On January 13, 2021, the Illinois General Assembly passed House Bill 3360 (Bill) which, if signed by Governor Pritzker, would impose a 9 percent per annum prejudgment interest rate in wrongful death and personal injury tort actions. Illinois law does not currently recognize prejudgment interest in such tort actions, only allowing a post-judgment interest rate of 9 percent per annum running from the date of the judgment’s entry through the date of satisfaction. 735 ILCS 5/2-1303(a). While 5 percent prejudgment interest is permitted in certain cases where liability is clear and damages are readily ascertainable, such interest has never been permitted in personal injury cases, as damages are too difficult to calculate in advance.
The Bill passed expeditiously through the Illinois Senate with a 33-17-2 margin in the early morning hours on January 11, and through the Illinois House with a 69-42-1 margin the following day. Under Illinois legislative procedure, once a bill passes through both houses of the General Assembly, it is sent to the governor’s desk within 30 days for action. Thereafter, the governor has 60 calendar days to decide whether to sign the Bill, thereby immediately enacting it into law, or veto it and return it to the General Assembly. In the event the governor does nothing in those 60 days, the Bill will automatically become law. Alternatively, if the governor elects to veto the law, it is sent back to the General Assembly where the veto could be overturned by a 3/5 vote in each house.
If signed by Governor Pritzker, the Bill would drastically advance the time at which interest begins to accrue. Section 1303(b)(4)(c) of the proposed statute states that prejudgment interest would begin “to accrue on the date the defendant has notice of the injury from the incident itself or a written notice.” Therefore, plaintiffs can essentially begin earning interest on their prospective judgments well before ever filing suit. Such interest would also be imposed on non-economic damages such as pain and suffering, as well as future damages that have not yet been incurred such as medical expenses and lost wages. This is a significant departure from the longstanding principle that prejudgment interest is only assessed when liability is clear, and damages are readily ascertainable. This is never the case in personal injury actions, as defendants rarely have the ability to determine the extent of their liability, if any, before the case has even started.
Additionally, personal injury and wrongful death claims that pre-date the enactment date would be impacted retroactively. Specifically, Section1303(b)(4)(e) of the proposed statute provides that prejudgment interest would be retroactively assessed to existing personal injury and wrongful death cases. Such interest would be calculated by starting at the later of the Bill’s enactment date, or the date the defendant has notice of the injury. An inevitable result is heightened pressure on settling earlier in the litigation out of fear of mounting damages compounded by interest.
The financial ramifications of the Bill are significant and could weigh heavily on litigation strategy in existing and prospective toxic tort and personal injury cases. To measure the potential economic impact on a given case, it is important to look at the applicable Illinois law regarding the statute of limitations. In Illinois, most applicable tort actions carry a two-year statute of limitations period; however, some limitations periods span up to four years. The Bill does not take into account judicial delays attributable to plaintiffs, such as waiting to file suit until right before the statute of limitations has run. In practice, defendants would constantly be on the clock to settle more quickly, as the risks associated with going to trial mount by the day. This is especially significant while litigants nationwide deal with unprecedented judicial delays due to COVID-19.
This legislation will have dramatic effects on toxic tort and personal injury litigation state-wide. The legislation is widely viewed as tilting the playing field in favor of plaintiffs and has been opposed by numerous Illinois organizations, including the Illinois Defense Counsel. The Bill’s enactment could present novel legal issues for Illinois defendants, requiring quick thinking and a thorough analysis of the financial risks associated with taking a case to verdict.
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