HEYL ROYSTER: Illinois Governor Signs Pre-judgment Interest Legislation Changing Tort Law in Civil Lawsuits

Heyl Royster issued the following announcement on June 1.

Illinois tort law has changed to include the award of pre-judgment interest in civil personal injury lawsuits. The change in the law will apply to existing lawsuits on July 1, 2021 and to all lawsuits filed after that time. 

The new law, Public Act 102-0006, is the result of House Amendment 2 to Senate Bill 72, that passed in late March 2021 and was sent to Governor Pritzker’s desk on April 1, 2021. For background on the history of the legislation, its prior version, and attempts to encourage Governor Pritzker to veto the legislation, click here.

Governor Pritzker signed the law on Friday May 28, 2021, with an effective date of July 1, 2021 for existing and new cases. It changes the tort law in Illinois to provide for pre-judgment interest and specifically the new law does the following:

• sets the pre-judgment interest rate at 6%;
• start the clock running for interest at the time the lawsuit is filed (or July 1, 2021 for existing lawsuits);
• includes pre-judgment interest on economic and non-economic damages;
• excludes from interest calculation punitive damages, sanctions, attorney fees, and statutory costs;
• excludes from interest calculation the highest written settlement offer from defendant;
• denies any prejudgment interest if the verdict is lower than the highest written settlement offer from defendant;
• stops the clock for running interest at 5 years;
• toll the time from interest accumulating from date a plaintiff voluntarily dismisses a case to any re-instatement;
• excludes public entities; and
• applies to existing lawsuits on the date of enactment with interest running from that date.

The new law applies to current lawsuits on the day it is enacted. It will also, of course, apply to all lawsuits filed after the date of enactment. Settlement offers made within 12 months of filing work as an offset to interest accrual. Plaintiff has 90 days to accept or reject an offer, and if not accepted, then the offer will work as a setoff on the interest calculation. If it is equal or greater than a subsequent verdict, then no prejudgment interest will be awarded. For existing lawsuits, that 12 month period for settlement offers and the cap of 5 years begins on July 1, 2021. Here are scenarios to illustrate:

Example A: Defendant makes offer to settle of $75,000. Rejected. Verdict is $100,000. Interest is calculated on the difference of $25,000.

Example B: Defendant makes offer to settle of $100,000. Rejected. Verdict is $100,000. No interest is calculated.

Example C: Defendant makes no offer. Verdict $100,000. Interest is calculated on the $100,000.

We encourage a discussion with legal counsel to consider the impact that this change in the law may have on any current or future litigation.

Original source can be found here.