city of chicago V. "KORSHAK" RETIREE HEALTHCARE LITIGATION

This is a dispute over the rights of certain annuitants of the City of Chicago Annuity & Benefit Funds for Police, Firemen, Municipal employees and Laborers to permanent coverage under the City’s retiree healthcare plan, subsidized by their respective Annuity & Benefit fund, unreduced from the terms and subsidy in effect on their dates of entry into their respective Funds.

CONTRIBUTIONS

Contributions to the retiree healthcare warchest are entirely voluntary but appreciated.  Click on the following link and contribute by credit card if you like:  https://secure.lawpay.com/pages/krislov-and-associates-ltd/operating

 

CURRENT STATUS  

        September 2017:  On September 7, 2017 we filed our Petition to the Illinois Supreme Court.  The link contains the brief and part of the appendix, the remaining are part 2, part 3, part 4, part 5, part 6, part 7 and part 8.   The city filed their response on October 19th and we filed a reply on November 14, 2017.

        August 2017:  On August 9, 2017 Judge Cohen ruled that he has no jurisdiction over the post-2013 reconciliations, yet he has set a status hearing for the city to report on the 2014-2016 reconciliation process timetable on September 14, 2017 at 10:30 a.m. in courtroom 2308.  At the hearing, he also denied class certification again, preferring to await rulings on the merits if the Supreme Court takes our appeal.  Accordingly, we will put our efforts into our Petition to the Illinois Supreme Court, which is due September 7, and we may try to get the class certification and jurisdiction issues up there as well.  You can read the transcript of the hearing here.

        July 2017:  On July 20, 2017, we filed our Petition for Rehearing on the Appellate Court's 6/29/2017 Opinion.  The Petition for Rehearing addresses the portions of the Court's opinion we believe are in error and requests that the Court grant oral argument on the matter.

        June 2017:  On June 29, 2017, the Ilinois Appellate Court issued an opinion in the Underwood v. City and Trustees matter; 2017 IL App 1st 162356.  The opinion expands the covered class entitled to lifetime benefits, including all of Class 3 and most of Class 4 -- everyone whose first hire date was before June 16, 2003; however, the appellate panel views the only protectable benefit as the statutes in 1983 and 1985, which provide the city subsidy at $55/21 per month for police and fire and $25 per month for municipal and laborers.

        July 2016:  On July 21, 2016, Circuit Court Judge Cohen issued his ruling upholding the Constitutional claim for protection of benefits for those hired prior to 8/23/1989.

        March 2016:  We filed the Third Amended Complaint in the Underwood case on January 13, 2016. The City's and Funds' responses have been filed, and we were granted leave to file a sur-reply to address the Illinois Supreme Court's recent Matthews decision.  Oral argument on the City's and Funds' motions to dismiss has been rescheduled on the Judge's order to July 6, 2016 at 1:30 p.m.

We also filed a motion for summary judgment, in the view that the facts, as stated in our complaint, are substantially undisputable and entitled us to judgment, as a matter of law.  Judge Cohen entered that motion, but refused to require responses until he’s dealt with another round of the motions to dismiss.

You can access the Third Amended Complaint and the exhibits here:  Third Amended Complaint

You can access our Motion for Summary Judgment here:  Class Certification and Summary Judgment Motion

        December 2015:  In the Underwood case, on December 2, 2015, Judge Cohn issued his decision on the City's and Fund's motions to dsmiss.  Following is a summary of Judge Cohen's decision:

  • denied dimissal of the claims that arise from the 1983 and 1985 statutes (this covers the Korshak class, the Window retiree class, and anyone else who was a participant; i.e. Date of Hire, on or prior to 8/23/1989);
  • rejected the Funds' arguments that they cannot be sued, or that the claims are time-barred, or that Kanerva does not apply to this case or to them.  The Court thus holds that the Illinois constitution's Article XIII, Section 5 protections do apply to protect your healthcare benefits (actually invalidates the statutory language in the 1985-and-later statutes that added a proviso that these benefits are not be construed as protected by the constitution's Pension Protection clause; but
  • leaves for future determination what the protected terms actually are.
  • Regarding the settlement period statutes (8/23/1989-6/30/2013), he regards those as time-delimited because they were created as time delimited.
  • As to Counts II (Breach of Contract) and III (estoppel), the judge essentially dismisses because most of the elements to support these claims actually were made in our briefing responses, rather than in the complaint itself.  Consequently, both of those counts are dismissed with leave to amend. 

        Korshak:  We have filed an appeal on our "motion to enforce extended benefits under the settlement agreement and order the city to audit and reconcile healthcare charges for the second half of the 2013 plan year".  We will keep you updated as briefs are filed.

