New Prejudgment Interest Bill Awaits Signature

New Prejudgment Interest Bill Awaits Signature

Governor Pritzker must decide whether to sign a compromise bill that would allow personal injury and wrongful death plaintiffs to recover 6% interest on all damages incurred prior to a legal judgment. Although Illinois currently recognizes only post-judgment interest, Senate Bill 72 would amend Section 2-1303 of the Illinois Code of Civil Procedure by allowing plaintiffs to recover pre- and post-judgment interest against non-governmental entities.

If Governor Pritzker signs, as is expected, the bill would take effect July 1, 2021. Prejudgment interest would begin to accrue on the date the legal action is filed and accrue for up to 5 years on all damages apart from punitive damages, sanctions, attorney fees, and costs. Governor Pritzker vetoed the first bill passed by the Illinois legislature that allowed for 9% prejudgment interest, voicing concerns about its impact on the healthcare industry in the wake of the COVID-19 pandemic. This second version was negotiated between the Illinois Trial Lawyers Association, the Illinois Hospital Associate, and the Health Care Council of Illinois.

Notably, S.B. 72 includes a provision meant to encourage defendants to make settlement offers. If a settlement offer is made within 12 months of the filing of an action but it is rejected, the amount of the offer will be offset from the judgment on which the interest would normally accrue.

To illustrate: a court enters a $300,000 verdict for a plaintiff after a slip-and-fall against Defendants A, B, and C divided equally. Defendant A offered $75,000 to settle, Defendant B offered $125,000, and Defendant C offered $0; all three offers were rejected by the plaintiff. Prejudgment interest would accrue against Defendant A on the $100,000 judgment offset by the $75,000 settlement offer ($100,000 + ($25,000 x 0.06) = $101,500). No prejudgment interest would accrue against Defendant B because its settlement offer was higher than the judgment. Defendant C would have to pay prejudgment interest on the entire $100,000 judgment ($100,000 x 1.06 = $106,000).

This provision rewards defendants who make generous settlement offers and punishes those who fail to make meaningful offers or to offer anything at all. The hope is that S.B. 72 will incentivize defendants to resolve cases quickly rather than prolong them, thereby reducing burdens on courts’ dockets.

This bill will, of course, interest trial attorneys and health care providers. But Illinois businesses of all varieties should also pay close attention to the bill because it will shape how they approach personal injury and wrongful death claims moving forward.

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