Hussey v. Milwaukee Cnty., 12–3625.

• Decision Date: 29 January 2014
• Docket Number: No. 12–3625.,12–3625.
• Citation: 740 F.3d 1139
• Parties: Esther HUSSEY, Plaintiff–Appellant, v. MILWAUKEE COUNTY, Defendant–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

740 F.3d 1139

Esther HUSSEY, Plaintiff–Appellant,

v.MILWAUKEE COUNTY, Defendant–Appellee.

No. 12–3625.

United States Court of Appeals, Seventh Circuit.

Argued April 25, 2013.

Decided Jan. 29, 2014.

Michael J. Ganzer, Hodan, Doster & Ganzer, Milwaukee, WI, for Plaintiff–Appellant.

Alan M. Levy, Lindner & Marsack, S.C., Milwaukee, WI, for Defendant–Appellee.

Before MANION and KANNE, Circuit Judges, and LEE, District Judge. ^*

LEE, District Judge.

Esther Hussey, on behalf of herself and all others similarly situated, sued Milwaukee County (the “County”) in state court alleging that its failure to provide cost-free health insurance to retirees constituted a taking of property without due process of law in violation of the United States and Wisconsin constitutions. The County removed the case to the United States District Court for the Eastern District of Wisconsin.

The parties consented to the jurisdiction of the magistrate judge, who stayed briefing on the class certification issues pending the resolution of the parties' cross-motions for summary judgment. On summary judgment, Hussey argued that the County ordinances bestowed upon retirees a property interest in “cost-free” health insurance. In response, the County contended that it only promised retirees the ability to participate in the same health insurance plan (“the Plan”) as active employees on a “premium-free” basis. The magistrate judge reviewed the language of the ordinances and agreed with the County, granting its motion for summary judgment and denying Hussey's cross-motion. Hussey appealed.¹ We affirm.

I. Background

Hussey worked for the County, primarily in the Register of Deeds Office, starting in 1961 until she retired in 1991. At the time that she was hired, she was required to make a monthly contribution toward the cost of her health insurance.

By 1971, the County provided its employees with health insurance pursuant to the Milwaukee County Code of General Ordinances (hereinafter “MCCGO”) § 17.14(7), which stated in pertinent part: “Hospital and surgical insurance shall be provided for county employees upon application of each employee. The county shall participate in the payment of monthly premiums for such insurance ... for eligible employes in the classified service, except for employes 65 years or age or over.” MCCGO § 17.14(7)(a) (1971).

In June of that same year, the County amended the ordinance to expand this coverage to retired County employees. Specifically, Section 17.14(7)(i) was amended to read that the “[p]rovisions of (a), (b), (c) and (d) shall apply to retired members of the County Retirement System with 15 or more years of creditable pension service as a County employee or beneficiaries of such members.” MCCGO § 17.14(7)(i) (1971).

Since 1971, Section 17.14 has undergone a number of amendments. By 1989, Section 17.14(7) provided that “[t]he County shall participate in the payment of the monthly costs or premium for [health insurance] benefits.” MCCGO § 17.14(7) (1989). Section 17.14(7)(a) was amended that year to provide that “[t]he County shall pay the full monthly costs of providing such coverage for employes who commenced their employment with Milwaukee County prior to July 31, 1989.” MCCGO § 17.14(7)(a) (1989). And Section 17.14(7)(h) made this provision applicable to eligible retired employees. MCCGO § 17.14(7)(h) (1989).

In 1993, Section 17.14(7)(h) itself was amended to provide expressly that “[t]he County shall pay the full monthly cost of providing such [health insurance] coverage to retired members of the County Retirement System with 15 or more years of creditable pension service.” Furthermore, starting in 1996, Section 17.14(7) also stated that “[t]he provisions of this subsection are considered a part of an employee's vested benefit contract.” MCCGO § 17.14(7) (1996).

It is undisputed that, at the time of her retirement in 1991, Hussey had paid no co-payments, co-insurance payments, or deductibles in conjunction with her health plan. Also that year, Hussey received a benefit plan booklet that explained: “If an active employee retires with fifteen years or more of County service, the retiree may participate in the health plan in which he/she is currently enrolled on the same basis as coverage provided to the active employee group. The County will make the full premium contribution on behalf of the retiree.”

