New Appellate Court Decision Clarifies Disability Pension Effective Dates

New appellate court decision clarifies disability pension effective dates

 The First District Appellate Court’s recent decision in Vokac v. Berwyn Police Pension Fund, 2025 IL App (1st) 240338, provides critical guidance for pension boards in determining the effective dates of disability pension benefits and the retroactive application of administrative rules. Most significantly, the Vokac decision resolves longstanding confusion created by the Third District’s 2017 decision in Sottos v. Firefighters’ Pension Fund of Moline regarding when disability payments should commence.

Background

In Vokac, a police officer suffered a line-of-duty injury in March 2020 and never returned to work. He received Public Employee Disability Act (“PEDA”) benefits until May 15, 2021, followed by workers’ compensation temporary total disability (“TTD”) benefits paid by the municipality’s insurance carrier. The Pension Board awarded the officer a line-of-duty disability pension under Section 3-114.1 of the Illinois Pension Code effective May 16, 2021, the day after his PEDA benefits ended. Vokac challenged this decision, arguing his pension should commence on January 19, 2022 (the hearing date), which would yield a benefit based on a higher salary.

Retroactive application of administrative rules requires express language

 After the police officer filed his complaint for administrative review, the Pension Board adopted Section 723 of its administrative rules to provide guidance on determining disability pension effective dates. Section 723 established that the Board would consider several factors in determining a benefit’s effective date, including: (a) the date following exhaustion of PEDA benefits; (b) the date following exhaustion of limited or light duty assignments; (c) the date following removal from the municipality’s payroll; or (d) any other relevant factors. But most importantly, Section 723 also provided that members cannot receive disability benefits based on a salary they never received and never made pension contributions on.

The court held the Pension Board erred in applying this new rule retroactively to the police officer’s pending application. The court applied established principles that administrative rules have the force of law and must be construed like statutes. Following that analytical framework, the court found that Section 723 was a “substantive” (not a “procedural”) rule because it “serves to establish, create, or define rights of officers seeking disability pension benefits.” However, “substantive” rules only apply prospectively unless they affirmatively state they are to be applied retroactively. Because Section 723 lacked retroactivity language, it could not be applied to the police officer’s application for disability benefits after the fact.

Disability pension effective dates clarified

 Despite finding the Pension Board’s retroactive application of Section 723 was improper, the court nevertheless affirmed the Pension Board’s determination that May 16, 2021, was the correct effective date for the police officer’s disability pension. This holding provided much-needed clarity on an issue that has confused pension boards since the Third District Appellate Court’s 2017 decision in Sottos v. Firefighters’ Pension Fund of Moline, 2017 IL App (3d) 160481.

In Sottos, the Third District held that a firefighter was “on the municipality’s payroll” during the period he was receiving TTD benefits “from the City.” Many pension boards have struggled with Sottos because it was unclear whether the decision meant that all TTD benefits—even those paid by a workers’ compensation insurance carrier rather than the municipality—should be treated as municipal salary for pension calculation purposes.

The First District’s decision in Vokac resolves this confusion. The court analyzed the language in Section 3-114.1 of the Illinois Pension Code regarding “suspension of duty” and concluded that this phrase means the date when an officer ceases performing police duties and no longer receives salary from the municipality (40 ILCS 5/3-114.1). In reaching this conclusion, the court made two key findings:

• First, PEDA benefits constitute “salary” for pension purposes. PEDA provides that an eligible employee injured in the line of duty “shall continue to be paid by the employing public entity on the same basis as he was paid before the injury.” Therefore, while receiving PEDA benefits, police officers or firefighters continue to receive their annual salary (including longevity) attached to their rank as established by the municipality’s appropriation ordinance. Thus, because Vokac remained an employee of the municipality while receiving PEDA benefits, the amount of the benefit was attached to his rank, and the compensation was thus “salary” for pension purposes.

• Second, and most critically, TTD benefits do not constitute “salary” when paid by the municipality’s workers’ compensation insurance carrier rather than the municipality itself. While the Pension Board did not cite specific authority for this distinction, the court found this determination was entitled to deference as part of the Pension Board’s statutory authority to calculate pensionable salary. Further, the court observed that TTD benefits are paid at a rate of 66.66% of the employee’s average weekly wage under the Workers’ Compensation Act—not full pay. Additionally and importantly, the Illinois Pension Code specifically provides for an offset of disability pension benefits based on a police officer’s or firefighter’s receipt of workers’ compensation benefits, reinforcing the notion that TTD is a distinct form of compensation.

The court’s analysis clarifies that Sottos should be understood narrowly. The critical fact in Sottos was that the municipality itself was paying the employee’s TTD benefits, which kept the firefighter on the municipality’s payroll. In contrast, when TTD benefits are paid by a workers’ compensation insurance carrier—as is typically the case—the member is no longer receiving salary from the municipality. This distinction resolves the confusion that has plagued boards trying to apply Sottos.

Accordingly, under Vokac, the effective date for line-of-duty disability pensions should be the date the police officer or firefighter stops receiving salary from the municipality. PEDA benefits count as salary because they are paid by the municipality at the employee’s full rate. TTD benefits do not count as salary when paid by a workers’ compensation carrier rather than the municipality directly. This clarifies that Sottos applies only in unusual circumstances where the municipality itself continues to pay TTD benefits after PEDA expires.

Key Takeaways

1. Pension boards should include express retroactivity language in their rules. When adopting new rules, boards should include clear language stating whether the rules apply retroactively to pending applications. Without such language, such substantive rules will only apply prospectively.

2. The Sottos confusion has been resolved. Pension boards no longer need to struggle with whether TTD payments will keep members “on the payroll” for pension calculation purposes. When PEDA benefits end and a police officer or firefighter transitions to TTD benefits paid by a workers’ compensation insurance carrier, the employee is no longer receiving municipal salary, and a disability pension’s effective date should be set accordingly. Sottos applies only in the unusual case where the municipality itself continues to pay TTD benefits directly.

The court’s analysis reinforces that pension boards have substantial discretion in determining disability pension effective dates. Their decisions are entitled to deference when supported by reasonable interpretation of the Illinois Pension Code. Therefore, Vokac will serve as a useful tool to pension boards in setting effective dates for benefits moving forward.