1997, the General Assembly amended the SEIGA with regard to retired state employees, providing for a graduated premium payment based upon years of service. Under the formula, the State was responsible for the entire premium for those retirees with 20 or more years of service. CMS retained the authority to set contributions for current employees. 5 ILCS 375/10 (a-1) to (a-7) (1998). Challenging the constitutionality of a statute on its face is the most difficult constitutional challenge because it can succeed only if no set of circumstances exist under which the statute would be valid.
 Napleton v. Village of Hinsdale,
 229 Ill. 2d 296 (2008). Statutes carry a strong  presumption of constitutionality, and the party challenging the statute has the burden of rebutting the presumption.
Crusius v. Illinois Gaming Board,
 216 Ill. 2d 315 (2005).
Pension Protection Clause
The State’s Motion to Dismiss is premised upon arguments that the Pension Protection
Clause only protects pensions as opposed to other employment benefits, such as health insurance.
The Pension Protection Clause provides “Membersh
ip in any pension or retirement system of the State, and unit of local government or school district, or any agency thereof, shall  be an enforceable contract relationship, the benefits of which shall not be diminished or impaired.
Ill. Const. Art. XIII S
ection 5. Pension benefits are in the nature of annuities. The payments are fixed sums, and the amount of the payments are paid from protected funds, are fixed at the time of retirement based upon a formula that considers years of service, final pay, and other criteria as defined by the  pension plan. Pension benefits are defined by the Illinois Pension Code.
 People ex. rel. Illinois  Federation of Teachers v. Lindberg,
60 Ill. 2d 266 (1975).

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