If at First You Do Not Succeed, Try Again Immediately: Illinois Passes Revised Pre-Judgment Interest Statute
Defendants welcomed the news that Illinois Governor J.B. Pritzker vetoed HB3360 which established 9% pre-judgment interest that began accruing as early as the date of a personal injury. Pritzker was critical of the bill as placing too large a financial burden on hospitals, acting as a deterrent to doctors practicing in the state, and the 9% interest rate being out of line with current rates. However, at nearly the exact time the Governor was vetoing that bill, both Chambers of the Illinois Legislature were passing SB72, a revised version of vetoed bill. The Governor has signaled he will sign this version of the bill.
The particulars of the bill are relatively straightforward: pre-judgment interest accrues at 6% per year from the date of lawsuit filing until the date of judgment (except for punitive damages, sanctions and statutory allowable fees and costs).
However, there are a few noteworthy nuances to this process. First, where there has been a written offer of settlement within 12 months of suit filing that the Plaintiff has not accepted within 90 days, the pre-judgment interest is only applied to the difference between the offered amount and the judgment amount. Second, where there is a written settlement offer within 12 months of suit filing, the Plaintiff has not accepted within 90 days, and the judgment is equal to or less than the written offer, there will be no prejudgment interest added to the judgment. Third, if the lawsuit is voluntarily dismissed and then refiled, prejudgment interest is tolled for the time between dismissal and refiling. Fourth, prejudgment interest accrual is capped at five years. Fifth, the State, local governments, school districts, and community college districts will not be liable for prejudgment interest.
The bill is scheduled to take effect on July 1, 2021 and will apply to all litigation (with previously filed cases having a July 1, 2021 accrual date for prejudgment interest). Once the bill takes effect, Defendants will have 12 months to make the written settlement offer as detailed above to qualify for the reduced or negated prejudgment interest awards.
Presuming that Governor Pritzker signs this bill into law, Illinois will join the majority of states that award some form of pre-judgment interest to personal injury plaintiffs who prevail at trial. As litigation proceeds, it will be critical to issue a written offer at or before the 12-month deadline to potentially reduce potential interest exposure.
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