In a disappointing setback for defendants, prejudgment interest will now apply to wrongful death and personal injury cases in Illinois. On May 28, 2021, Illinois Governor J.B. Pritzker signed Senate Bill 72 into law, effectively amending Section 735 ILCS 5/2-1303 of the Illinois Code of Civil Procedure to now allow plaintiffs to recover prejudgment interest in personal injury and wrongful death cases. Previously, plaintiffs had only been permitted to collect post-judgment interest at a rate of nine percent. Under the new law, plaintiffs will now be entitled to prejudgment interest at a rate of six (6%) percent in addition to the post-judgment interest of nine (9%) percent.
Effective Date and Application
The new law will take effect on July 1, 2021. Notably, prejudgment interest will only apply to personal injury and wrongful death cases that proceed to trial and reach a verdict. Prejudgment interest will begin to accrue on the date that a legal action is filed or the effective date of the law (July 1, 2021), whichever is later. Accordingly, the law purportedly applies to lawsuits that are currently pending and prejudgment interest will be calculated from the July 1, 2021 effective date. However, prejudgment interest will never accrue longer than a period of five years.
Potential Reduction of Prejudgment Interest
Defendants will have an opportunity to reduce prejudgment interest through early settlement negotiations. The law provides that written settlement offers made within the first 12 months of a lawsuit are to be credited against the judgment before calculating prejudgment interest. If a judgment is equal to or less than the highest settlement offer, no prejudgment interest will apply.
For example, assume a defendant makes a settlement offer of $500,000 within the first 12 months of the filing of a lawsuit. The case then proceeds to trial and a verdict is rendered in the amount of $300,000. No prejudgment interest would apply in this instance. On the other hand, if the highest settlement offer by the defendant is $300,000 and a verdict is rendered in the amount of $500,000, the settlement offer will be a setoff to the amount on which prejudgment interest may be assessed.
Prejudgment interest will only be assessed on the $200,000 difference between the verdict and the settlement offer.
Exceptions to Prejudgment Interest
Prejudgment interest will not apply to lawsuits filed against the state, a unit of local government, a school district, a community college district, or any other governmental entity. Prejudgment interest will also not be calculated to include any punitive damages, sanctions, statutory attorneys’ fees, or statutory costs awarded at trial.
The new law must inevitably be a consideration for defendants defending personal injury and wrongful death cases in Illinois and be contemplated when valuing cases and evaluating the early resolution of a case. We, at Kamykowski, Gavin & Taylor, will continue to monitor the law and its impact on the litigation landscape in Illinois as it is implemented.