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Nos. 2--02--0719 & 2--02--0720

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT

JUSTICE BYRNE delivered the opinion of the court:

Defendant, Roselle Police Pension Board (Board), andintervenor, Village of Roselle (Village), appeal the trial court'sorder of declaratory and injunctive relief, which enjoined theBoard from holding a hearing to reconsider the pension benefitsaward it previously granted to plaintiff, Jeannette Sola. We affirm.

Plaintiff's husband, Lester Sola, a Roselle police officer,died on May 10, 1993. On May 26, 1993, plaintiff filed anapplication with the Board requesting pension benefits as asurviving spouse. She also sent a letter to the president of theBoard requesting an annual cost-of-living increase. Shortlythereafter, she began to receive surviving spouse pension benefitsand received such benefits along with an annual 3% cost-of-livingincrease until January 1, 2002. There is no written decision inthe record memorializing the Board's grant of pension benefits toplaintiff in 1993. The minutes of a Board meeting held on January23, 1996, reflect that the Board reviewed and approved a scheduledannual increase in Lester Sola's pension.

In June 2000, the Department of Insurance (Department) auditedthe pension fund for the period beginning May 1, 1998, and endingApril 30, 2000. In its report, the Department found that plaintiff"was granted a pension of $1596.59, effective May 10, 1993." TheDepartment further found that "annual increases have been grantedsince 1993." The increases set out in the report reflect an annualincrease of 3%. The Department, without explanation, concludedthat plaintiff's current pension of "$1963.60" was overstated.

On or about December 27, 2001, plaintiff received a letterfrom the Village stating that her pension benefits for 2002 wouldnot increase beyond the 2001 level. On February 4, 2002, theBoard's attorney sent a letter to plaintiff that stated: "As youare aware, in 1993 the Pension Board awarded you a 3% cost ofliving increase pursuant to 35/3-111.1 [sic] of the IllinoisPension Code." The letter then informed plaintiff of theDepartment's findings and stated:

"It would appear that this overpayment resulted from thePension Boards [sic] granting you a cost of living increase. The Department of Insurance position is that survivingspouse's [sic] of Police Officers are not entitled to cost ofliving increases. *** The Village of Roselle has also takenthe position that you were not entitled to cost of livingincreases."

The letter then stated that the Village had petitioned to intervenein any proceedings to be held before the Board, that a hearing wasscheduled on February 11, 2002, and that plaintiff's pensionbenefits may be affected. Plaintiff later received a notice thatthe hearing would be held on April 1, 2002.

On March 26, 2002, plaintiff filed a complaint for declaratoryand injunctive relief and a motion for a temporary restrainingorder. Plaintiff argued that the Board was without jurisdiction toconduct a hearing to modify plaintiff's pension benefits because itdid not timely review its original pension decision pursuant to theAdministrative Review Law (735 ILCS 5/3--101 et seq. (West 2002)). The court granted the Village's petition for leave to intervene andthe Village filed a brief in opposition. The Board filed a motionfor summary judgment.

The court granted plaintiff's request for declaratory andinjunctive relief and enjoined the Board from conducting a hearingto review plaintiff's pension and annual 3% increase. The courtalso denied the Board's motion for summary judgment. The Villageand the Board both appealed. We consolidated the appeals.

The Board argues (1) that it had jurisdiction to hold ahearing pursuant to the Illinois Pension Code (Pension Code) (40ILCS 5/1--101 et seq. (West 2002)); (2) that it did not losejurisdiction by failing to timely review its original award becauseit never rendered an administrative decision; and (3) plaintifffailed to exhaust her administrative remedies. The Village alsoargues that there was no administrative decision. The Villageadditionally argues that plaintiff, as a surviving spouse, is notentitled to cost-of-living increases in her pension.

We review the court's order de novo, as it is based on theconstruction of a statute. People ex rel. Devine v. $30,700.00United States Currency, 199 Ill. 2d 142, 148-49 (2002). ThePension Code, which governs the Board, provides that review ofpension board decisions shall be pursuant to the AdministrativeReview Law. 40 ILCS 5/3--148 (West 2002). The AdministrativeReview Law provides in part:

"Every action to review a final administrative decisionshall be commenced by the filing of a complaint and theissuance of summons within 35 days from the date that a copyof the decision sought to be reviewed was served upon theparty affected by the decision ***." 735 ILCS 5/3--103 (West2002).

Because the Pension Code provides that decisions of pension boardsare subject to the Administrative Review Law, the Board's decisionscan be reviewed only pursuant to that law. Rossler v. Morton GrovePolice Pension Board, 178 Ill. App. 3d 769, 773-74 (1989). Thereview of a decision under the Administrative Review Law, initiatedeither by an agency or an individual appearing before it, islimited to a 35-day period after the decision is issued. Rossler,178 Ill. App. 3d at 774. This limit is jurisdictional. Holmes v.Aurora Police Pension Fund Board of Trustees, 217 Ill. App. 3d 338,344 (1991). Although an administrative agency's procedural rulesmay allow for an extension of the 35-day review period, the PensionCode provides no such extension. See Holmes, 217 Ill. App. 3d at344-45. Accordingly, the Board lacks jurisdiction to reconsiderdecisions after the expiration of the 35-day period.

