by Michael B. Weinstein (Fall 2018)

Trustees of police and firefighter pension funds are well aware of the detailed procedures that must be followed with respect to the consideration of an application for disability benefits. Specifically, a disability pension cannot be awarded without an applicant submitting to an examination by three (3) physicians selected by the fund’s board of trustees. (See 40 ILCS 5/3-115 and 4-112)

However, not all Illinois public pension funds require such examinations. A recent Illinois appellate court decision, Hadler v. Illinois Municipal Retirement Fund, 2018 IL App (2d)170303, highlights the pitfalls when such examinations are not part of the process.

Katherine Hadler was a member of the Illinois Municipal Retirement Fund (IMRF) with over 26 years of creditable service. In 2012, Ms. Hadler began experiencing pain in her right foot and ankle. The pain became so intense that it prevented her from working as an engineering technician for the Village of Rantoul. In fact, she was unable to return to work after having bunion surgery on her foot in November 2012. Subsequently, Ms. Hadler applied for, and received, temporary disability benefits from IMRF. Those benefits expired in June 2015 and she then applied for total and permanent disability benefits. 1

As it turned out, her treating physicians diagnosed her condition as Complex Regional Pain Syndrome (CRPS), a chronic and debilitating condition believed to be caused by damage to, or malfunction of, the peripheral and central nervous systems. Ultimately, one of her physicians, Dr. King, found her to be totally and permanently disabled due to her CRPS and advised IMRF of his conclusion by completing the applicable IMRF disability form.

Nevertheless, IMRF staff denied Ms. Hadler’s application for total and permanent disability benefits, relying upon a review of her medical records by their medical consultant, Dr. Rao. Ms. Hadler appealed the denial to the IMRF Board of Trustees. A hearing was subsequently held before the Board’s Benefit Review Committee.

After hearing from Ms. Hadler and reviewing the initial staff report; additional materials submitted by both Dr. King and Ms. Hadler (including an administrative law judge’s decision granting her Social Security disability benefits); a vocational opinion submitted by Allegiant Managed Care (Allegiant); and Dr. Rao’s opinion. Thereafter, the Committee recommended that the full Board of Trustees uphold the staff decision. This recommendation was later adopted by the full Board. Ms. Hadler timely filed an administrative review complaint contesting the Board’s decision denying permanent disability benefits.

The trial court affirmed the administrative decision, finding that the medical evidence indicated that Ms. Hadler could sit for extended periods of time and there were sedentary occupations available for which she was qualified. In so holding, the trial court adopted the conclusions of Allegiant and Dr. Rao that Ms. Hadler had not demonstrated that she was unable to perform “any gainful activity” (the statutory standard used to determine eligibility for total and permanent disability benefits).

On further appeal, the Illinois Appellate Court, Second District, reversed. Initially, the appellate court noted that the standard of review was the “manifest weight of the evidence” standard since the parties “essentially dispute whether the facts support the Board’s determination that the plaintiff is able to engage in any gainful activity.”

Nevertheless, after considering both the statutory requirement, as well as IMRF’s administrative rule defining “gainful activity,” the appellate court unanimously held that the decision of the Board of Trustees was against the manifest weight of the evidence and, therefore, must be reversed.

Initially, the court noted that all three of Ms. Hadler’s treating physicians concluded that she was permanently disabled and unable to return to work. On the other hand, Dr. Rao, the IMRF medical consultant, never treated Ms. Hadler. Moreover, he never explained the basis for his opinion. Indeed, even after additional materials were submitted by Ms. Hadler, Dr. Rao “offered no explanation as to how, with all the limitations set forth by the plaintiff’s treating physicians, the plaintiff could perform any gainful activity. Further, he offered no reasons why the plaintiff’s treating physicians’ opinions should be discounted.”

Furthermore, the Allegiant report was also insufficient to support the Board’s determination since the case manager “assumed” that Ms. Hadler could perform sedentary work. Once again, the court pointed out that the case manager never directly spoke to, much less saw, Ms. Hadler. Nor was there any indication that the case manager had reviewed Dr. Rao’s opinions or even spoke to him. Finally, the report was discounted since Ms. Hadler’s work limitations “were not all considered.” Thus, while acknowledging that the record on appeal contained evidence that could support the Board’s decision, that evidence lacked a reliable basis in fact.

The court’s conclusion can be summarized in the following quotation from its opinion: “In the present case, the plaintiff offered opinions from three experts. All of her experts had examined and treated her. The Board rejected those opinions and instead relied upon the opinions of the Allegiant case manager and Dr. Rao, neither of whom had ever met the plaintiff.”

Thus, we see the importance of the three-physician IME requirement found in Articles 3 and 4 of the Illinois Pension Code. For in the eyes of this court, there can be no substitute for the actual physical examination(s) of an applicant for long-term disability benefits.

On a final note, since this decision was rendered, IMRF has implemented, on a limited basis, an examination process for both physical and psychiatric disabilities. However, the examinations are limited to those application for which an appeal to the Board’s Benefit Review Committee has been requested. Thus, the vast majority of disability applications continue to not include an actual examination by IMRF medical consultants.


1IMRF members are eligible for two types of disability benefits: temporary benefits that can last as long as thirty (30) months; and total and permanent disability benefits that can last until an individual reaches the age at which full Social Security benefits are payable, or five years after the employee becomes disabled, whichever is later. (See 40 ILCS 5/7-147 and 7-150)