In a welcome, yet surprising development, a court in Illinois finally issued a favorable ruling for municipalities last fall. The Appellate Court for the Fifth District held in Pyle v. City of Granite City [i] that a firefighter was not entitled to the so-called “lifetime” health insurance benefits from his employer, the City of Granite City.

James Pyle was employed as a firefighter for Granite City for 23 years. While responding to emergencies between March 1998 and September 1999, he suffered injuries while moving a water hose in response to two separate fires. He submitted himself to the typical treatment for this type of condition, commencing with physical therapy and epidural injections. Ultimately, however, he underwent surgery in November 1999 and March 2006. Following his surgery, Pyle pursued a line-of-duty disability pension, alleging that the effects of his injuries prevented him from returning to work as a firefighter. His disability pension was properly awarded effective in November 2000, the date he was deemed disabled. In addition, Pyle sought benefits pursuant to the Public Safety Employee Benefits Act. [ii]  This Act, referred to as PSEBA, provides that a safety employee who suffers a “catastrophic injury” is entitled to have his health insurance premiums paid by his employing municipality so long as the injuries have been sustained in a defined set of circumstances. These benefits extend to his spouse and children under 25 years of age. When Granite City denied his request, Pyle filed suit in Madison County asking the trial court to compel Granite City to pay PSEBA benefits.

In its defense of Pyle’s claims, Granite City challenged Pyle’s definition of “catastrophic injury.” Granite City argued that the Illinois Supreme Court’s definition of “catastrophic injury,” as set forth in Krohe v. City of Bloomington[iii]  should be revised for public policy reasons and made consistent with common understanding and legislative intent. The city also asserted that if required to make payment for Pyle’s health insurance premiums, its duty to make such payments was limited to doing so only until Pyle reached age 65 and became eligible for Medicare. In other words, Granite City believed that PSEBA was not a lifetime benefit requiring it to pay health insurance premiums until Pyle’s death. The trial court in Madison County was not persuaded by Granite City’s defense. Granite City lost and Pyle was awarded the PSEBA benefits. Granite City appealed to the Fifth District Court. [iv]

In the appeal, Granite City’s arguments regarding the definition of “catastrophic injury” went nowhere. The Court was not about to override the Supreme Court’s definition. Indeed, the Court very clearly stated that it did not have the authority to change a Supreme Court’s decision in Krohe and that after the Supreme Court “has declared the law with respect to an issue, [we have to] follow that law because only the supreme court has authority to overrule or modify its decisions.” [v] As for the alternative theory that payments would cease when Pyle reached age 65, the Court did, from this author’s perspective, the right thing.

Prior decisions regarding PSEBA had already established that the premium payment benefits begin as of the date on which the safety employee is disabled. In this case, the court was asked to determine when the employer’s obligation ends. To answer, this question, the court examined a portion of Section 10 of the Act, which provides as follows:

(a) An employer who employs a full-time… firefighter, who… suffers a catastrophic injury or is killed in the line of duty shall pay the entire premium of the employer’s health insurance plan for the injured employee, the injured employee’s spouse, and for each dependent child of the injured employee until the child reaches the age of majority… The term “health insurance plan” does not include supplemental benefits that are not part of the basic group health insurance plan. If the injured employee subsequently dies, the employer shall continue to pay the entire health insurance premium for the surviving spouse until remarried and for the dependent children under the conditions established in this Section. However:

(1) Health insurance benefits payable from any other source shall reduce benefits payable under this Section. [vi]

The Court noted that to interpret PSEBA, it had to determine and give effect to the intention of the legislature when it enacted it.  According to PSEBA’s plain language in Section 10(a), “health insurance benefits payable from any other source shall reduce benefits payable under this section.” Because Medicare benefits are guaranteed to working individuals in the United States who reach a designated retirement age and have paid Medicare taxes, they are “health insurance benefits payable from any other source”, and require that PSEBA benefits payable by Granite City be reduced. In addition, PSEBA’s definition of “health insurance plan” clearly excludes “supplemental benefits that are not part of the basic group health insurance plan.” Medicare benefits are primary benefits for an individual. Any additional or secondary benefits would be deemed “supplemental” and therefore outside the scope of the benefits granted by PSEBA. Accordingly, Granite City’s obligation to pay PSEBA benefits ended with Pyle reaching Medicare eligibility at age 65.

As additional support for this finding, the Court pointed to Section 367f of the Illinois Insurance Code. Disabled firefighters who do not qualify for PSEBA benefits, may nevertheless qualify for continuation of coverage pursuant to section 367f of the Illinois Insurance Code, the firemen’s continuance privilege, and pay the premiums for continued group insurance coverage. The Court’s basis for examining the Insurance Code in a PSEBA case stems from a well-established rule that statutes related to the same subject matter are to be read in conjunction with each other. Section 367f provides that a municipality’s group accident and health insurance for firemen employed by said municipality shall provide “for the election of continued group insurance coverage for the retirement or disability period of each fireman who is insured under the provisions of the group policy.” [vii] Section 367f also provides as follows:

If a person electing continued coverage under this Section becomes eligible for [M]edicare coverage, benefits under the group policy may continue as a supplement to the [M]edicare coverage upon payment of any required premiums to maintain the benefits of the group policy as supplemental coverage[viii]

Any employee eligible for PSEBA health benefits who becomes eligible for Medicare would have to take Medicare for primary coverage.  The coverage offered by the employing municipality would become a secondary, “supplemental coverage.” Accordingly, the Court concluded that when Pyle became Medicare eligible, Granite City no longer had to pay PSEBA premiums on his behalf.

So what is the impact of the Pyle decision and how does it affect municipalities? PSEBA provides benefits beyond those provided in the Illinois Insurance Code. As a result, an employing municipality, rather than the safety employee, is responsible for paying the insurance premiums on the employee’s behalf. However, once the employee becomes Medicare eligible, the group insurance benefits may continue only as a “supplement” to the Medicare coverage, but it is not the health insurance plan for which the employing municipality has to pay premiums.

[i]  2012 IL App (5th) 110472, 978 NE 2d 1086 (5th Dist. 2012).

[iv] For purposes of convenience, the Fifth District Court will be referred to as the “Court.”

[v] 978 NE 2d at 1091.

[viii] Id. (emphasis added).


Carlos S. Arevalo


Author: Carlos S. Arévalo