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Gendel v. Jones

OPINION FILED MARCH 13, 1978.

GERTRUDE GENDEL ET AL., PLAINTIFFS-APPELLEES,

v.

NOLAN B. JONES, DIRECTOR OF THE DEPARTMENT OF PERSONNEL, ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. DANIEL A. COVELLI, Judge, presiding.

MR. JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:

Plaintiffs, Gertrude Gendel and Ruth Lew, who are 65 years old and enrolled under Part B of the Federal Medicare health insurance program, filed suit on behalf of themselves and all other employees, annuitants and their covered dependents similarly situated, seeking a declaratory judgment and injunctive relief against defendants, the Director of the Department of Personnel, the Comptroller and the Treasurer of the State of Illinois. Plaintiff Gendel is an annuitant under the State Employees Group Insurance Act of 1971 and had been an employee of the State of Illinois for more than 35 years until her retirement in 1972. Plaintiff Lew is a present employee of the State of Illinois. By their suit, plaintiffs sought to restrain the Illinois Director of Personnel from implementing his directive of February 21, 1974, issued by him as administrator of the State group health insurance program, which stated that individuals who have reached the age of 65 and are eligible to enroll for Part B Medicare coverage should enroll and pay the premium therefor and that if they failed to enroll, the benefits which Part B would have paid would be deducted from the State plan benefits. The trial court granted summary judgment for plaintiffs, declaring that the Director's acts exceeded his authority under the State Employees Group Insurance Act of 1971 (Ill. Rev. Stat. 1975, ch. 127, pars. 521-537), ordering him to refrain from implementing the policy announced in his directive and not to reduce benefits under the State plan without providing for reimbursement of Part B premiums to those who enrolled in Part B.

Defendant's appeal, contending that the trial court's order should be reversed because the Director's directive conforms to the Act and affords plaintiffs equal protection of the laws. They also argue that to the extent the trial court's order purports to grant plaintiffs monetary relief it is void because only the Court of Claims has jurisdiction to grant a monetary award from State funds.

The purpose of the State Employees Group Insurance Act of 1971, as stated in section 2, is "to provide a program of group life and group health insurance for persons in the service of the State of Illinois and certain of their dependents" (Ill. Rev. Stat. 1975, ch. 127, par. 522). Section 10 provides (Ill. Rev. Stat. 1975, ch. 127, par. 530(a)):

"(a) The State shall pay the cost of the basic non-contributory group life insurance and group health insurance on each eligible employee and annuitant * * *."

Section 6 provides in pertinent part (Ill. Rev. Stat. 1975, ch. 127, par. 526):

"The group health insurance program shall provide for protection against the financial costs of health care expenses incurred in and out of hospital including basic hospital-surgical-medical coverages and major medical coverage.

The group health insurance program shall be designed by the Director (1) to provide a reasonable relationship between the benefits to be included and the expected distribution of expenses of each such type to be incurred by the covered employees and dependents, and (2) to include reasonable controls, which may include deductible and co-insurance provisions, applicable to some or all of the benefits, or a coordination of benefits provision, to prevent or minimize unnecessary utilization of the various hospital, surgical and medical expenses to be provided and to provide reasonable assurance of stability of the program, and (3) to provide benefits to the extent possible to employees throughout the State, wherever located, on an equitable basis.

Where a covered employee or annuitant, or any of their covered dependents, are eligible for benefits under the Federal Medicare health insurance program (Title XVIII of the Social Security Act as added by Public Law 89-97, 89th Congress), benefits paid under the State of Illinois program will be reduced by the amount of benefits paid by Medicare, with premiums adjusted to an amount deemed by the Director to be reasonably consistent with the reduction of benefits."

On February 21, 1974, Nolan B. Jones, the Director of the Department of Personnel, issued the following directive:

"`The State Employees Group Insurance Act of 1971' REQUIRES THAT, WHEN PERSONS ARE ELIGIBLE FOR MEDICARE, STATE PLAN BENEFITS WILL BE REDUCED BY THE AMOUNT OF MEDICARE BENEFITS. When claims are submitted for members covered by Medicare, benefits payable under the State Plan are calculated in the normal manner; benefits payable under Medicare are then subtracted from the State Plan benefit amount; and any difference due is paid by the State Plan. The result is that Medicare and Non-Medicare members receive the same net total benefits. * * *

Medicare Part `B' — (Physician Care) — Everyone 65 years of age and over is eligible for Medicare Part B and the minimum cost is currently $6.30 per month. The State program assumes all eligible persons will enroll in Medicare Part B and pay the premium cost. IF YOU DO NOT ENROLL IN PART B, THE HEALTH INSURANCE CARRIER WILL DEDUCT FROM ANY STATE PLAN BENEFITS ALL AMOUNTS WHICH PART `B' WOULD HAVE PAID."

Plaintiffs argue that under this directive employees who reach the age of 65 and are thus eligible for Medicare Part B are discriminated against because, in order not to lose the benefits paid by Medicare Part B, they would have to pay a premium for coverage not required of those under 65. Plaintiffs argue that the Director had no authority under the Act to require them to enroll in Part B and to pay for coverage, while all others under 65 received the same benefits at no cost to themselves.

On appeal there is no dispute that those who are eligible to enroll in Part B must pay a premium for the same benefits that all others covered by the basic plan receive without the payment of a premium. There further is no dispute that the State's savings from requiring persons eligible for ...


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