        Pension Reform:  In the Jones/Johnson case, on July 24, 2015 Circuit Court Judge Rita Novak issued an Order that the City Pension Reform Law, Public Act 98-641, unconstitutionally reduces benefits protected by the Illinois Constitution Article XIII, Section 5.  The City's Motion For A Stay Pending Appeal was denied - see the Order dated July 29, 2015.  The matter is now on appeal in the Illinois Supreme Court.  Our brief was filed on October 22, 2015.

        Click here for a complete update of the pending matters.

 

Brief History of the “Korshak” Retiree Healthcare Litigation

          This case was originally brought in 1987 by the City to enable it to terminate its Annuitant Healthcare coverage for participants in the City’s four Annuity and Benefit Plans (Police, Firemen, Municipal and Laborers), and to recover monies expended under the Plan in prior years.

          The trustees/board members of the four affected annuity and benefit funds, and the annuitant healthcare plan participants class (represented by the Krislov firm), asserted counterclaims, seeking to force the City and the Pension Funds’ trustees to continue annuitant healthcare coverage under the terms of the Annuitant Healthcare Plan as in effect on October 1, 1987 (through the August 23, 1989 date the Pension Code was amended in this respect).

          After dismissing the City’s claims, the case proceeded on the counterclaims by the Funds and the Participants’ claims against the City. 

          A trial was conducted in 1988 before Honorable Albert Green, but prior to the verdict, the City and Trustees entered into a 10-year class action settlement that was approved by the Circuit Court over the participant class’ objections, and affirmed by the Illinois Appellate Court.

          At the conclusion of that ten-year settlement, the participants moved to revive the litigation, which was ultimately resolved by another ten-year agreement, settling the dispute for the period through June 30, 2013, but preserving participants’ rights to assert their claims to permanent retiree healthcare thereafter.  Korshak 2003 Settlement at Section IV.J.

The June 30, 2013 Expiration of the Korshak 2003 Settlement

          In a letter dated May 15, 2013, the City declared its intention to reduce benefits beginning January 1, 2014, and to eliminate all of the City’s retiree healthcare plans by January 1, 2017.  Anticipating the June 30, 2013 end of the applicable settlement periods, the City’s letter, issued to all retiree healthcare participants, stated the City intended to:

  • Extend current retiree healthcare benefits to the end of 2013;
  • Maintain the current level of benefits for pre-8/23/1989 retirees for their lifetimes;
  • Make changes beginning January 1, 2014 to the plans with respect to later participants, and terminate their coverage entirely by January 1, 2017.

          Also, per Public Act 86-273 and its following statutes, the Funds’ statutory authority to subsidize the healthcare ended June 30, 2013; but was recently extended by Public Act 98-43, signed into law June 28, 2013, extending the current statutory authorization of the subsidies at their current levels until the earlier of January 1, 2017, or such date as the City terminates its retiree healthcare plans.

Reviving the City Retiree Healthcare after June 30, 2013

          On July 5, 2013 we filed our motion to revive the Korshak litigation (Motion to Reactivate Case) asserting the post-June 30, 2013 entitlements of (a) those who retired before 8/23/1989; (b) those who began participation in the Funds (that is, initial hire date with the City) prior to 8/23/1989, and (c) those who began participating after 8/23/1989.    

          We welcome both your comments and questions.  Participants’ input, especially alerting us to other matters and decisions, have been very helpful in our fight for you.  So please keep those coming.

Underwood, et al. v. City of Chicago, No. 13-cv-5687 (N.D. Ill.)

          We have filed our Reply in Support of Our Motion to Enjoin the City from Changing Terms of Retiree Healthcare During the Litigation and Without Six months' Notice and our Reply in Support of Class Certification

          On December 13, 2013, Judge Holderman granted the City's motion to dismiss Plaintiff's Amended Complaint.  We promptly filed a Notice of Appeal with the 7th Circuit U.S. Court of Appeals, and filed a motion for stay and/or an injunction pending appeal, and requested a referral to the Illinois Supreme Court

          Our reply in support of a motion for stay and or an injunction to stop the 2014 rate changes while the case is pending, has been filed with the court of appeals.  Due to the timing of the request, and the city’s request for time on the briefing schedule, we agreed with the City to schedule the briefing on a reasonable time frame, in exchange for the City’s agreement that (since the Pension Checks had already been generated with the 2014 rates in place) to treat the request as preserving the pre-2014 status quo for purposes of the ruling (essentially, it eliminates the City arguing that the status quo we seek to preserve no longer exists, which would have made our chances for an injunction even less).  So we’re waiting now for a decision from the court, which could roll back rates while the appeal is pending.

