Illinois Prejudgment Interest Update: Prejudgment Interest Law Ruled Unconstitutional – Personal Injury

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Last year, we reported extensively on the passage of the Illinois Prejudice Act, 735 ILCS 5/2-1303(c).
See “Illinois Legislature Passes Bill to Amend Judgment Interest Act to Impose Prejudgment Interest in Tort Actions” January 2021; “Illinois Prejudgment Interest Legislation – UPDATE,” March 2021; “Illinois Prejudgment Interest – June Update” June 2021.

To recap, the law imposes prejudgment interest in all actions brought to recover damages for bodily injury or wrongful death as follows:

  • Prejudgment interest will accrue “on all damages except punitive damages, penalties, attorneys’ fees and statutory costs.”

  • Prejudgment interest will begin to accrue “on the date the action is filed”. However, if the plaintiff voluntarily dismisses the action and files a new claim, “the accrual of prejudgment interest will be charged from the date the action is voluntarily dismissed to the date the action is again filed”.

  • Prejudgment interest will be taxed at the rate of 6% per annum and will not accrue “for more than 5 years”.

  • “[N]the state, local government unit, school district, community college district, or any other governmental entity is not liable to pay prejudgment interest in any action brought directly or indirectly against it by the injured party. »

  • “For any bodily injury or wrongful death occurring before the date of entry into force of this amending law” – July 1, 2021 – “prejudgment interest shall begin to accrue on the later of the date of introduction of the action or the date of entry into force of this amending law.”

Finally, the law includes provisions aimed at capping prejudgment interest in settlement offers:

  • where is the judgment bigger that the defendant’s highest written offer to settle made within 12 months of the filing of the action or the effective date of the invoice (July 1, 2021), whichever is later, and that offer of payment is not accepted or is rejected by the applicant within 90 days of the date of issue, pre-judgment interest accrues only on the difference between the amount of the judgment (less punitive damages, penalties, attorneys’ fees and court costs) and the amount of the settlement offer.

  • where is the judgment equal to or less than the defendant’s highest written offer to settle made within 12 months of the filing of the action or the effective date of the invoice (July 1, 2021), whichever is later, and such offer to settle is not accepted or is rejected by the applicant within 90 days of the date of issue, no prejudgment interest is added to the judgment.

Since the Prejudgment Interest Act went into effect on July 1, 2021, numerous constitutional challenges have been raised in cases pending in the Circuit Court of Cook County. These challenges were consolidated for decision by Judge Marcia Maras and on May 27, 2022, Judge Maras wished to Hyland v. Advocate Health and Hospitals Corp., et al., No. 17 L 003541, that the law on prejudgment interest is unconstitutional. Judge Maras reasoned as follows:

The Prejudgment Interest Act violates the rights of defendants to a jury trial as protected by Article I, §13 of the Illinois Constitution of 1970.

Article I, §13 of the 1970 Illinois Constitution states that “the right to trial by jury, which he has hitherto enjoyed, shall remain inviolate.” Judge Maras noted that the Illinois Supreme Court interpreted this language to indicate that the framers of the 1970 Illinois Constitution intended to maintain certain features of a jury trial, “[one] of these features being the right of the jury to determine damages. (Order, p. 4) Accordingly, Judge Maras concluded that the statute “violates the fundamental right to a jury trial because it improperly strips the jury’s function and role in assessing all issues, including including damages, and instead requires an award of prejudgment interest after a verdict that exceeds the time allowed for the defense [settlement] offer” (Order, p. 4):

The [statute] was enacted to purportedly allow an injured party to be compensated for its injury from the time the injury was caused until judgment was entered. The requirement that prejudgment interest be added to a jury’s decision prevents the jury from determining questions of fact as to what constitutes reasonable and just compensation for a party’s injuries and conditions the right to a defendant at a jury trial to pay a fine. This objective cannot be interpreted as serving to promote a compelling state interest.

