Illinois Court Finds Prejudgment Interest Statute Unconstitutional

Faegre Drinker Biddle & Reath LLP

Faegre Drinker Biddle & Reath LLP

On May 27, 2022, the Circuit Court of Cook County ruled that Illinois’ recently enacted prejudgment interest statute is unconstitutional. Hyland v. Advocate Health and Hospitals Corporation, et al., No. 2017-L-003541. We reported on the passage of that statute here. In Hyland, a wrongful death/medical malpractice case, the court ruled that the statute violated the right to trial by jury and the prohibition against special legislation. This order will surely face appellate scrutiny, but for now it raises some uncertainty over the valuation of personal injury and wrongful death cases pending within the state.

In 2021, the Illinois legislature passed an amendment to the statute providing for interest on judgments. 735 ILCS 5/2-1303 (the “Amendment”). It allowed interest to accrue at 6% on a judgment against a defendant from the date a case was filed in all actions seeking damages for personal injury or wrongful death.  Before the Amendment, interest accrued from the date judgment was entered, rather than the date of filing of the lawsuit.

In Hyland, the court found the validity of the Amendment ripe for adjudication, even though there had been no judgment triggering its application, due to its impact on settlement offers and the ongoing accrual of interest from the date of filing. The court then found the Amendment unconstitutional for two reasons: (1) it violates the right to trial by jury as protected by Article I, §13 of the Illinois Constitution of 1970, and (2) it violates the prohibition against special legislation set forth in Article IV, §13 of the Constitution.

Article I, § 13 of the Illinois Constitution of 1970 provides “the right of trial by jury as heretofore enjoyed shall remain inviolate.” The court interpreted that language as securing the right to trial by jury and “[o]ne of those characteristics being the right of the jury to determine damages.” The Amendment “improperly strips the function and role of the jury in assessing all issues, including damages, and instead requires an award of prejudgment interest after verdict.” The court was also not persuaded by plaintiff’s argument that abandoning the Amendment would encourage defendants to refuse to engage in settlement negotiations, citing a law review article that provided data to the contrary.

The court also found the Amendment violated Article IV, § 13 of the Illinois Constitution of 1970—the prohibition against special legislation. The section “prevents arbitrary legislative classifications that discriminate in favor of a select group without a sound, reasonable basis.” The court held that the Amendment “clearly and arbitrarily favors personal injury and wrongful death plaintiffs and is not rationally related to any State interest.” The court held the Amendment also discriminates among defendants by penalizing them for all pretrial delays, even delays attributable to a plaintiff.

The Hyland order creates some uncertainty in the valuation of wrongful death and personal injury cases. It potentially limits prejudgment exposure in such cases and affects the calculus of taking cases to verdict. While the law further develops, defendants in Illinois personal injury or wrongful death cases should be sure to adequately preserve their ability to challenge application of the Amendment.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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