SB0072 signed into law: This bill really does introduce prejudgment interest in Illinois

Back in January, after the 101st General Assembly concluded its business in the traditional, confusing whirlwind (confusing, at least, to those not "in the know," namely, everyone not in the General Assembly and probably most of those in the General Assembly as well), I did a couple of posts documenting the strange, and very sudden, journey of HB3360, which spent most of its existence as a modest little bill amending two sections of the Mortgage Foreclosure Article of the Code of Civil Procedure only to metamorphose, in the course of the last 48 hours of the 101st General Assembly, into a bill allowing prejudgment interest in Illinois tort cases. My two posts on the subject, "Illinois adopts prejudgment interest in tort cases: Part 1 -- A look at the process" and "Illinois adopts prejudgment interest in tort cases: Part 2 -- a look at the statutory language," turned out to suffer from a fatal flaw, namely, an assumption that a bill passed by overwhelming Democratic majorities in both houses would be promptly signed into law by the Democratic Governor.

As it turned out, my seemingly safe assumption was anything but: Gov. Pritzker vetoed HB3360. Shame on me for not noticing sooner.

Indeed, I don't know when I might have noticed but for my stumbling across this May 28 post from the indespensable Rich Miller, "Pritzker signs renegotiated trial lawyers bill." (Mr. Miller's comment on the timing of this news: "Late Friday afternoon before a holiday weekend while the rest of the news media is focused on the remap. Not buried at all /s…")(your kids can tell you what "/s" means, if necessary).

This bill, SB0072, was merely signed in the chaos of the concluding moments of the Spring Session; as reference to the legislative history shows, it had been sent to the Governor on April 1.

But do not despair, cynical citizens. This bill, too, had its share of Springfield shenanigans. It started off life as a bill to create an Electronic Wills and Remote Witnesses Act and amending the Electronic Commerce Security Act to conform. Filed on January 29, it breezed through the Senate unanimously on March 10. I will leave it to probate practitioners to speculate whether this might have been a good or necessary proposal, but it seems, if only by the title, to have been an appropriate subject for legislation, given our recent isolation.

It doesn't matter, of course, because the text of the bill was jettisoned in the House. On March 16 and March 18 "amendments" were filed to the bill, one in case the Governor signed HB3360, the other not mentioning HB3360 at all. There were substantive differences between the two, but it really doesn't matter, does it? In short order, on March 18, the House opted for option 2. On March 25, the day of Gov. Pritzker's veto of HB3360, the Senate concurred in option no. 2. Can you say "done deal"?

So SB0072 now becomes P.A. 102-006.

The new Act adds a new subsction (c) to §2-1303 of the Code of Civil Procedure. Effective July 1, §2-1303(c) will provide:

 (c) In all actions brought to recover damages for personal injury or wrongful death resulting from or occasioned by the conduct of any other person or entity, whether by negligence, willful and wanton misconduct, intentional conduct, or strict liability of the other person or entity, the plaintiff shall recover prejudgment interest on all damages, except punitive damages, sanctions, statutory attorney's fees, and statutory costs, set forth in the judgment. Prejudgment interest shall begin to accrue on the date the action is filed. If the plaintiff voluntarily dismisses the action and refiles, the accrual of prejudgment interest shall be tolled from the date the action is voluntarily dismissed to the date the action is refiled. In entering judgment for the plaintiff in the action, the court shall add to the amount of the judgment interest calculated at the rate of 6% per annum on the amount of the judgment, minus punitive damages, sanctions, statutory attorney's fees, and statutory costs. If the judgment is greater than the amount of the highest written settlement offer made by the defendant within 12 months after the later of the effective date of this amendatory Act of the 102nd General Assembly or the filing of the action and not accepted by the plaintiff within 90 days after the date of the offer or rejected by the plaintiff, interest added to the amount of judgment shall be an amount equal to interest calculated at the rate of 6% per annum on the difference between the amount of the judgment, minus punitive damages, sanctions, statutory attorney's fees, and statutory costs, and the amount of the highest written settlement offer. If the judgment is equal to or less than the amount of the highest written settlement offer made by the defendant within 12 months after the later of the effective date of this amendatory Act of the 102nd General Assembly or the filing of the action and not accepted by the plaintiff within 90 days after the date of the offer or rejected by the plaintiff, no prejudgment interest shall be added to the amount of the judgment. For the purposes of this subsection, withdrawal of a settlement offer by defendant shall not be considered a rejection of the offer by the plaintiff. Notwithstanding any other provision of this subsection, prejudgment interest shall accrue for no longer than 5 years.
  Notwithstanding any other provision of law, neither the State, a unit of local government, a school district, community college district, nor any other governmental entity is liable to pay prejudgment interest in an action brought directly or vicariously against it by the injured party.
  For any personal injury or wrongful death occurring before the effective date of this amendatory Act of the 102nd General Assembly, the prejudgment interest shall begin to accrue on the later of the date the action is filed or the effective date of this amendatory Act of the 102nd General Assembly.

Illinois now has an "offer of judgment" procedure, at least as a way around prejudgment interest. But timing is limited: Settlement offers must be made within one year of filing (or within one year of the July 1 effective date of this new statute) and not accepted within 90 days thereafter. Of course, if they are accepted, there's no problem... right? But I believe this provision has been included to prevent any "pocket veto" of a settlement offer; no outright rejection is required before the settlement offer "counts" for purposes of §2-1303(c). And if the ultimate verdict is lower than the highest timely settlement offer, there is no prejudgment interest. And prejudgment interest interest accrues only on the difference between the highest timely settlement offer and the ultimate verdict.

Where it applies, prejudgment interest will be assessed at a rate of 6%.

No matter how long a case pends, there is a five year limit on prejudgment interest.

When a case is voluntarily dismissed, prejudgment interest stops accruing. It starts up only when the case is refiled.

Schools and other units of local government are exempt from prejudgment interest.

In January I made a prediction that I think still makes sense. To wit, there are probably two categories of tort cases where the new amendments to §2-1303 are most likely to increase settlements or judgments, and they are typically viewed as being at the opposite ends of the litigation food chain: medical malpractice cases and soft tissue auto accident cases where a substandard carrier insures the defendant. These are not coinicidentally the two most common types of tort cases to go to trial. In soft tissue cases with substandad carriers, the prospect of prejudment interest may prompt some behavior modification -- the low-ball final settlement offer will have to come sooner, or be made in a few more cases. But substandard carriers and med mal carriers take their very different types of cases to trial for the same reason: They generally do pretty well. There's no interest to pay on a defense trial verdict.