Moreover, Parliament could have used the more restrictive means of allowing the jury to consider and award prejudgment interest. By requiring a court to automatically add prejudgment interest when the verdict exceeds the defendants’ time-limited offer, the legislature removed a litigant’s right to have the jury decide damages.

The [statute] does not pass rigorous scrutiny and is unconstitutional. (Order, p. 7)

The law violates the prohibition against special legislation set forth in Article IV, §13 of the Illinois Constitution of 1970.

The prohibition against special legislation set forth in Article IV, §13 of the Illinois Constitution of 1970 provides that “[the] The General Assembly does not pass any special or local law when a general law is or may be made applicable. Whether a general law is or can be made applicable is a matter for judicial determination.” Judge Maras noted that the Illinois Supreme Court held that this clause prohibits the General Assembly from granting a special benefit or privilege to a person or group and excludes Here, Judge Maras concluded that the law of prejudgment interest impermissibly benefits and penalizes parties in a situation similar to tort litigation and thus violates the clause special legislation.

With respect to plaintiffs, the Prejudgment Interest Act only awards prejudgment interest to plaintiffs for wrongful death and bodily injury, as opposed to all tort plaintiffs. “The [statute]divides the tort parties into two groups: the parties to the wrongful death and personal injury actions that are subject to prejudgment interest, and all other tort parties that are not,” Judge Maras wrote. interest of the state.” (Order, p. 9) On this point, Judge Maras rejected plaintiff’s argument that the prejudgment interest law “is an antidote to the litigation strategy of many defendants and their insurers who refuse to s ‘engage in meaningful settlement negotiations until every possible attempt to avoid the inevitable has been made’, so that ‘when trials are long delayed, inflation erodes the real value of the plaintiff’s compensation ” (Order, p. 6):

In Better, the Supreme Court wrote that “the fact that a problem exists does not permit the adoption of an arbitrary or unrelated means of solving a problem”. 179 Ill. 2d to 398. Here the [statute] discriminates in favor of only plaintiffs for wrongful death and bodily injury by granting them a substantial advantage while excluding all similarly situated tort plaintiffs. As defendants argue, this classification of wrongful death and bodily injury plaintiffs as the only ones to receive prejudgment interest is not sufficiently related to “harm” to be avoided because other tort plaintiffs – those who have a private life, emotional distress, fraud, conversion, attorney malpractice, etc., actions – also want to be fully compensated for the injuries they themselves have suffered. (Order, p. 8)

Judge Maras concluded that the prejudgment interest law also creates impermissible classifications of defendants. “[The]classification of bodily injury and wrongful death
accused as the only defendants paying prejudgment interest, unlike all other tort defendants, does not fix anything because these other tort defendants also benefit from the funds that are allegedly deprived of the other tort plaintiffs. Further…all tort cases result in court congestion and the use of an arbitrary classification of only personal injury plaintiffs to receive prejudgment interest would not encourage early settlements or relieve congestion for all other tort actions. (Order, p. 8; italics in original) Judge Maras further concluded that the prejudgment interest statute also discriminates between defendants in the same action for bodily harm or wrongful death:

In accordance with the [statute]a defendant must make a settlement offer within one year of the filing of the action.Defendants who are served more than a year after the case is filed are arbitrarily penalized and deprived of any potential benefit offered by the settlement offer. Cases of delays in serving the accused, filing the required medical professional’s report (735 ILCS 5/2-622(a)(2-3)), or entering a HIPAA order for no to name but a few, will act to prevent even a diligent defendant named in the original action from developing knowledge of the case necessary to assess a fair settlement offer. This amendment penalizes defendants whether or not they contributed to a delay and may allow a less diligent plaintiff to reap the benefit of prejudgment interest even if that plaintiff has dragged its feet in litigation. Unlike some prejudgment interest laws in other states, the [statute]provides no way to gauge which party may be at fault for any delay that may have occurred. (Order, p. 9; italics in original)

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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