Federal court won't rule on Illinois' constitutional issue regarding Chicago retiree benefits

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CHICAGO — A federal appeals court has declined to tackle the issue of whether Illinois' constitution bars the reduction of health care benefits for retired public-sector employees in Chicago.

A unanimous six-page decision by a three-judge panel of 7th U.S. Circuit Court of Appeals in Chicago, posted late Wednesday, said the dispute is still winding its way through state channels and that it won't intervene.

"We are reluctant to resolve a novel issue of state constitutional law," the opinion, written by Judge Frank Easterbrook, said. "The federal judiciary has an institutional interest in allowing states to resolve novel issues of state law."

The case before the panel stemmed from a lawsuit from retired city police and others that argued the state constitution and U.S. contract law should have prohibited the city from forcing retirees to pay more for their health care in a cost-saving measure.

In a related but broader case, the Illinois Supreme Court will hear oral arguments on the constitutionality of the state's landmark pension overhaul next month. The high court already ruled last summer that the state constitution rules out reductions of health care benefits for retired state workers.

While the 7th Circuit did not say one way or another how the Illinois constitution might affect Chicago policy on retirees' health care payments in Wednesday's filing, it did vacate a U.S. district court finding that the state constitution would not render that policy unlawful. That lower court ruling led the Chicago retirees to appeal to the 7th Circuit.

On the surface, the 7th Circuit ruling didn't appear to be a resounding win for either side.

But a lawyer for the retirees, Clinton A. Krislov, said Thursday that the decision to kick the case back to state courts — which he said tended to be sympathetic to the retirees' legal position — was a victory.

"We couldn't be happier," he said. "This is exactly what we wanted. ... to send the issue back to the state."

A brief statement from the city's law department said it was pleased the court rejected plaintiffs' arguments that were grounded in U.S. contract law. But at the same time, the department said, it was "disappointed that, instead of also ruling on plaintiffs' state law claims, it remanded those claims to state court."

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