Esther Hussey v. Milwaukee County

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 12‐3625
ESTHER HUSSEY,
Plaintiff‐Appellant,
v.
MILWAUKEE C OUNTY,
Defendant‐Appellee.
____________________
Appeal from the United States District Court for the
Eastern District of Wisconsin.
No. 12‐C‐73 — William J. Callahan, Jr., Magistrate Judge.
____________________
A RGUED A PRIL 25, 2013 — D ECIDED J ANUARY 29, 2014
____________________
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
* The Honorable John Z. Lee of the Northern District of Illinois, sitting by
designation.

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2 No. 12‐3625
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),
1 On September 10, 2013, Esther Hussey passed away during the
pendency of this appeal. On October 25, 2013, the Court granted her
estate’s motion for substitution of party.

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No. 12‐3625 3
which stated in pertinent part: “Hospital and surgical
insurance shall be provided for county employees upon
application of each employe. 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
employe 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

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4 No. 12‐3625
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

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No. 12‐3625 5
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).

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6 No. 12‐3625
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, 768 N.W.2d 749,
757 (Wis. 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 (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 (1972).

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No. 12‐3625 7
“[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. “[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 secure certain
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 property
interest in participating in the County’s retiree health
insurance plan. However, the parties hotly dispute the
contours of that interest. In short, Hussey’s position is that
she has a property interest in “cost‐free” health insurance,
that is, insurance coverage free of deductibles, co‐payments,
and co‐insurance charges. The County in turn acknowledges
that Hussey possesses a property interest, but contends that
this interest is limited to participating in the same health
insurance plan as active employees without the need to pay

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8 No. 12‐3625
the attendant premiums—what the County refers to as
“premium‐free” health insurance.
As an initial matter, Hussey argues that the district court
erred in ignoring a number of well‐established Wisconsin
cases that stand for the proposition that once a property
right in a benefit is vested, the benefit cannot be modified or
eliminated. See, e.g., Roth v. City of Glendale, 614 N.W.2d 467,
473–74 (Wis. 2000); Wis. Retired Teachers Ass’n, Inc. v. Employe
Trust Funds Bd., 558 N.W.2d 83, 92 (Wis. 1997); Ass’n of State
Prosecutors v. Milwaukee Cnty., 544 N.W.2d 888, 889 (Wis.
1996); Schlosser v. Allis‐Chalmers Corp., 271 N.W.2d 879, 885
(Wis. 1978). Hussey’s reliance on these cases, however, puts
the proverbial cart before the horse. Before we can determine
whether a vested property right has been modified or
infringed, we first must ascertain the exact nature of that
right. For present purposes, we must determine whether
Hussey has a vested property interest in “premium‐free”
health insurance or “cost‐free” health insurance. For if the
existing rules and understandings, as defined by state law
and municipal ordinances, demonstrate that Hussey lacks a
property interest in “cost‐free” health insurance, the
requirement that she pay deductibles, co‐payments, and co‐
insurance charges beginning in 2006 would not constitute a
modification of a vested property right.
Unfortunately, the cases and state statutes cited by
Hussey that discuss pension and health benefits provide no
assistance in our determination of whether Hussey has a
property interest in cost‐free health insurance. Moreover,
because the health insurance program for retirees was not
created until 1971, her reliance on pre‐1971 statutes,
ordinances, cases, and plan booklets is equally unhelpful.

