7th Circuit: No disability discrimination in former Lake Co. officer’s pension plan

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A disabled former Lake County police officer who claimed that his disability pension plan should provide the same cost-of-living increases that nondisabled retirees receive did not sway the 7th Circuit Court of Appeals.

Thomas Ostrowski served nearly eight years as a police officer with the Lake County Sheriff’s Department until 1996, when he sustained a serious spinal injury during a training exercise.

Ostrowski’s condition worsened over time and forced him to undergo a double fusion surgery on his spine in 2003.  The surgery failed, and the Lake County Sheriff’s Merit Board determined Ostrowski was permanently disabled.

Now retired, Ostrowski receives a monthly disability pension from the department.

Former employees and surviving spouses who receive retirement benefits are eligible for an annual cost-of-living increase to their benefits once they turn 55 years old. However, individuals who receive disability benefits, including Ostrowski, aren’t eligible for the increase.

Ostrowski thus sued Lake County, the sheriff’s department, the Lake County treasurer, and the Pension Committee of the Pension Plan of the Lake County Sheriff, arguing the county’s policy violated the equal protection clause of the 14th Amendment, the Americans with Disabilities Act, Section 504 of the Rehabilitation Act and state law.

Ostrowski had previously sued Lake County and others for a different matter in 2016, alleging he was forced to leave his job as a 911 dispatcher because his employer denied him reasonable accommodations. That matter was settled in 2017.

When Ostrowski brought the present action, the defendants raised as a defense a release included in the 2017 settlement agreement.

The district court found the release applied and granted summary judgment to the defendants on that basis, finding Ostrowski knew his pension did not include cost-of-living increases before he signed the 2017 agreement. It also concluded Ostrowski had waived any claims against the sheriff, treasurer and pension committee because they were “affiliates” or “related entities.”

The defendants were also awarded $221,577.25 in attorney fees and $4,487.08 in costs.

But in a Wednesday decision, the 7th Circuit determined “the settlement agreement in its entirety has no effect on Ostrowski’s disability pension. The release appears in paragraph 2 of the agreement, and this is one of those things that does not ‘change, modify, terminate, or affect in any way’ Ostrowski’s disability pension.”

“That is enough to dispose of the threshold issue on which the district court relied,” Judge Diane Wood wrote, adding that the court would address Ostrowski’s alternate argument — based on “the preservation of ‘rights or claims arising after the execution’ of the settlement agreement” — for the sake of completeness.

Relying on Bay Area Laundry and Dry Cleaning Pension Trust Fund v. Frebar Corp. of California, 522 U.S. 192 (1997), the 7th Circuit determined “each payment after (Ostrowski) signed the settlement agreement in February 2017 has generated a distinct claim that falls outside the scope of the release.”

Turning then to the merits, the 7th Circuit declined to reconsider Morgan v. Joint Admin. Bd., 268 F.3d 456 (7th Cir. 2001), which held that a retirement plan did not violate the employment provisions of the ADA by extending a cost-of-living increase to nondisabled retirees but not to those who retire early because of a disability.

“That resolves Ostrowski’s case,” Wood wrote.

“Ostrowski’s complaint also invoked section 504 of the Rehabilitation Act, 29 U.S.C. § 794. But on appeal, Ostrowski’s brief barely touched on this theory,” Wood wrote. “This argument is thus forfeited.”

Additionally, the 7th Circuit noted that Ostrowski’s disability pension is calculated as though he had spent 32 years working for the department, despite having worked on the force for less than eight years.

“There is nothing irrational about providing more generous benefits to former employees who worked longer for the Sheriff’s Department or who made more annual contribution payments,” Wood wrote. “Similarly, Lake County could permissibly believe that it is appropriate to provide more generous benefits to surviving spouses of employees who died on the job than to disabled employees, in light of the sacrifice those families made.

“… As long as a policy has some rational connection to a legitimate state interest, improving it is a task for the democratic branches of government, rather than the courts,” the judge continued. “Lake County easily meets that test.”

The appellate panel also declined to hold that Indiana Code § 36-8-10-15 requires a cost-of-living increase for all disability pensions.

Finally, it reversed the award of attorney fees and costs to the defendants, finding that the fees provision of the 2017 settlement agreement “has no effect on Ostrowski’s lawsuit about his pension benefits.”

“If the contract does not apply, the defendants must bear the cost of their own litigation,” the 7th Circuit concluded.

The case is Thomas Ostrowski v. Lake County, et al., 21-1674 and 21-2580.

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