Retirees urge Illinois Supreme Court to save health care subsidy

More than 22,000 retired city workers want the Illinois Supreme Court — which decided a similar case in favor of state employees — to overturn Mayor Rahm Emanuel’s plan to save $130 million a year by completing a three-year phase-out of the city’s 55-percent subsidy for retiree health care.

The motion for a so-called “direct appeal” while several lower court cases are pending is a legal long-shot.

But, the retirees argued that there are extenuating circumstances. If the Supreme Court does not hear and resolve the case, the Emanuel administration will succeed in “running out the clock” before the legal battle is resolved.

“The city has been successful in diverting, dividing and delaying resolution of these claims. While we regret that the [pension] funds have joined the city in fighting their participants, we believe that the Supreme Court taking the legal issues for resolution is, as it was in the state retirees’ health care case, the only way to bring the dispute to a resolution before the city terminates the coverage at the end of the year,” the retirees motion states.

Clint Krislov, an attorney representing the retirees, pointed out that the retirees’ legal argument was strengthened immeasurably when the Illinois Supreme Court ruled in 2014 that health care benefits provided to state employees are a “permanent benefit” guaranteed by the state constitution.

“This is the last group of people whose city work doesn’t qualify them for federal Medicare coverage. The city’s strategy is to dump them off. If these city cases languish beyond year end, retirees will have their coverage terminated. They’ll have to look for coverage elsewhere,” Krislov said.

“Many of our people have faced increases as much as 300 percent over past three years. Some actually have to pay more to preserve their health care than they get in their pension check. One of our people gets an $800 check every month. He has to turn around and give the entire check plus $20 in order to have his health care coverage continue.”

Law Department spokesman Bill McCaffrey had no immediate comment on the retirees’ motion.

The retiree’s motion states that the retiree health care subsidy is “not a substantial cost” to the city. In fact, the $130 million amounts to just 3 percent of the city’s corporate budget.

Before convincing the City Council to raise property taxes by $588 million for police and fire pensions and school construction, Emanuel ordered sharply higher health care contributions from 313 City Hall bureaucrats, including himself.

He also cut a deal with organized labor to wring $20 million in savings out of their health care costs, using tele-medicine, expert second opinions before surgery, diabetes management and higher co-payments.

Then, he lowered the boom on retirees — by completing the three-year phase-out to save $30 million and assuming that the retirees’ lawsuit would fall flat.

If Krislov gets his way, the full, 55 percent subsidy would be restored and city employees would be entitled to refunds dating back to 2013, when the phase-out began.

In December, a Circuit Court judge appeared to throw a curveball that threatened to prevent Emanuel from completing the phase-out.

Circuit Judge Neil Cohen rejected the city’s motion to dismiss a lawsuit filed by city retirees and kept the individual pension funds on the hook as well.

More importantly, Cohen ruled that the lifetime health care coverage of 22,000 people who started working for the city prior to Aug. 23, 1989, is protected by the Illinois Constitution’s pension protection clause. It states that those benefits “shall not be diminished or impaired.”

The precise nature of the obligation was not determined. That decision was postponed until a later date.

The judge dismissed the lifetime benefits claim made by retirees who started working for the city after Aug. 23, 1989. He argued that they began working under a statute that provided benefits only for limited periods of time and that those agreements have expired.

Although it sounded a bit like a mixed bag, Krislov portrayed Cohen’s ruling as a “clear-cut victory for people who gave their working lives to the city.”

City Hall seized on that portion of Cohen’s ruling that said employees hired after Aug. 23, 1989 are not entitled to lifetime health care benefits.

Cohen subsequently “clarified” his prior ruling in a way that, Krislov claimed, “gets the city off the hook almost entirely.”

“He said it only requires the pension funds to provide health care insurance and the city to finance their small subsidies,” Krislov said Tuesday.

“We say that, constitutionally, if you provide a beneft that is conditioned on being a member of a pension system, it’s a permanent benefit. And even if it’s a pension fund obligation, they fulfilled that obligation by contracting with the city to provide the coverage. The city contracted to be the insurance provider and it’s stuck with that obligation.”