Illinois Governor Signs Bill Entitling Plaintiffs to Recover Prejudgment Interest on Tort Damages
On May 28, 2021, Illinois Governor JB Pritzker signed SB 72, a bill that amends Section 2-1303 of the Illinois Code of Civil Procedure by allowing plaintiffs to recover prejudgment interest on most damages in wrongful death and personal injury actions.
Effective July 1, 2021, SB 72 applies only to legal judgments, encouraging opposing parties to resolve cases out of court. The new law imposes 6% per annum prejudgment interest, for a maximum of five years from the date the suit commences, on past and future economic and non-economic damages awarded for negligence, willful and wanton misconduct, intentional conduct, or strict liability. Prejudgment interest will not be assessed on punitive damages, sanctions, statutory attorney’s fees, and statutory costs, or in tort actions against local public entities.
While the five-year interest accrual period creates incentives for both parties to settle cases expeditiously, which could lead to the swifter resolution of tort actions, the incentives under SB 72 disproportionately benefit plaintiffs. Under the new law, prejudgment interest is only assessed on the portion of an award exceeding the defendant’s highest settlement offered within the preceding year but rejected by the plaintiff within 90 days of the offer. If, however, the defendant’s highest settlement offer exceeds the judgment, the plaintiff is barred from recovering any prejudgment interest. Designed to reduce litigation costs, SB 72 in practice will put undue pressure on defendants to make higher settlement offers lest they pay prejudgment interest on the judgment, effectively negating their cost savings from swiftly resolving the case and subverting the fundamental purpose SB 72’s prejudgment interest scheme.
SB 72 also terminates the prejudgment interest accrual period five years after the action is filed and tolls the running of interest if the plaintiff voluntarily dismisses and subsequently refiles the action. The tolling scheme could help avoid a windfall for the plaintiff, but the provision limiting the assessment of interest to five years could impede discovery and stall settlement negotiations. Plaintiffs are now encouraged to prolong litigation, i.e., by failing to timely answer discovery, notice depositions, disclose expert witnesses, etc., to maximize the duration of the prejudgment interest period. Should a plaintiff-caused delay occur, SB 72 confers no right upon the defendant to toll the interest period, creating even more of an uneven playing field in favor of plaintiffs. While prejudgment interest under SB 72 is supposed to be assessed only on awards for economic and non-economic damages, allowing interest to accrue when plaintiffs abuse the legal system is nonsensical and tantamount to assessing interest on damages outside the purview of SB 72. Moreover, penalizing defendants while rewarding plaintiffs for their own misconduct is prejudicial to defendants and completely undermines the integrity of SB 72.
The extent to which SB 72 alters the landscape of tort litigation in Illinois remains to be seen. Nevertheless, defense counsel should be prepared for sweeping changes to Illinois’ prejudgment interest laws and consider revising their defense strategies to account for higher settlement demands and longer litigation.
The full text of SB 72 is available here. Please contact Daniel Schwartz with any questions.