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No. 12‐3625 9
Rather than resting upon these sources, we must
determine the contours and dimensions of Hussey’s
property interest by examining the existing rules and
understandings that stem from state law and the municipal
ordinances defining the County’s obligation to provide
health insurance for active and retired employees. See Town
of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005) (stating
property interests “are created and their dimensions are
defined by existing rules or understandings that stem from
an independent source such as state law”).
The 1971 General Ordinance provided for the first time
that the health insurance provisions applicable to employees
also “appl[ied] to retired members of the County Retirement
System with 15 or more years of creditable pension service
as a County employe.” MCCGO § 17.14(7)(i) (1971). The
ordinance also stated that “[t]he payment of Blue Cross‐Blue
Shield and major medical insurance premiums as above
provided shall be made for coverage commencing July 1,
1971 for employees presently enrolled and payment of
premiums for those retired employees not presently enrolled
shall be made for coverage commencing September 1, 1971.”
Id. (emphases added). Thus, as of 1971, the plain language of
the ordinance made it abundantly clear that the County
committed itself to pay only the premiums of retired
employees for their medical insurance. See Conn. Nat’l Bank
v. Germain, 503 U.S. 249, 253–54 (1992) (“We have stated time
and again that courts must presume that a legislature says in
a statute what it means and means in a statute what it says
there.”).
By 1989, the ordinance provided that “[t]he County shall
participate in the payment of the monthly costs or premium

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10 No. 12‐3625
for [health insurance] benefits.” MCCGO § 17.14(7) (1989).
And Section 17.14(7)(a) was amended 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). Section 17.14(7)(h) made this provision
applicable to eligible retired employees. MCCGO §
17.14(7)(h) (1989).
Then, 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 as a County
employe.” MCCGO § 17.14(7)(h) (1993).
Accordingly, by the time that Hussey retired and in the
years thereafter, the municipal ordinances required the
County to pay the “premiums” or “monthly costs” of
providing the same health insurance coverage for retirees
that it was providing to active employees. No deductive leap
is needed to conclude that the County’s promise to pay
“premiums” does not comprise a promise to pay all of the
costs incurred by a retiree in obtaining health care. And as
for the term “monthly costs,” we agree with the district court
that co‐payments, deductibles, and co‐insurance charges are
not monthly costs because they are not incurred on a month‐
to‐month basis. Rather, such costs are incurred if and when a
health care service is provided and then only on an annual
basis (in the case of deductibles) or an as‐needed basis (in
the case of co‐payments and co‐insurance charges).Thus,
nowhere do these ordinances create an entitlement for
retirees—or active employees for that matter—to receive

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No. 12‐3625 11
cost‐free health insurance as Hussey contends. Put another
way, in light of the plain and unambiguous language of the
relevant ordinances, we cannot equate the County’s
obligation to pay the premiums and monthly cost of
providing health insurance with the obligation to pay the
full cost incurred by Hussey of receiving health care
services. See United States v. Rosenbohm, 564 F.3d 820, 823 (7th
Cir. 2009) (“If the language … is clear and unambiguous, in
the absence of a clearly expressed legislative intent to the
contrary, that language must ordinarily be regarded as
conclusive.”) (quotation omitted).2
The language in the benefits booklet that Hussey
received when she retired in 1991 only serves to bolster this
conclusion. The booklet states: “If an active employee retires
within 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.” (emphasis
added).
Hussey also takes umbrage with the district court’s
conclusion that the municipal ordinances only required the
County to provide retirees with the same level of health
insurance coverage that was provided to active employees.
2 Similarly, the ordinances do not obligate the County to utilize any
particular coordination of benefits formula with respect to retirees who
receive benefits under Medicare. Although the change from a come‐out‐
whole formula to a non‐duplication formula in 2011 “undoubtedly
increase co‐payments for certain retirees, it put them in no worse
position than they would have been absent Medicare.” Diehl v. Twin Disc,
Inc., 102 F.3d 301, 309 (7th Cir. 1996).

