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Monday, July 28, 2014 05:06 pm

Supreme Court reinstates lawsuit over state retiree health benefits

Sangamon County judge erred in dismissing suit, high court said

Lawsuits against the State of Illinois over retiree health benefits can proceed, thanks to an Illinois Supreme Court decision today which reversed a Sangamon County judge's ruling.

The decision reinstates four lawsuits against Illinois' Central Management Services agency. The lawsuits claimed changes in certain retirees' health benefits packages were unconstitutional. 

In July 2012, a new law took effect removing the state's required contributions to certain retiree health benefits and allowing then CMS director Malcolm Weems to instead determine each year how much the state and retirees would contribute to the systems. The law resulted in many retirees paying more for their health benefits and having to sign up for different, unfamiliar plans. CMS also hired an outside company to audit the list of beneficiaries to ensure all of the enrolls were eligible.

Several retirees sued the state, saying the change diminished the value of their retirement benefits in violation of the Illinois state constitution, which says that membership in a pension or retirement system  "shall be an
enforceable contractual relationship, the benefits of which shall not be diminished or impaired."

Sangamon County associate judge Steven Nardulli dismissed the lawsuits in July 2013, saying they did not state a cause of action because health benefits aren't part of a retiree's pension. The retirees appealed to the Illinois Supreme Court, which today released an opinion siding with the retirees. The high court sent the consolidated lawsuits back to the circuit court for a rehearing. 

The case is 2013-MR-48 in Sangamon County Circuit Court.

A PDF of today's Supreme Court ruling is here:  http://www.illinoiscourts.gov/Opinions/SupremeCourt/2014/115811.pdf
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