Neil H. Cohen
A Cook County judge has dismissed with prejudice all but one count in a suit brought by city health-care benefit participants who argue their changing benefits are constitutionally protected.
The ruling came Thursday in the city of Chicago’s and its police, fire, labor and municipal retirement funds’ motion to dismiss the plaintiffs’ third amended complaint filed in January, about one month after the same judge ruled the plaintiffs could replead portions of their case.
But even the surviving count didn’t escape Cook County Associate Judge Neil H. Cohen’s 17-page memorandum and order unscathed.
The complaint alleges the city is violating Illinois’ Constitution, which declares the benefits of any government pension retirement system an enforceable contractual relationship that “shall not be diminished or impaired.” But Cohen ruled the plaintiffs have valid claims under that count only as they pertain to Pension Code amendments made in 1983 and 1985 — the years before the state began making time-limited benefit amendments on Aug. 23, 1989.
Although the 1983 and 1985 amendments changed carrier-contract and monthly premium contribution requirements for the different funds, Cohen ruled, they did not contain any termination-date language regarding the funds’ obligations.
“While the 1983 amendments provided that the group health-care contracts made by the [f]iremen and [p]olice funds could not extend beyond two fiscal years, this limitation was not a time-limitation on the [f]unds’ obligation to provide group health care to their annuitants,” Cohen wrote. “This was only a limitation on the length of any of the group health-care contracts the fire and police funds could enter into while fulfilling its non-time-limited obligation to its members.”
Unlike those amendments, Cohen ruled, later ones made in 1989, 1997 and 2003 — which came by way of settlement agreements between parties in the case City of Chicago v. Korshak, 87 CH 10134 — included express time-limited terms that did not provide annuitants with lifetime benefits.
“Rather, the annuitants who became members of the retirement systems during the effective period of these amendments could, and did, validly agree to the amended time-limited health-care benefits as conditions of their membership to the system without violating [A]rticle XIII, [S]ection 5,” Cohen wrote.
Clinton A. Krislov, owner of Krislov & Associates Ltd. who represents the proposed class of plaintiffs, said Cohen’s ruling is one that “brings the case to a head” as it acknowledges claims made by the case’s core group of plaintiffs.
And although Cohen did not expressly detail those claims, Krislov said he intends to try to get them defined.
“He recognizes that our core claimants have a claim, and we’re going to pursue it and try to stop the city from ending the coverage at the end of the year and phasing people out from what it was in 2013,” he said.
The plaintiffs also amended their complaint to include an allegation that the city is violating the U.S. Constitution’s equal protection clause by treating fund participants hired before the first time-limited amendment differently than those who were hired after it.
But Cohen ruled they failed to allege any facts to show the two groups are actually similarly situated.
“Plaintiffs fail to allege facts negating a rational basis for the challenged classification,” he wrote. “Nor could [p]laintiffs allege such facts as the [c]ity of Chicago’s dire financial condition is a matter of public record and forms a rational basis for declining to extend the same benefits to the much larger group of post-Aug. 23, 1989 [f]und participants.”
The parties also failed to amend their complaint with factual allegations to support their argument that the city is estopped from lowering or ending annuitants’ health-care coverage based on booklets distributed during pre-retirement seminars held for the participants, Cohen ruled.
“ … Plaintiffs still do not allege any specific facts showing that any city employee at these seminars possessed the actual authority to promise lifetime subsidized healthcare benefits on behalf of the [c]ity,” he wrote. “Nor do [p]laintiffs allege any specific facts showing they inquired whether these [c]ity employees possessed actual authority granted by the [c]ity to promise lifetime subsidized healthcare benefits.”
The city contended in its motion that the state’s 10-year statute of limitations bars any claims the annuitants may have against the funds because the 1989 Korshak settlement agreement did not preserve them. Even if it did, the city contended, the 2003 Korshak settlement also did not preserve any claims.
However, Cohen ruled, the motion did not establish when pre-August 1989 fund participants knew or should have known of any valid claims they might have possessed. In light of that, he ruled he would assume neither that those members were aware of the facts in the 1987 Korshak litigation or how many participants knew the terms of the 1989 Korshak settlement.
“While the substance of this matter may be flushed out through discovery and may be the proper subject of future summary judgment motions, speculation about the matter will not suffice as a basis upon which to grant the current [m]otion to [d]ismiss,” he wrote.
The parties will return to court on Aug. 11 for a status hearing, but Krislov said he plans to ask Cohen to make findings before then that would make his ruling immediately appealable.
“I hope (Cohen’s) view is getting this to the appellate court for direction as fast as possible is in the best interest of all the parties,” he said. “(The fund participants) need to know what they’re going to do by late fall because otherwise the city wants to dump them and have them find other coverage. So the urgency of the situation is not lost on anyone.”
Richard J. Prendergast, owner of Richard J. Prendergast Ltd. who represented the city, could not be reached for comment.
A spokesman for the city’s Law Department did not return a request for comment by time of publication.
The case is Michael W. Underwood et al. v. City of Chicago et al., 16 CH 17450.