Important info for state and university retirees about opt-out mailings
Retirees in the state of Illinois and university retirement systems were forced to begin paying premiums – or pay higher premiums – for health care benefits starting in July 2013. This stemmed from a state law passed in 2012 that was challenged in the courts by AFSCME and partner unions – IFT, FOP and INA. Last July, the Illinois Supreme Court sided with the unions, ruling that the premium increases are unconstitutional.
The court granted an injunction against any further collection of the increases. Now, union attorneys are working to ensure that the increases retirees paid for health care premiums are refunded in an orderly and accurate manner.
At a hearing on December 18, Sangamon County Circuit Court Judge Steven Nardulli approved a timeline for disbursing the refunds to affected retirees. This timeline also ordered the state to calculate and include in the refund the interest that is owed to each retiree for the withheld health care premiums. According to this schedule retirees should receive their refund by June 2015.
The “class notices” regarding the refunds are now being sent out to all affected retirees. You do not need to reply to the notice in order to receive your refund. The court has set up a website to provide you with relevant court orders. You can access this site at: www.kanervahealthinsurancerefund.com.
Unfortunately, a conflict has arisen regarding attorney fees in this case. Cornfield and Feldman, the firm representing AFSCME and our union partners, does not get paid on a contingency fee basis; the unions are paying these legal fees out of union funds based on the law firm’s normal hourly billing rate.
However, other groups that sued the state on this issue signed agreements with their attorneys to allow them to receive a contingency fee, i.e. a percentage of the final award. That means anything they are paid is taken out of the funds allocated to pay you and other retirees your refunds. Some of these attorneys are pressing for exorbitant fees – far in excess of the hours they have actually worked – which would deplete the funds available to reimburse retirees for the excess premium payments they have made.
Judge Nardulli will determine how much these “contingency fee” attorneys will be paid. AFSCME will object to their being paid anything beyond the normal hourly rate for work actually performed.
As a result of these attorney fees, effected retirees are receiving class-action opt-out letters in the mail.
This means that while retirees will still have some attorney fees deducted from their refund, it will be in the neighborhood of 1-2% of their refund deducted for attorney fees. For most retirees this will be about $5-10. Therefore it is likely that most members will choose to NOT opt-out of the class action.
If you don't do anything with that paperwork you should receive your refund in the late May / early June time frame.