The Board first argues that, regardless of the 35-day reviewperiod, it nevertheless has the statutory authority to modifyplaintiff's pension. The Board relies on section 3--144.2 of thePension Code, which provides:

"The amount of any overpayment, due to fraud,misrepresentation or error, of any pension or benefit grantedunder this Article may be deducted from future payments to therecipient of such pension or benefit." 40 ILCS 5/3--144.2(West 2002).

This argument was rejected by the court in Rossler, which heldthat section 3--144.2 is limited to "allowing the Board to readjustpension payments where a claimant has actively sought tomisrepresent his entitlement to pension funds or where the Boardhas made some inadvertent arithmetical error in calculating pensionbenefits." Rossler, 178 Ill. App. 3d at 774. As the court inRossler reasoned:

"To conclude that section 3--144.2 can be used by the Board toreopen final decisions simply because it failed to verify theaccuracy of the information on which it based its decisionwould not only circumvent the appeal period of theAdministrative Review Law but would leave pension recipientsuncertain as to their entitlement to benefits despite the factthat they relied on the judgment of the Pension Board." Rossler, 178 Ill. App. 3d at 774-75.

Here, there is no allegation of fraud or misrepresentation byplaintiff and no error by the Board. Rather, the Board is seekingto modify plaintiff's benefits because it now believes, followingthe advice of the Department of Insurance, that the Pension Codedoes not allow cost-of-living increases to surviving spouses'pensions. This change in the Board's interpretation of the PensionCode does not qualify as an error allowing the Board to modifyplaintiff's pension pursuant to section 3--144.2.

The Board next argues, along with the Village, that it is notprecluded from holding a hearing because it never rendered anadministrative decision. Without an administrative decision,defendants argue, the Administrative Review Law does not apply, the35-day limit is inapplicable, and the Board therefore hasjurisdiction to review plaintiff's pension.

The Administrative Review Law defines an administrativedecision as:

"[A]ny decision, order or determination of anyadministrative agency rendered in a particular case, whichaffects the legal rights, duties or privileges of parties andwhich terminates the proceedings before the administrativeagency." 735 ILCS 5/3--101 (West 2002).

" 'A final and binding decision by an administrative agencyrequires, at the very least, that the agency has taken somedefinitive action with regard to the application before it and thatthe applicant has been informed of the action.' " (Emphasis inoriginal.) Key Outdoor, Inc. v. Department of Transportation, 322Ill. App. 3d 316, 324 (2001), quoting Illinois Wood EnergyPartners, L.P. v. County of Cook, 281 Ill. App. 3d 841, 851 (1995).

Although the record contains no written decision thatmemorializes the Board's 1993 award of a pension and 3% annualcost-of-living increase to plaintiff, the record reflects that theBoard nevertheless rendered an administrative decision. Plaintiffapplied for a pension and cost-of-living increases on May 26, 1993. Soon thereafter, she began to receive the requested pensionbenefits and annual cost-of-living increases. In 1996, the Boardreviewed and approved an annual increase in plaintiff's pension. In 2000, after auditing the Board's pension fund, the Department ofInsurance found that plaintiff "was granted a pension of $1596.59,effective May 10, 1993," and that "annual increases have beengranted since 1993." Finally, in 2001, the Board's attorney sentplaintiff a letter stating that "in 1993 the Pension Board awarded[her] a 3% cost of living increase pursuant to 35/3-111.1 [sic] ofthe Illinois Pension Code." Accordingly, even in the absence of aformal written decision by the Board, the record reflects that in1993, the Board decided to award plaintiff a pension and annual 3%cost-of-living increases. This action qualifies as anadministrative decision, and thus, the Administrative Review Lawapplies. Because the Board did not seek to review its decisionwithin 35 days, it no longer has jurisdiction to modify plaintiff'spension benefits.

The Board next argues that plaintiff failed to exhaust heradministrative remedies. The Board contends that plaintiff shouldhave moved it to rule on its own jurisdiction prior to filing acomplaint in the circuit court. Under the exhaustion of remediesdoctrine, a party cannot seek judicial review of an administrativeagency action without first pursuing all available administrativeremedies. Board of Trustees of the Addison Fire ProtectionDistrict No. 1 v. Stamp, 241 Ill. App. 3d 873, 884 (1993). Oneexception to the exhaustion rule applies when the party attacks theagency's jurisdiction on the ground that it is not authorized bystatute. Stamp, 241 Ill. App. 3d at 884. Such is the case here. Plaintiff's complaint asserted that the Board, pursuant to thePension Code and the Administrative Review Law, lacked jurisdictionto hold a hearing. Therefore, plaintiff was not required toexhaust her administrative remedies.

Finally, the Village argues that the Pension Code does notallow for cost-of-living increases to surviving spouses' pensions. However, the only issue before us is whether the Board had thejurisdiction to hold a hearing and modify plaintiff's pension.Accordingly, we need not decide whether the Pension Code providesfor cost-of-living increases to surviving spouses' pensions.

The judgment of the circuit court of Du Page County isaffirmed.

Affirmed.

HUTCHINSON, P.J., and KAPALA, J., concur.