On Friday, May 28, 2021, Illinois Governor JB Pritzker signed into law Senate Bill 72, which will allow plaintiffs in personal injury and wrongful death lawsuits to collect interest against defendants from the time the lawsuit is filed, rather than from the time judgment is entered.
Bill History (HB 3360)
Prior to the legislation, Illinois generally only recognized post-judgment interest, meaning from when the judgment was made to the time the monetary judgment was received, in 9% interest annum. Personal injury plaintiffs generally could not collect for losses they may have incurred before judgment.
Illinois trial lawyers and Democratic state lawmakers said the pre-judgment interest was needed to help encourage settlements against corporate defendants, who they alleged were in a better financial position to endure prolonged litigation. Representatives Jay Hoffman, Marcus Evans, and Mary Flowers initially proposed House Bill 3360, which would allow plaintiffs to collect 9% pre-judgment interest (the same rate used for post-judgment interest), calculated from the time the court determined the defendant first became aware an injury had occurred. This meant that the 9% interest could begin to accrue before the plaintiff even filed the lawsuit.
Business groups argued against this sentiment, stating that the new bill would threaten the economy and it was a new form of punitive damages previously not allowed in Illinois. The basis for this argument was that the financial risk of litigation would deter businesses from operating in Illinois. These business groups, which include health care providers and corporations, further argued that the bill could incentivize personal injury plaintiffs to decline settlement offers due to the potential of collecting greater interest on the judgment amount.
HB 3360 was passed by both houses of the Illinois General Assembly at 3:00 a.m. on the last day of the lame duck session, January 13, 2021.
Governor’s Veto of HB 3360
On March 25, 2021, Governor Pritzker vetoed HB 3360 because of the impact the 9% pre-judgment interest could have on the healthcare industry in the wake of the COVID-19 pandemic. However, he released a statement that he supported the majority of states that allow pre-judgment interest in personal injury cases, but the provisions of HB 3360 went beyond the national norm. He elaborated that he would prefer a more reasonable pre-judgment interest rate tied to market conditions, such as the federal prime rate. He also suggested that the interest exclude non-economic damages from the calculation. He further encouraged the bill’s sponsors to continue working on a pre-judgment interest that was more reasonable.
Compromise: The Proposal of SB 72
Shortly after the veto, the Illinois houses worked on compromise legislation. Representative Jay Hoffman, D-Swansea, introduced Senate Bill 72, which was negotiated by the Illinois Trial Lawyers Association, the Illinois Hospital Association, and the Health Care Council of Illinois. This version allowed recovery of 6% interest on all damages incurred pre-judgment. Amendments to HB 3360 included:
- The interest does not apply on punitive damages, sanctions, statutory attorney’s fees, and statutory costs.
- If the plaintiff voluntarily dismisses the action and refiles, the accrual of pre-judgment interest tolls from the date the action is voluntarily dismissed to the date the action is refiled.
- Pre-judgment interest cannot accrue for longer than five years.
- This measure does not apply to any government entity.
- For any personal injury or wrongful death occurring before the effective date of the act, the pre-judgment interest accrues on the date the action is filed or the effective date of the Act, whichever is later.
- If the judgment is greater than the highest written settlement made by the defendant within 12 months after July 1, 2021 or the filing of the action, whichever is later, and rejected by the plaintiff, the interest added to the judgment is an amount equal to interest calculated at 6% per annum on the difference between judgment and the settlement offer. If the judgment is equal to or less than this highest written settlement, no pre-judgment interest shall be added to the amount of the judgment.
Governor Signing
Upon the governor’s signature on May 28, 2021, SB 72 became Public Act 102-0006. It adds subpart (c) to 735 ILCS 5/2-1303. The pre-judgment interest measure applies to all personal injury and wrongful death actions, including negligence actions. The Act becomes effective July 1, 2021, and it does not apply retroactively. There are 47 states, including Illinois, that now have some form of pretrial interest for court winnings.
Implications
SB 72 still imposes pre-judgment interest on non-economic damage awards for pain and suffering, which can never be anticipated with mathematical precision and often constitute a majority of the personal injury or wrongful death verdicts.
The bill can also be read to apply to currently pending lawsuits, effective July 1, 2021, all of which have been subject to lengthy delays as a result of court closures and slow-downs necessitated by the COVID-19 pandemic. Therefore, the accrual of pre-judgment interest during this particular time could result in a windfall for plaintiffs through no fault of either side.