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12 No. 12‐3625
This objection is unfounded. Throughout its various
iterations, Section 17.14(7) defined the health care coverage
available to retirees in relation to the coverage provided
simultaneously to active employees. For example, the June
1971 amendments noted that the “[p]rovisions of (a), (b), (c)
and (d) [which applied to active employees] shall apply to
retired members.” MCCGO § 17.14.7(i) (1971). The 1989
amendments declared that “[p]rovisions of (a) [which
applied to active employees] shall apply to retired
members.” MCCGO § 17.14(7)(h) (1989). The 1993 and 1996
versions of the ordinance stated that the “County shall pay
the full monthly cost of providing such coverage [i.e.,
coverage applicable to active employees] to retired
members.” MCCGO § 17.14(7)(h) (1993, 1996) (emphasis
added). And, indeed, the 1991 benefits booklet expressly
equates the scope of the coverage that an employee can
expect to receive upon retirement with that “provided to the
active employee group.” Nor does the record support the
proposition that Hussey has been treated differently when
compared to active employees who had received similar
health care services under the same plan.3
3 For example, starting in 2001 and continuing through 2006, the
ordinances required active employees to pay certain monthly fees as well
as various other charges. Whether Hussey had to pay such charges and,
if so, what those charges were is unclear from the record. See, e.g.,
Appellant’s Br. 20 (noting that Hussey had paid “administratively
enacted co‐pays” starting in 2006). Furthermore, in her brief, Hussey
appears to argue that she and similarly situated retirees were not
adversely affected by the County’s alterations to the health care plans
until 2011. See id. 21 (“It was not until the 2011 enactments that retirees
were directly affected by [the] ordinances, though the County had earlier
administratively demanded small contributions from retirees at the point

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No. 12‐3625 13
Hussey’s consternation is understandable. For many
years, she participated in the County’s health insurance plan
and received health care services without having to pay any
deductibles, co‐payments, or co‐insurance charges. But there
is no evidence in the record that the County had ever failed
to pay a health care insurance premium on Hussey’s behalf
as it had promised. Additionally, even assuming for the
moment that she had not been asked to pay any deductibles,
co‐payments, or co‐insurance charges prior to 2006, this in
and of itself does not mean that the County had promised
her these benefits under the applicable ordinances, thereby
creating a constitutionally cognizable property interest. See,
e.g., Brown v. City of Mich. City, 462 F.3d 720, 729 (7th Cir.
2006) (city’s historical practice of allowing its residents to use
its parks free of charge did not create a property interest),
reh’g denied en banc, No. 05‐3912, (7th Cir. Oct. 12, 2006);
Coghlan v. Starkey, 845 F.2d 566, 570 (5th Cir. 1988) (plaintiff’s
expectation that she would continue receiving free
municipal water based on past practices was insufficient to
create a property interest).
Hussey also points out (and the County does not contest)
that the level of deductibles, co‐payments, and co‐insurance
charges levied upon plan participants bears an inverse
relationship to the level of premiums charged by the health
of service.”). In her affidavit, however, Hussey states that she “never had
to pay any co‐pays or any contributions” until 2006 and, as a hedge,
immediately adds “if I was required to make those payments, they either
were not exacted by the provider or I have no recollection.” In any event,
to the extent that Hussey received health care services after 2006, the
record is devoid of any evidence of any active employees who had
obtained similar services and whether they were required to make
payments under the health care plan.

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14 No. 12‐3625
insurance plans, and by adopting and implementing plans
that impose such charges, the County can decrease or
maintain the premium levels, thereby shifting a portion of
the cost of providing health care coverage to retired
employees. But as discussed, Hussey was entitled only to
receive health care insurance without being charged a
premium; she was not entitled to participate in a particular
health insurance plan. Furthermore, it is worth noting that,
so long as the terms of the health insurance plan provided to
retired employees remain the same as those provided to
active employees, the County cannot shift the costs of health
insurance coverage to retirees without limit, for doing so
would substantially impede its ability to recruit and
maintain active employees.
In conclusion, Hussey held a secure and durable right to
participate in the health care insurance plans that the County
offered to active employees without having to pay an
insurance premium. She never had the right, however, to a
health care insurance plan that allowed her to obtain health
care services on a completely cost‐free basis. Because Hussey
never had a vested property right in cost‐free health
insurance, the requirement starting in 2006 that she pay
deductibles, co‐payments, and co‐insurance charges does not
diminish a property right. The district court properly
granted summary judgment in Milwaukee County’s favor,
and the opinion is AFFIRMED.

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