Madigan's suit names Jon Burge and the Policemen's Annuity and Benefit Fund of Chicago, claiming that the board violated the state's pension code last month when it voted not to terminate Burge's benefits.
Burge was sentenced last month to 4 1/2 years in prison after being convicted in June of lying in a civil lawsuit when he said he'd never participated in or witnessed the physical abuse of suspects. A subsequent pension board vote on terminating Burge's pension failed by one vote, 4-4. It needed five votes to pass.
The four board members who voted to allow Burge to keep the pension said his convictions for perjury and obstruction of justice weren't directly related to his job as a police officer and that he didn't have any law enforcement duties when he was accused of making the false statements in 2003.
Burge was fired from the police department in 1993 over the alleged abuse of a suspect. He began receiving his pension about four years later.
Madigan claims in her suit that the convictions are "related to, arose out of, and were in connection with Jon Burge's service as a policeman."
"It's this type of criminal conduct by a public servant that our pension forfeiture laws were designed to discourage," Madigan said in a statement. "The public should never have to pay for the retirement of a corrupt public official."
Burge's attorney Thomas Pleines said his office intends to "vigorously defend" Burge's right to keep his benefits.
"These (pension board) trustees are elected to their office, and they took a long, hard look at the facts in the case, and they rightfully concluded that events that occurred 10 years after Jon Burge was no longer a police officer were not related to his service, and therefore he was entitled to keep his pension," Pleines said.
Pension board Executive Director John Gallagher confirmed that the lawsuit had been served to the trustees, but declined to comment further.
Madigan's suit not only seeks the end of pension payments but calls on Burge to return the benefits he has received since being convicted.
More than 100 men have accused Burge and the officers under his command of shocking, suffocating and beating them into giving confessions during the 1970s and 1980s. The decorated former commander has never been criminally charged with abuse.
Burge is scheduled to report to prison on March 16.