Our Amicus Brief for the City Annuitants in the Parallel Litigation for State Employees

          We have filed our initial amicus curiae/ friend of the court brief  (Amicus Curiae Brief) in the State employees’ healthcare litigation in the Illinois Supreme Court (informing the court the Illinois Constitution’s Article XIII, Section 5 protections cover “benefits of participation” in government funds, not just “pensions” or annuities; that City annuitants’ healthcare benefits are created in the Pension Code, and thus should be protected as well, encouraging them to reverse the Sangamon County Circuit Court’s declaration that Healthcare subsidies are not protected at all)

* * * * * * * *JULY 3, 2014 Update * * * * * * * * *

         On July 3, 2014, the Illinois Supreme court issued a very clear declaration in the State Retirees’ Healthcare case (Kanerva v. Weems), that all benefits which a participant enjoys from his or her membership in an Illinois government pension or retirement system are protected benefits, not just pension annuity payments.

         And the decision seems to have followed our very targeted arguments that (1)the Constitution’s plain language protecting “benefits of participation” in an Illinois government retirement system means it is not limited to pension payments, and (2) that the court should follow the decisions of the Hawaii and Alaska Supreme Courts, and distinguish away the New York decision that would limit protection to the amount of one’s annuity.

        This does not mean we’ve won yet; only that we are alive, survived a potentially fatal hurdle, and are now able to pursue the case with a better chance of winning.

        Click here to read the Illinois Supreme Court's decision.       

* * * * * * * *February 25, 2015 Update * * * * * * * * *

        Today the Seventh Circuit ruled that our state consitutional claims to permanent healthcare benefits belongs in the State court.  The decision reverses and vacates Judge Holderman's dismissal of the case, and instructs the district court to refer the matter back to the Cook County Circuit Court. 

        Click here to read the Seventh Circuit's opinion.

Recent Underwood Updates and Documents

Transcript of Hearing on November 17, 2017

Petition for Leave to Appeal filed September 7, 2017

Transcript of Hearing before Judge Cohen on August 9, 2017

Petition for Rehearing filed in Illinois Appellate Court, July 20, 2017

Illinois Appellate Court's Underwood v. City and Trustees Opinion, June 29, 2017

Emergency Motion for Injunction Pendente Lite, November 23, 2016

Opening Appellate Brief filed November 22, 2016, Appendix, and Separate Appendix Part 1, Part 2 and Part 3

Transcript of Hearing on August 9, 2016

Judge Cohen's July 21, 2016 Decision

Reply in Support of Rule 302(b) Motion for Direct Appeal to the Illinois Supreme Court

Rule 302(b) Motion for Direct Appeal to the Illinois Supreme Court

Transcript of hearing on March 18, 2016

Motion and Memo for Class Certification and Summary Judgment (filed March 16, 2016)

Third Amended Complaint (filed January 13, 2016)

Judge Cohen's December 3, 2015 Decision

Plaintiffs' Opposition to the Defendants' Motions to Dismiss and Motion for Partial Summary Judgment filed September 9, 2015

Plaintiffs' Motion for Reinstatement in the Circuit Court of Cook County and to Set a Status Hearing filed April 9, 2015

Seven Circuit Opinion reversing the District Court's dismissal with instructions to remand to State Court

City's response to our opening brief filed in the 7th Circuit

Appellants' Motion to Certify a Question to the Illinois Supreme Court filed October 14, 2014

Appellants' Opening Brief filed in the 7th Circuit

Illinois Supreme Court's Decision in Illinois State Retirees' Healthcare Case, Kanerva v. Weems, No. 115811 (July 3, 2014) (all benefits which a participant enjoys from his or her membership in an Illinois government pension or retirement system are protected benefits, not just pension annuity payments.)

Plaintiffs' Reply in Support of Their Motions for 1) Stay and/or an Injunction and 2) Request for Referral to the Illinois Supreme Court

Plaintiffs' Motions 1) for Stay and/or an Injunction Pending Appeal and 2) Request for Referral to the Illinois Supreme Court

Plaintiffs' Reply in Support of Motion to Enjoin City From Changing Terms of Retiree Healthcare filed October 23, 2013

Plaintiffs' Reply in Support of Class Certification filed October 23, 2013

New Complaint filed July 23, 2013

Participant Class Counsel's Motion to Reactivate Case, File Amended Complaint and for Injunction

Amicus Curiae Brief for the City Annuitants in the parallel litigation for State employees

City of Chicago's May 15, 2013 Letter to Participants

Class Counsel's April 25, 2013 Letter to Participants

Forms to be a Class Representative

2003 Settlement Agreement

 

Krislov Law

20 North Wacker Drive, Suite 1300
Chicago, IL 60606

Toll Free:  855.263.3025

Tel: 312.606.0500 | Fax: 312.739.1098
Email: mail@krislovlaw.com

Photography by Ian Korer