News and Events
Anticipated Prejudgment Interest In Illinois
April 26, 2021Joseph Panatera
ANTICIPATED PREJUDGMENT INTEREST IN ILLINOIS
On March 18, 2021, the Illinois Legislature passed a bill to amend 735 ILCS 5/2-1303 to require prejudgment interest on all personal injury and wrongful death matters in which a judgment is entered for the plaintiff. This bill is expected to be signed by Governor Pritzker and become effective on July 1, 2021. The amendment requires prejudgment interest at a rate of 6% per annum. The prejudgment interest begins to accrue on the date the action is filed, but it does not apply to punitive damages, sanctions, statutory attorney’s fees, or statutory costs. The bill also does not apply to public entity defendants.
The current bill is a compromise of a prior House Bill that required 9% prejudgment interest per annum, which would have begun to accrue at the time a defendant had notice of an injury. See Illinois House Bill 3360, January 13, 2021. Based on the 2-year statute of limitations for most personal injury matters and the 4-year statute of limitations for construction negligence claims in Illinois, the prior bill would have essentially resulted in 18%-36% prejudgment interest being added to a potential judgment at the time a plaintiff filed their personal injury or wrongful death lawsuit. The prior version of the bill was passed by the Illinois Senate. However, Governor Pritzker requested that the bill’s sponsors engage in discussions with the defense bar to discuss how to make the bill fairer to defendants. Governor Pritzker’s request was prompted by significant objections from the defense bar and the business community in Illinois. Based on the compromise reached in the current bill and the prior passage of the House Bill by the Illinois Senate, it is expected that this amendment will be signed by Governor Pritzker and become effective on July 1, 2021. The current bill will also apply to all personal injury and wrongful death cases currently pending at the time the bill is enacted and prejudgment interest on those cases will begin to accrue from the time the bill is enacted.
The Illinois Court’s statistical summary for 2019 indicates that the time between a lawsuit being filed and a verdict is approximately 33.8 months for personal injury cases seeking in excess of $50,000. This means that a plaintiff in Illinois could expect prejudgment interest of approximately 18% for the average personal injury case seeking in excess of $50,000. The prejudgment interest will apply to the total amount of the judgment based on all damages. This will include prejudgment interest on damages related to past medical billing, as opposed to actual payment for past medical costs, as well as expected future medical expenses, lost wages, future loss of earning capacity, and non-economic damages.
Based on this bill providing a significant incentive to plaintiffs to delay litigation, the bill sets a 5-year time limit for prejudgment interest. This will limit prejudgment interest to 30% of any judgment in a personal injury matter. Moreover, prejudgment interest does not continue to accrue during the time that a plaintiff voluntarily dismisses an action. In Illinois a plaintiff may voluntarily dismiss an action at any time prior to trial and refile within 1 year or within the original statute of limitations, whichever is greater. See 735 ILCS 5/2-1009 and 735 ILCS 5/13-217. Prejudgment interest will then continue to accrue upon refiling.
One of the concessions in the current bill is related to written settlement offers made by a defendant within 12 months of the filing of a lawsuit. If a plaintiff does not accept a written offer within 90 days or rejects the written offer, then any prejudgment interest added to the amount of the judgment shall be based on the difference between the judgment and the amount of the written offer. If the judgment is equal to or less than the highest written offer, then no prejudgment interest shall be added to the judgment. Based on this section of the bill, it may be beneficial for a defendant to make a written settlement offer to a plaintiff within 12 months of the filing of a lawsuit. However, it is expected that this section of the bill will be an incentive to plaintiff’s counsel to delay discovery during the first 12 months of a case in an effort to reduce any potential written settlement offer and to increase the punitive effect of the prejudgment interest statute.
Overall, the passing of this bill furthers Illinois’ status as a plaintiff friendly jurisdiction. This bill punishes defendants that defend themselves against personal injury and wrongful death lawsuits and provides an incentive for plaintiffs to file suit and to delay litigation for up to 5 years. We anticipate that this bill will create more litigation, increase costs of litigation for defendants, and cause further congestion of the Illinois Courts, which have not conducted civil trials in more than a year due to the COVID-19 pandemic. At this time, the defense bar and the business community are requesting that the bill be further amended to extend the time frame for settlement offers to 36 months, to delay interest from starting to accrue until the parties are at issue, to remove interest from being added to non-economic and future damages, and to add that plaintiffs would be responsible for a defendant’s costs and fees if they reject a written settlement offer that is equal to or exceeds the judgment.
Joseph A. Panatera is a partner at Cassiday Schade LLP. Joseph concentrates his practice on civil litigation, with an emphasis on transportation, products liability, medical malpractice, and civil rights. Joseph has tried multiple cases to verdict in both Illinois and Indiana, and frequently resolves cases through arbitration and mediation.
