State University Retirees Say Illinois Lied

CHICAGO (CN) - Illinois cut pensions of state university retirees in exchange for free health insurance for life - then broke its word by charging for the insurance, based on a percentage of the reduced pensions, retirees claim in a class action.

Teresa Proctor and 24 other named plaintiffs sued Illinois and the State Universities Retirement System, for a class of "thousands," in Federal Court.

The class consists of employees who retired before working for the system 20 years.

In 1998, the defendants offered retirees the choice of accepting reduced payments in exchange for free health insurance. "Plaintiffs, and thousands of others, entered into a signed contract with defendant SURS whereby they made an 'irrevocable election' to accept a reduction in their monthly retirement annuities in exchange for free health insurance from the State of Illinois for the remainder of their lives," the lawsuit states.

The state did reduce their pensions, Proctor says. "Then, in July 2013, in derogation of the prior agreement, the defendants unilaterally began charging plaintiffs and others a health insurance premium calculated as a percentage of their retirement annuity (now the reduced annuity based upon the election). This charge took the form of a line item deduction from the recipients' monthly retirement annuity." (Parentheses in complaint.)

The named plaintiffs worked in diverse positions, including professor, administrative assistant, carpenter, librarian, alumni association chief financial officer, chief of police, and building manager.

"The July 1 charge represented a new line item deduction to plaintiffs' retirement checks, which SURS explained to some retirees with the following statement: 'A change has been processed to your insurance. This may have changed the net amount of your benefit,'" the complaint states.

Plaintiffs seek class certification, an injunction, restoration of the deductions taken for the insurance, with interest, damages equal to the unfair deductions taken, costs and attorneys' fees, and the free health insurance they were promised.

They are represented by Aaron Maduff with Maduff & Maduff.

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