Furthermore, it is worth noting that, prior to Hussey's retirement in 1991, the County had revised its health care insurance benefits to include a “fee-for-service” plan and a Health Maintenance Organization (“HMO”) plan and required employees who were hired after July 31, 1989, to contribute to their selected plan. See MCCGO § 17.14(7)(a), (b) (1989). The County continued to modify its health insurance plans after 1991, changing insurance carriers and revising the applicable deductibles, co-payments and co-insurance amounts. In fact, as early as 2001, the ordinance increased the various charges that active employees and retirees had to pay as participants in the plans. See. e.g., MCCGO § 17.14(7)(a), (b) (2000); § 17.14(8)(d), (e) (2000). The County nevertheless continued to pay the “monthly costs of providing such coverage” for eligible retirees. See MCCGO § 17.14(7)(h) (2000). As for Hussey, according to her affidavit, she “never had to pay any co-pays or any contributions toward [her] retirement healthcare benefits” until 2006, or if she had been required to make such payments “they either were not exacted by the provider or [she has] no recollection” of them.

In 2012, the County again amended its health insurance plans, which further increased the deductibles, co-payments, and co-insurance charges that Hussey would have to bear. These amendments also modified the plan's coordination of benefits with Medicare for retirees over the age of 65. Prior to the 2012 amendments, the County's plan had employed the “come-out-whole” method of benefits coordination, under which any expenditures not covered by Medicare was paid in full by the County. Starting in 2012, the County began to utilize the “non-duplication” method, which designated Medicare as the primary health coverage provider and reduced the benefits to be paid under the County's plan by the amount of benefits paid by Medicare. Among other things, this change ensured that retirees over the age of 65 would pay the same deductibles, co-payments, and co-insurance charges as other retirees and active employees.

II. Discussion

“We review a summary judgment determination as well as any questions of constitutional law under the de novo standard of review.” Anderson v. Milwaukee Cnty., 433 F.3d 975, 978 (7th Cir.2006). “Summary judgment is appropriate where the pleadings, discovery, disclosure materials on file, and any affidavits show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law.” Jackson v. Indian Prairie Sch. Dist. 204, 653 F.3d 647, 654 (7th Cir.2011).

Hussey alleges that the County's failure to provide cost-free health insurance to retirees constitutes a taking of property without due process of law in violation of the United States and Wisconsin constitutions. Because Wisconsin courts employ the same analysis for takings claims under either the federal or state constitution, City of Milwaukee Post No. 2874 Veterans of Foreign Wars v. Redevelopment Auth. of the City of Milwaukee, 319 Wis.2d 553, 768 N.W.2d 749, 757 (2009), the Court utilizes a single analysis with regard to Hussey's takings claims.

The Fifth Amendment provides that “private property [shall not] be taken ... without just compensation.” U.S. Const. amend. V. The Due Process Clause of the Fourteenth Amendment provides: “[N]or shall any State deprive any person of life, liberty, or property, without due process of law.” U.S. Const. amend. XIV, § 1. To establish either a due process violation or an unconstitutional taking, Hussey must demonstrate that she was deprived of a vested property right. Bettendorf v. St. Croix Cnty., 631 F.3d 421, 429 (7th Cir.2011) (due process); Landgraf v. USI Film Prods., 511 U.S. 244, 267–68, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994) (taking).

Under the Fifth and Fourteenth Amendments, “[p]roperty ... is an entitlement, by which we mean a valuable right that cannot be withdrawn unless a specified substantive condition comes to pass.” Lim v. Cent. DuPage Hosp., 871 F.2d 644, 646 (7th Cir.1989) (quotation omitted). “To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.” Bd. of Regents of State Colls. v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972). “[V]iewed functionally, property is what is securely and durably yours under ... law, as distinct from what you hold subject to so many conditions as to make your interest meager, transitory, or uncertain....” Reed v. Vill. of Shorewood, 704 F.2d 943, 948 (7th Cir.1983).

“Property interests, of course, are not created by the Constitution.” Roth, 408 U.S. at 577, 92 S.Ct. 2701. “[T]hey are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law-rules or understandings that securecertain benefits and that support claims of entitlement to those benefits.” Id.; see, e.g., Germano v. Winnebago Cnty., 403 F.3d 926, 927–28 (7th Cir.2005) (holding that state law created a property interest in continued group insurance to retired deputies at the same premium rate charged to active deputies). On appeal, Hussey argues that the district court erred in granting summary judgment in favor of the County because it misapplied the Wisconsin law that establishes her vested property right in cost-free health insurance. The County, of course, disagrees.

It is undisputed that Hussey has a vested...