Holland & Knight LLP

Illinois Gov. JB Pritzker has vetoed Illinois House Bill 3360, which sought to amend the state's judgment interest statute to add prejudgment interest on all damages rendered in personal injury and wrongful death claims at the rate of 9 percent per year. (See Holland & Knight's previous alert, "Illinois Legislature Passes Bill to Impose Prejudgment Interest on Personal Injury Claims," Jan. 28, 2021.) In vetoing the measure on March 25, 2021, the governor expressed concern about the statute's potentially adverse impact on Illinois' healthcare industry, particularly given the impact of COVID-19 on that sector of the Illinois economy.

Had the bill become law, it would have provided for the calculation of prejudgment interest to begin accruing when the tortfeasor had notice of the injury and would have had an immediate impact on cases pending in the courts of Illinois.

After the veto, Illinois lawmakers passed a new version of the bill under Senate Bill 72, which lowers the prejudgment interest rate to 6 percent, has passed both chambers and now awaits Gov. Pritzker's signature.

This Holland & Knight alert summarizes the effect of Senate Bill 72 if and when the bill becomes law.

Background

To date, Illinois law has not recognized the award of prejudgment interest in tort actions for personal injury or wrongful death. Instead, Illinois' judgment interest statute currently imposes only post-judgment interest in tort actions that accrues at the rate of 9 percent per year after a court issues a judgment. See 735 ILCS 5/2-1303.

Application and Effect

Senate Bill 72 seeks to amend the Illinois judgment interest statute to provide that in all actions for personal injury or wrongful death, with certain exceptions as detailed below, a plaintiff shall recover prejudgment interest on all damages rendered in a judgment against a tortfeasor at an interest rate of 6 percent per year. Prejudgment interest would apply only in personal injury and wrongful death cases that reach verdict. It would not apply to punitive damages, sanctions and attorney fees, or court costs added to a judgment.

Senate Bill 72 sets the beginning of the accrual of prejudgment interest on the date that a lawsuit is filed against the tortfeasor. The proposed amended bill would become effective on June 21, 2021. For any claims that occurred before the effective date, prejudgment interest shall begin on the date the action is filed or the effective date of the bill, whichever is later.

Senate Bill 72 also includes a provision that provides defendants with an opportunity to reduce prejudgment interest through early settlement offers. The value of settlement offers made within the first 12 months of the filing of a lawsuit are to be credited against the judgment amount rendered at trial before calculating prejudgment interest, and if that settlement offer meets or exceeds the judgment, no prejudgment interest will apply.

Finally, the proposed law would not apply to lawsuits filed against the state, a local unit of government, a school district, community college district or any other governmental entity.

Conclusion

If signed into law by Gov. Pritzker, this important change to the Illinois judgment interest statute would mark the first time that prejudgment interest will be allowed against tortfeasors for certain personal injury or wrongful death upon the entry of a judgment.

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