Five non-union retirees sue state over new benefit law

Jul 11, 2012

Five retired state employees are suing over a new law that allows Illinois to begin charging some state retirees for health insurance.

The plaintiffs are members of the State Employees Retirement System who all put in at least 20 years of state service. Such retirees had been entitled to premium-free state health insurance, but Gov. Pat Quinn signed a law last month that does away with that benefit.

The retirees contend the law "is an invalid delegation of legislative authority to an administrative agency or officer" because it allows the Department of Central Management Services to determine annually what retirees will pay for health care.

The lawsuit says the law violates the pensions clause of the Illinois Constitution, which prohibits the diminishment of pension benefits once they are earned, and the contracts clause of the Constitution because state law provided for premium-free health insurance after 20 years as a “term and condition of employment” for the five plaintiffs.

Two of the plaintiffs retired as part of the 2002 early retirement incentive program. The lawsuit says the state promised premium-free health and dental insurance for life to early retirees and the two relied on that promise when they accepted early retirement.

The lawsuit seeks class-action status on behalf of an estimated 10,000 merit compensation employees who retired with at least 20 years of service. Such employees are not covered by collective bargaining agreements. 

“The reason for that is only because the union may have some issues that arise from their collective bargaining agreements, and we don’t want to get involved in those,” plaintiffs’ attorney John Myers told the State Journal-Register. “We limited it to people whose rights are not affected by collective bargaining agreements.”

The lawsuit also seeks creation of a subclass of about 5,000 people who retired under the early retirement incentive.

Retired state appellate justice Gordon Maag also has filed suit challenging the health insurance premiums. Maag contends the law represents an unconstitutional diminishment of retirement benefits.