Alert On Illinois Personal Injury And Wrongful Death Actions: Prejudgment Interest On Those Judgments Is Effective On July 1, 2021.

By Melinda S. Kollross and Amy R. Paulus

We had earlier reported on efforts by the Illinois legislature to assess prejudgment interest on personal injury and wrongful death judgments. That legislation stalled, but a compromise bill was passed and signed into law on May 28, 2021, with an effective date of July 1, 2021.

This new law places additional burdens on defendants and their insurers defending personal injury and wrongful death actions in Illinois.

General Provisions:

The prejudgment interest rate is 6% per annum.

The prejudgment interest applies to all damages except punitive damages, sanctions, statutory attorney’s fees, and statutory costs.

Prejudgment interest runs from the date the action is filed.

If a plaintiff voluntary dismisses an action, prejudgment interest is tolled from the date the action is dismissed to it being refiled.

Prejudgment interest cannot accrue longer than 5 years.

Prejudgment interest cannot be assessed against the State, a local government unit, school district, community college district when sued directly or in a vicarious capacity.

If the personal injury or wrongful death suit was filed before 7-1-21, prejudgment interest begins to accrue on 7-1-21. If the personal injury or wrongful death occurred before 7-1-21, but suit was filed after 7-1-21, then interest runs from the date of the action.

Settlement Provisions—The “Guts” Of The Compromise Enactment

If any eventual judgment is greater than the amount of the highest written settlement offer made within 12 months from the effective date of the Act or the filing of an action, and not accepted by plaintiff within 90 days of the offer or rejected by the plaintiff, 6% interest is computed on the difference between amount of the judgment and the highest written settlement offer.

If any eventual judgment is equal to or less than the amount of the highest written settlement offer made within 12 months from the effective date of the Act or the filing of an action, and not accepted by plaintiff within 90 days of the offer or rejected by the plaintiff, no prejudgment interest shall be added to the amount of the judgment.

The withdrawal of a settlement offer by the defendant shall not be considered the rejection of an offer by the plaintiff.

The 12-Month Settlement Window Means Immediate Action Is Necessary

The 12-month period specified in this law should be treated by defendants and their insurers as a “statute of limitation”. That means immediate action is required to review pending claims, confirm coverage, evaluate liability, and determine judgment/settlement values, if any.  Then, written settlement offers should be issued prior to the deadline for each case in order to maximize the benefits of the settlement contingencies in the statute.