Lawmakers Pass Compromise Bill on Pretrial Interest in Personal Injury Cases
The Illinois Senate passed a bill Thursday to allow victims in personal injury and wrongful death cases that reach a verdict to collect interest on money they receive from court, with the intent of incentivizing settlements in these cases.
Gov. JB Pritzker vetoed an earlier version of the bill that was approved by both chambers in the January lame duck session.
The current version of the bill, Senate Bill 72, will now head to Pritzker’s desk for his signature after passing the House last week.
Senate President Don Harmon, who sponsored the current version of the bill, said the purpose is to level the economic playing field in personal injury and wrongful death cases in which the defendant — or the entity being sued — is usually a hospital or health care provider. Most often, the insurance company representing the entity being sued will cover the costs of the defense in court.
Meanwhile, Harmon said, the plaintiff — or the person who is suing the entity — often faces loss of income while he or she awaits the verdict.
“This simply tilts the scale a little bit in favor of a prompt settlement of a meritorious (personal injury or wrongful death) claim. It encourages the settlement,” Harmon, D-Oak Park, said.
SB 72 reduced the amount of interest charged from the previous version of the bill, from 9 percent to 6 percent. It would only apply in personal injury and wrongful death cases that reach a verdict. It passed the Senate Thursday, 37 to 17.
Illinois currently has a 9 percent post-judgment interest, which is collected in cases after the court issues a judgment award. The only prejudgment interest under current Illinois law is a 5 percent interest that applies to damages in specific cases that do not include personal injury or wrongful death cases.
SB 72, like the previous version, would not apply to cases that are resolved by settlements out of court.
If the case reaches a verdict in favor of the plaintiff but the defendant entered a good faith settlement within the first 12 months that was refused by the plaintiff, then that offered settlement amount is deducted from the amount of the verdict, which is subject to interest.
The bill also 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.
The Illinois Trial Lawyers Association, an organization composed of attorneys who represent plaintiffs in court, often in personal injury and wrongful death cases, lobbied for the passage of SB 72.
Trial Lawyers Association President Larry Rogers Jr., an attorney who represents injured plaintiffs at Chicago-based Power Rogers LLP, said the bill is a compromise among the various stakeholders involved.
“Again, the issue that this bill addresses is a ‘delay, deny and don't pay’ perspective that has been incentivized because of the absence of prejudgment interest,” Rogers said in testimony before the Senate Executive Committee on Wednesday.
Under the earlier version of the bill, the interest would begin to accrue once the entity or individual being sued “has notice of the injury from the time of the incident itself or a written notice,” the bill states. This would have resulted in the interest beginning to accrue even before the injured party had filed a lawsuit in court.
Under SB 72, interest would begin to accrue once the lawsuit is filed.
Harmon said the bill does not apply retroactively, and, if signed by the governor, it would take effect June 21.
In adopting prejudgment interest, Illinois would join 46 other states that currently have some form of this type of interest.
Minority Leader Dan McConchie, R-Hawthorn Woods, said making a comparison between Illinois’ proposed prejudgment interest and that of other states is misleading because many other states place caps on the amount of total damages in personal injury and wrongful death cases. In Illinois, there are no such damage caps.
“Additionally, this legislation will increase costs for Illinois small business owners who are simply attempting to get people back to work in our communities. The cost increases caused by President Harmon’s bill will be passed along to consumers or force reductions in health care, retail products, services and, most importantly, Illinois jobs,” McConchie said in a written statement.
SB 72 is opposed by a number of hospital, business and insurance groups, including the Illinois Chamber of Commerce, Illinois College of Emergency Physicians, the Illinois Defense Counsel, Illinois Manufacturers Association, National Association of Mutual Insurance Companies, and the Illinois Retail Merchants Association.
Mark Denzler, president and CEO of the Illinois Manufacturers’ Association, in a statement issued after the bill passed the Senate, urged Pritzker to veto the legislation, “which will dramatically increase litigation costs on manufacturers, hospitals, and doctors that have been on the front lines during the pandemic.”
Pritzker’s veto message also acknowledged that the proposed 9 percent interest rate went further than other states, such as Michigan or Wisconsin, that “provide a more reasonable rate structure by tying the interest rate to market conditions such as the federal prime rate, as opposed to a flat rate.”
The previous version of the bill, Pritzker said in his veto message, “would be burdensome for hospitals and medical professionals beyond the national norm, potentially driving up healthcare costs for patients and deterring physicians from practicing in Illinois.”
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