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Illinois Bill Seeks to Impose Prejudgment Interest in Tort Actions

By Michael A. Airdo

Up until now, Illinois law has not provided for prejudgment interest in personal injury or wrongful death tort cases. This may change if House Bill 3360, which was passed by the Illinois General Assembly on January 13, 2021, is not vetoed by Governor J.B. Pritzker. The Bill amends the State’s judgment interest statute and adds prejudgment interest on all personal injury and wrongful death claims where a plaintiff prevails. It provides that the plaintiff will recover prejudgment interest at the rate of nine percent (9%) per year on all damages awarded by the court in a final judgment. The proposed new law states that the prejudgment interest begins to accrue on the date the tortfeasor “has notice of the injury.” This Bill was sent to the Governor on February 4, 2021. The Governor has 60 days to sign the Bill into law or veto it. If he takes no action, the Bill automatically becomes law after that 60 days expires, or in this case, on April 5, 2021. As discussed below, if this prejudgment interest Bill is enacted into law, it will have an impact on the way tort cases are litigated in the State.

Current Law

Under current Illinois law, plaintiffs are entitled to accrue interest in tort cases only after a court enters a monetary judgment against a defendant. Specifically, pursuant to the Illinois Code of Civil Procedure, a defendant owes a plaintiff interest at a rate of nine percent (9%) per year. However, this interest is calculated from the date of the judgment, not before. See 735 ILCS 5/2-1303(a). There is no provision in the current law to award prejudgment interest in personal injury or wrongful death cases.

Proposed Amended Law

House Bill 3360 modifies the current judgment interest statute in cases alleging personal injury or wrongful death to provide for prejudgment interest. Should plaintiffs prevail at trial, they will be entitled to recover prejudgment interest at a rate of nine percent (9%) per year on the full judgment. Interest begins to run when the defendant-tortfeasor has “notice of the injury.” When a defendant is deemed to have “notice” will be dependent upon whether the defendant was aware of the injury “from the incident itself”—like in a traffic accident where the plaintiff was taken by ambulance to the emergency room—or upon “written notice” of the injury. As such, plaintiffs will begin to “earn” interest on a prospective judgment well before making a claim or bringing a case, since a plaintiff will have years after being injured to file suit under the applicable statute of limitations.

The new proposed law does exempt “local public entities” from the prejudgment interest rule. It also provides that, in cases where a State agency or department is also on the plaintiff’s side in the case, the trial judge has the discretion to apportion the interest award between the State and the individual plaintiff.

House Bill 3360 provides that it would become effective immediately upon it becoming law. So, for any personal injuries or wrongful deaths occurring before the effective date of the bill—including cases currently in suit—prejudgment interest will begin to accrue on either the date the bill becomes law or the date that the alleged tortfeasor has notice of the injury, whichever is later.

Impact on Litigation Moving Forward

House Bill 3360 presents a significant departure from the current landscape of personal injury and wrongful death litigation in Illinois. If it becomes law, it will adversely affect civil law defendants, businesses, and insurers. While this article is not intended to outline all the potential impacts of this proposed legislation, nor does it discuss the potential legal challenges to the Bill, it highlights some critical implications.

First, this Bill does not consider judicial delays that will objectively result from COVID-19. As it stands, in most courtrooms across the State, because of the pandemic, there are no jury trials, and there may be none for some time. The proposed law does not account for these systemic delays that exist through the fault of neither side. Moreover, when the pandemic resolves, the law does not account for the purposeful delays of plaintiffs, who may strategically and intentionally cause delays. Given that most tort actions in Illinois have a statute of limitations that range from two (2) to four (4) years, depending on the theory of liability, House Bill 3360 has the potential to add years of interest to a plaintiff’s judgment before a suit has even been filed. And, since there is no mechanism by which the defendant can accelerate or expedite such a filing, the proposed law unfairly prejudices the defense.

Second, if this Bill becomes law, prejudgment interest will be a factor that defendants must consider in evaluating a plaintiff’s personal injury or wrongful death claim. Currently, if a plaintiff prevails at trial, and a monetary judgment is entered, a defendant can calculate post-judgment interest and consider that sum in determining whether and for how long to appeal the judgment. A defendant has certainty as to what the judgement is and what the interest will likely add up to, should the appeal be unsuccessful. With prejudgment interest, defendants will need to calculate the anticipated amount of interest before judgment–without certainty as to the amount the jury may award—and factor that number in when evaluating a gross verdict potential and settlement value. The proposed law would award prejudgment interest for economic and non-economic damages, including future medical expenses and lost wages. Thus, defendants will be asked to not just consider these uncertain damages, but to contemplate interest on these damages, as well.

Forcing defendants to have to consider prejudgment interest at a rate of nine percent (9%) is no-doubt designed to strongarm settlements. Moreover, the proposed law is crafted to coerce defendants to settle early in the litigation process, before discovery is complete, and before a defendant is able to test the merits of the claim, all to avoid accruing interest.  Defendants will be faced with deciding whether to exercise their rights to a jury trial under the Illinois Constitution, or to settle a case to avoid having to pay usurious interest.

Since the Governor has not yet taken action, those who oppose House Bill 3360 still have the opportunity to make their objections known to him. The Governor can be reached at his office at 312-814-2121, or to submit comments in writing via the website below:

https://www2.illinois.gov/sites/gov/contactus/Pages/VoiceAnOpinion.aspx

If you have questions regarding this Bill, please contact Michael Airdo at [email protected].