Kanerva v. Weems
2014 IL 115811
| Ill. | 2014Background
- Public Act 97-695 (eff. July 1, 2012) repealed statutory standards for State contributions to health insurance for SERS, SURS, and TRS annuitants and replaced them with an administratively set annual contribution by the Director of CMS.
- Pre-2012, the State paid full cost for health benefits for pre-1998 annuitants and provided graduated, service-based contributions for newer annuitants under 1992, 1997, and 1998 amendments and collective bargaining agreements.
- Four consolidated lawsuits challenged Act 97-695 as violating the pension protection clause (art. XIII, §5), and also raised contracts, separation of powers, and promissory estoppel theories.
- The circuit court dismissed all claims; plaintiffs sought direct appellate review and the Supreme Court reversed and remanded for further proceedings.
- The court held that health insurance premium subsidies are a benefit of membership protected by the pension protection clause, making Act 97-695 void as applied to pre-Act rights; it did not resolve non-pension claims on remand.
- Justice Burke dissented, arguing health insurance subsidies are not pension benefits and urging not to expand the pension protection clause beyond pensions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether health-insurance premium subsidies are a pension protection clause benefit | Kanerva/Weems: subsidies are benefits of membership in a state retirement system. | Weems: subsidies are health benefits outside the pension contract and not protected. | Subsidies are protected under art. XIII, §5. |
| Scope of the pension protection clause to non-pension benefits | Benefits other than annuities (e.g., health insurance) flow from membership and are protected. | Protection covers pension benefits; health subsidies fall outside. | Health subsidies fall within protection when tied to membership; but the majority’s broader reading is introductory to remand; minority disagrees. |
| Whether Public Act 97-695 violates Contracts Clause | Act 97-695 impairs contractual rights arising from prior coverage arrangements and negotiated benefits. | No contractual right to continued subsidies; changes are permissible. | Question not fully resolved on direct review; remand was ordered after establishing pension-protection merits. |
Key Cases Cited
- People ex rel. Sklodowski v. State of Illinois, 182 Ill. 2d 220 (Ill. 1998) (defines contractual relationship under pension protection clause)
- Felt v. Board of Trustees of the Judges Retirement System, 107 Ill. 2d 158 (Ill. 1985) (protects postretirement rights under pension clause)
- McNamee v. State of Illinois, 173 Ill. 2d 433 (Ill. 1996) (interprets pension protection clause liberally in favor of pensioners)
- Lippman v. Board of Education, 487 N.E.2d 897 (N.Y. 1985) (health benefits not per se retirement benefits; depends on direct relation to pension)
- Everson v. State of Hawai‘i, 228 P.3d 282 (Haw. 2010) ( Hawai'i constitution protects health benefits derived from pension membership)
- Kraus v. Board of Trustees of the Police Pension Fund, 72 Ill. App. 3d 833 (Ill. App. 1979) (historical context of pension protection construction)
- Prazen v. Schoop, 2013 IL 115035 (Ill. 2013) (liberal construction of pension statute in favor of pensioners)