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Underwood v. City of Chicago

Court of Appeals of Illinois, First District, First Division

September 21, 2016

MICHAEL W. UNDERWOOD, JOSEPH M. VUICH, RAYMOND SCACCHITTI, ROBERT McNULTY, JOHN E. DORN, WILLIAM J. SELKE, JANIECE R. ARCHER, DENNIS MUSHOL, RICHARD AGUINAGA, JAMES SANDOW, CATHERINE A. SANDOW, MARIE JOHNSTON, and 338 Other Named Plaintiffs Listed, Plaintiffs-Appellants,
v.
CITY OF CHICAGO, a Municipal Corporation, TRUSTEES OF THE POLICEMEN'S ANNUITY AND BENEFIT FUND OF CHICAGO; TRUSTEES OF THE FIREMEN'S ANNUITY AND BENEFIT FUND OF CHICAGO; TRUSTEES OF THE MUNICIPAL EMPLOYEES' ANNUITY AND BENEFIT FUND OF CHICAGO; and TRUSTEES OF THE LABORERS' AND RETIREMENT BOARD EMPLOYEES' ANNUITY AND BENEFIT FUND OF CHICAGO, et al., Defendants Trustees of the Policemen's Annuity and Benefit Fund of Chicago; Trustees of the Firemen's Annuity and Benefit Fund of Chicago; Trustees of the Municipal Employees' Annuity and Benefit Fund of Chicago; and Trustees of the Laborers' and Retirement Board Employees' Annuity and Benefit Fund of Chicago, et al., Defendants-Appellees.

         Appeal from the Circuit Court of Cook County, No. 13-CH-17450; the Hon. Neil H. Cohen, Judge, presiding.

         Affirmed.

          Counsel on Appeal Clinton A. Krislov and Kenneth T. Goldstein, both of Krislov & Associates, Ltd., of Chicago, for appellants.

          Stephen R. Patton, Corporation Counsel, of City of Chicago (Jane E. Notz, Benna Ruth Solomon, and Myriam Zreczny Kasper, Assistant Corporation Counsel, of counsel), and Richard J. Prendergast and Michael T. Layden, of Richard J. Prendergast, Ltd., and Joseph M. Gagliardo, Jennifer A. Naber, and James J. Convery, of Laner Muchin Ltd., all of Chicago, for appellees.

          Panel JUSTICE SIMON delivered the judgment of the court, with opinion. Presiding Justice Connors and Justice Harris concurred in the judgment and opinion.

          OPINION

          SIMON, JUSTICE

         ¶ 1 This appeal is taken from the denial of a motion for a preliminary injunction. The case stems from the City of Chicago's plan to phase out the health care benefits it offers to its employees. The trial court held that one category of plaintiffs did not have a clearly ascertainable right in need of protection. The court then ruled that the other category of plaintiffs had some rights given by statute but that the medical care plan offered by the City for 2016 was not a diminution in their benefits. We affirm.

         ¶ 2 BACKGROUND

         ¶ 3 The General Assembly created four pension funds for City employees in order to administer and carry out the provisions of the Illinois Pension Code: (1) the Policemen's Annuity and Benefit Fund (Police Fund), (2) the Firemen's Annuity and Benefit Fund (Fire Fund), (3) the Municipal Employees' Annuity and Benefit Fund (Municipal Fund), and (4) the Laborers' and Retirement Board Employees' Annuity and Benefit Fund (Laborers' Fund) (collectively, Funds). The Funds' obligations to their annuitants under the Pension Code are financed by the taxpayers of the City through a tax levy. 40 ILCS 5/5-168 (West 2014).

         ¶ 4 In 1983, the General Assembly amended the Pension Code to require the Fire and Police Funds to contract with one or more insurance carriers to provide group health care coverage for their retirees. Ill. Rev. Stat. 1983, ch. 108½, ¶ 6-164.2. The 1983 amendments also required the Funds to pay the premiums for such health insurance for each annuitant "up to a maximum of $55 per month if the annuitant is not qualified to receive [M]edicare benefits, or up to a maximum of $21 per month if the annuitant is qualified to receive [M]edicare benefits." Ill. Rev. Stat. 1983, ch. 108½, ¶ 5-167.5(d). If the payments made by the Funds did not cover an annuitant's health care premium, the Funds were to deduct the additional cost from the annuitant's monthly pension payment. Id.

         ¶ 5 In 1985, the General Assembly amended the Pension Code to require the Municipal and the Laborers' Funds to pay up to $25 per month toward the health care premiums of each annuitant age 65 or older with at least 15 years of experience. Ill. Rev. Stat. 1985, ch. 108½, ¶ 11-160.1. If the monthly premium for such coverage exceeded the $25 per month, the Funds would deduct that amount from the retiree's monthly pension payment. Id.

         ¶ 6 In 1987, the City notified the Funds that it intended to cease making health care payments to the Funds' retirees no later than January 1, 1988. On October 19, 1987, the City filed suit seeking a declaration that it had no obligation to provide health care to retirees and to recover the money it had spent over the previous years. City of Chicago v. Korshak, No. 87 CH 10134 (Cir. Ct. Cook Cty.). The Funds counterclaimed for declaratory relief, seeking to compel the City to continue health care coverage for the Funds' retirees. Two group of retirees intervened in the litigation: employees who retired on or before December 31, 1987, were certified as the "Korshak sub-class, " and employees who retired after December 31, 1987, but before August 23, 1989, were certified as the "Window sub-class."

         ¶ 7 The issues in the Korshak litigation were never judicially resolved. Instead, in 1988, the parties entered into a settlement agreement, which was subsequently codified through amendments to the Pension Code. The amendments specifically stated that the obligations set forth "shall terminate on December 31, 1997." Ill. Rev. Stat. 1989, ch. 108½, ¶ 5-167.5(e) (as amended by Pub. Act 86-273, § 1 (eff. Aug. 23, 1989)). The amendments provided that between January 1, 1988, until December 31, 1992, the Funds "shall pay to the City on behalf of each of the Board's annuitants the following amounts: up to a maximum of $65 per month for each such annuitant who is not qualified to receive [M]edicare benefits, and up to a maximum of $35 per month for each such annuitant who is qualified to receive [M]edicare benefits." Ill. Rev. Stat. 1989, ch. 108½, ¶ 5-167.5(d). Next, from January 1, 1993, through December 31, 1997, the Funds would pay "up to a maximum of $75 per month for each such annuitant who is not qualified to receive [M]edicare benefits, and up to a maximum of $45 per month for each such annuitant who is qualified to receive [M]edicare benefits." Id. The amendments also required the City to pay 50% of the cost of the annuitants' health care coverage through 1997 and required the annuitants to make the payments for the remaining portion of their premiums. Ill. Rev. Stat. 1989, ch. 108½, ¶ 5-167.5(c) (as amended by Pub. Act 86-273, § 1 (eff. Aug. 23, 1989)).

         ¶ 8 In June 1997, before the expiration of the initial settlement period, the parties entered into a new settlement agreement, which extended the settlement period until June 30, 2002. The new settlement was again codified by amendments to the Pension Code. The amendments provided that the Funds were required to pay "up to a maximum of $75 per month for each such annuitant who is not qualified to receive [M]edicare benefits, and up to a maximum of $45 per month for each such annuitant who is qualified to receive [M]edicare benefits." 40 ILCS 5/5-167.5(d) (West Supp. 1997) (as amended by Pub. Act 90-32, § 5 (eff. June 27, 1997)). ...


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