Klein: The Highest Possible Value

Wednesday, November 15, 2017 | 0

When Illinois courts review firefighter pension claims, they usually pick the highest possible value.

Carolyn Ettelson Klein

The Illinois Appellate Court recently affirmed a trial court’s judgment to reverse the amended decision of the Firefighters’ Pension Fund of the City of Moline (board) and reinstated the board’s original decision to grant a firefighter (plaintiff) his line-of-duty disability pension, calculated at the salary he was receiving on the last date he was on the payroll, an amount much higher than the salary attached to his rank if the court had interpreted “removed from the payroll”  as the date at which plaintiff began receiving temporary total disability benefit payments.

The court reasoned that the state Pension Code, the interpretation of which is pivotal to this case, must be liberally construed in favor of applicant. The court determined plaintiff’s last day on the city payroll is the day he signed workers' compensation settlement contracts and stopped receiving TTD payments, thereby entitling him to a pension based upon 65% of the “rank-attached” salary he would have been receiving at that time.

The board initially determined that plaintiff’s last day on the payroll was March 7, 2014, and calculated his line of duty pension based upon the salary attached to his rank on that day. He would receive a monthly disability pension benefit of $4,099.06 — 65% of the monthly salary attached to the plaintiff’s rank. Plaintiff received a lump-sum payment consisting of unused vacation time and compensatory time (without pension withholding).

Of its own volition, the board subsequently motioned to reconsider its own ruling on plaintiff’s application for line-of-duty disability pension benefits.

The board held a hearing in September 2014 to reconsider its previous ruling. The city’s human resources manager testified that plaintiff’s annual salary attached to his rank was $72,204 prior to Feb. 27, 2013, after which his salary increased to $73,829.32 due to an anniversary raise.

Fleming testified in accordance with the Public Employee Disability Act (5 ILCS 345/0.01 et seq. (West 2012)) that plaintiff received full pay with pension contributions withheld through March 8, 2013, at which time the city began paying workers’ compensation TTD benefits based upon plaintiff’s 2013 salary.

In May of 2013, the city stopped withholding pension fund contributions from plaintiff’s payments. The city instituted a general wage increase for firefighters in January of 2014. The HR manager contended that plaintiff would have received said wage increase had he been eligible for the same, meaning plaintiff was not on payroll at the time of the increase and ultimately could not have pension disability benefits calculated based upon an increased wage he was not eligible to receive, as plaintiff’s last day on the payroll was in February 2013.

The HR manager asserted that the city erroneously paid plaintiff a lump sum based on the new higher salary of $75,674.93 and that the monthly disability pension benefits should be reduced to $3,999.09, and a refund was due to the plaintiff for excess pension contributions withheld after March 8, 2013.

The board entered an amendment to its initial ruling without stating why. In 2014, plaintiff filed a complaint for administrative review of the board’s decision. The trial court reversed the board’s amended decision, reinstated the original decision, which was to pay plaintiff his monthly line-of-duty disability pension benefit based on the salary attached to his rank in March 2014. The board appealed and lost.

The liberal interpretation of the payroll clause in favor of plaintiff required the court to rule that the correct date plaintiff was removed from the city’s payroll was in March 2014, thereby entitling him to his lump sum payment based upon his higher “rank-attached” $75,674.93 salary, which would entitle him to $4,099.06 (65% of that salary) on a monthly basis.

The Appellate Court’s ruling was consistent with an Illinois Department of Insurance advisory opinion from 2016 wherein, for the purpose of Section 4-110 of the Pension Code, workers’ compensation benefit payments by a municipal employer constitute being “on” the municipality’s payroll. In that case, a disabled employee was still considered on the municipality’s payroll throughout the time the city paid workers’ compensation TTD benefits.

The Appellate Court assigned the Department of Insurance opinion what it felt was appropriate weight and thereby reversed the board’s amended decision, reinstated its initial decision and affirmed the trial court’s judgment.

It should be noted that in calculating disability pension benefits based upon the “rank-attached” salary at the time an employee is removed from payroll may result in an exponential increase to malingering petitioners.

As defense attorneys, we should be cognizant of the motivation this creates for city employees to not settle their claims and extend them to get more money. We should consider the possible perspective of the petitioner — a salary raise is next week, next month (possibly soon), so if he can hold off settlement and remain on TTD a little longer, disability pension benefits will be based upon 65% of a higher salary.

The Appellate Court has decided that state workers’ compensation TTD benefit payments constitute “salary” for the purpose of the Pension Code. The benefits hinge upon the salary an employee was earning at the time he became disabled. Therefore, employees receiving these benefits are effectively entitled to monthly pension payments based upon calculations for a raise not “earned” during service.

Carolyn Ettelson Klein is an attorney at Keefe, Campbell, Biery and Associates, a Chicago-based workers' compensation defense firm. This column was reprinted with permission from the firm's client newsletter.