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Posted on Jun 11th, 2021

Illinois Enacts Pre-Judgment Interest on Personal Injury Claims

By Jason G. Schutte

Synopsis: 

The Illinois General Assembly recently enacted Public Act 102-0006. The Public Act is of concern to insurers, claims adjusters and defense attorneys because it implements pre-judgment interest in the State of Illinois. We have broken down the basics of the law below for your quick reference in consideration of any pending cases that you have or upcoming cases that you may incur within the jurisdiction of the State of Illinois:

  1. Effective date.

The statute is effective July 1, 2021.

  1. Applicability.

The statute provides pre-judgment interest to personal injury and wrongful death claims arising from negligence, willful and wanton misconduct, intentional misconduct or strict liability. Pre-judgment interest will not accrue for punitive damages, sanctions, statutory attorneys’ fees or statutory costs set forth within any judgment obtained by the plaintiff.

  1. Pre-judgment interest accrual date.

Pre-judgment interest will begin to accrue on the date a cause of action is filed. In any personal injury or wrongful death action that has occurred prior to July 1, 2021, pre-judgment interest will begin accruing on the latter of the date that the cause of action is filed or the effective date of enactment of the law, July 1, 2021. To provide an example, if a lawsuit has already been filed before July 1, 2021, pre-judgment interest begins accruing on on July 1, 2021. If an injury occurs on June 1, 2021 and a lawsuit is not filed until August 1, 2021, pre-judgment interest begins to accrue on August 1, 2021.

  1. Tolling period for pre-judgment interest.

Pre-judgment interest is tolled in the event that plaintiff files a voluntary dismissal of their lawsuit. The tolling period extends from the date the action is voluntarily dismissed until the date that the action is re-filed.

  1. Amount of statutory interest.

6% per annum, simple interest.

  1. Limiting actions to interest exposure.

Pre-judgment interest exposure can be limited by the highest written settlement offer made by the defendant within 12 months of July 1, 2021 for pending cases or 12 months after filing the action. If the plaintiff rejects the highest offer, the pre-judgment interest is limited to interest on the amount that any judgment obtained exceeds the highest settlement offer. If a judgment is equal to or less than the amount of the highest written settlement offer, no pre-judgment interest shall be added to the judgment.

  1. Cap on interest.

Pre-judgment interest is not allowed to accrue for longer than five years.

  1. Applicability to governmental entities.

The pre-judgment interest statute does not apply to local government, school districts, community college districts nor other governmental entities.

SUMMARY AND ANALYSIS OF STATUTE

The aforementioned statute will certainly be utilized by plaintiffs’ attorneys as leverage during settlement negotiations. Obviously, it will have its largest effect in cases with a theoretical high exposure. Most likely it will prove most useful when a case has questions of liability but verifiable and potentially high damages.

We recommend that insurers and defendants strongly consider extending an offer within the higher end of their evaluation of the value of the case within the 12 month period after the filing of the cause of action (or within 12 months of July 1, 2021 for pending actions) to cap any pre-judgment interest concerns. Regarding the smaller value cases, the pre-judgment interest statute most likely will not affect the evaluation of the case or how the defense chooses to handle the matter. However, it is certainly worth noting and a concern for the defense bar, claims adjusters and insurers going forward.

Please contact us regarding your thoughts and if you have any questions on this particular statute.

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