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Illinois Legislature Poised to Unfairly Change Tort Law in Illinois Regarding Prejudgment Interest

03/22/2021

By Tobin J. Taylor
Chicago Office
ttaylor@heylroyster.com

In January 2021, the Illinois General Assembly passed legislation that seeks to dramatically change the law in Illinois with respect to an award of prejudgment interest in personal injury lawsuits. That law would begin the running of interest owed to a plaintiff in a civil personal injury lawsuit before a jury has determined that a defendant is liable and fixes any damages. It rather unfairly seeks to punish a defendant sued in personal injury lawsuit from exercising the right to a trial by jury. The legislation, not yet signed into law by Governor Pritzker, is now being amended and still may yet be signed into law - all without opportunity for any meaningful public input or debate from lawyers, judges, or citizens. The amended bill, House Amendment 2 to SB72, moves to the Illinois Senate on March 23, 2021.

The original prejudgment interest legislation was first introduced in the waning hours of a lame duck session in January 2021 via a “floor amendment” to a completely unrelated bill that had languished since 2019, a bill that had nothing to do with prejudgment interest in personal injury lawsuits, and was passed through a legislative sleight of hand in a matter of days. It continues to be pushed forward to law without any meaningful debate or consideration from the public. Fortunately it has not yet been signed into law and has been amended by measures that make the legislation slightly “less bad.” The current legislation will return to the Illinois Senate for a vote on March 23, 2021.

What is the legislation?

The prejudgment interest legislation started as HB3360, with Senate Amendment 1, which according to the bill status summary:

provides that in all actions brought to recover damages for personal injuries or wrongful death resulting from or occasioned by the wrongful conduct of any other person or entity, the plaintiff shall recover prejudgment interest on all damages set forth in the judgment. Provides that a local public entity is not liable to pay prejudgment interest in an action brought directly or vicariously against it by the injured party. Provides that for any personal injury or wrongful death occurring before the effective date of the amendatory Act, the prejudgment interest shall begin to accrue on the later of the effective date of the amendatory Act or the date the alleged tortfeasor has notice of the injury. Provides that the trial court may apportion any amount of prejudgment interest between the plaintiff and any agency or department of the State. Effective immediately.

A link to the original January 2021 legislation as amended by Senate Amendment 1 appears below:

https://www.ilga.gov/legislation/BillStatus.asp?DocNum=3360&GAID=15&DocTypeID=HB&LegID=119866&SessionID=108&SpecSess=&Session=&GA=101

Previously, the only effective statutory basis in Illinois for prejudgment interest was for actions based upon a written instrument. The public policy of several states disfavors or outright prohibits prejudgment interest in personal injury lawsuits. Of those that prohibit prejudgment interest, a few states actually have statutes prohibiting it; others treat the limitations of prejudgment interest with case law. Some of these states also tend to disfavor the interest where the damages are unliquidated such as pain and suffering, disability, or loss of normal life. These are damages that are not easy to calculate, or predict, and are often based upon arbitrary or imperfect assessments that vary from jury panel to jury panel.

How did the January 2021 prejudgment legislation happen?

It is not uncommon for a bill to go through legislative hearings and constitutionally required readings on the floor but at the last minute have an amendment which deletes the entire contents of the bill and puts in language completely unrelated to the initial bill. The “amended” bill then passes without many of the usual requirements of hearings and readings. This practice makes it virtually impossible for an ordinary citizen to monitor the status of a bill and make any concerns known to his or her representatives in the General Assembly. The courts, on separation of powers grounds, seem unwilling to police this thoroughly undemocratic practice. In these situations, the bill that is enacted into law starts its life as one thing and becomes something wholly different and unrelated in the end.

This prejudgment interest legislation that passed both houses of the General Assembly, HB3360, was first introduced in 2019 as legislation related to amending the Mortgage Foreclosure Article of the Code of Civil Procedure – nothing at all to do with personal injury lawsuits or prejudgment interest. There were readings, hearings and the usual process for that mortgage related bill, but it hadn’t progressed to passing each house and seemingly may never have had the momentum to do so.

The most recent activity in January 2021 was a complete re-writing of that legislation in the last few days of the General Assembly’s lame duck session. Having seen no activity since May of 2019, HB3360 was scheduled for a second reading on January 10, 2021, which seems to have occurred – presumably with the mortgage related legislation intact. It was set for a third reading on January 11, 2021, whereupon the Amendment No. 1 was made. That amendment from the Senate floor deleted all reference to the prior language and added the amendment to 735 ILCS 5/2-1303 in the form that we now see it. That means that the entire language of HB3360 which dealt with mortgage foreclosure was deleted and a completely different piece of legislation was inserted and quickly set for a vote within days of first being introduced. That “warp speed” is unfathomable for legislation that ordinarily requires multiple hearings, consideration by committees, and multiple votes. (See the ordinary process “How a Bill Becomes a Law in Illinois” in a flowchart prepared by Illinois General Assembly https://www.ilga.gov/commission/lis/98bill_law.pdf). The process ordinarily allows time for public input and reasoned consideration by lawmakers on multiple opportunities.

Here is a more detailed summary of the history over those couple of days in January 2021:

1/11/2021

Senate

Senate Floor Amendment No. 1 Filed with Secretary by Sen. Don Harmon

1/11/2021

Senate

Senate Floor Amendment No. 1 Referred to Assignments

1/11/2021

Senate

Alternate Chief Sponsor Changed to Sen. Don Harmon

1/11/2021

Senate

Senate Floor Amendment No. 1 Be Approved for Consideration Assignments

1/11/2021

Senate

Recalled to Second Reading

1/11/2021

Senate

Senate Floor Amendment No. 1 Adopted; Harmon

1/11/2021

Senate

Placed on Calendar Order of 3rd Reading

1/11/2021

Senate

Third Reading - Passed; 038-017-002

1/11/2021

House

Arrived in House

1/11/2021

House

Placed on Calendar Order of Concurrence Senate Amendment(s) 1

1/11/2021

House

Chief Sponsor Changed to Rep. Jay Hoffman

1/11/2021

House

Senate Floor Amendment No. 1 Motion Filed Concur Rep. Jay Hoffman

1/11/2021

House

Senate Floor Amendment No. 1 Motion to Concur Referred to Rules Committee

1/11/2021

House

Senate Floor Amendment No. 1 Motion to Concur Rules Referred to Executive Committee

1/12/2021

House

Added Chief Co-Sponsor Rep. Mary E. Flowers

1/12/2021

House

Senate Floor Amendment No. 1 Motion to Concur Recommends Be Adopted Executive Committee; 008-005-000

1/13/2021

House

Senate Floor Amendment No. 1 House Concurs 069-042-001

1/13/2021

House

House Concurs

1/13/2021

House

Passed Both Houses

As news of the legislation began to be disseminated in January 2021, the only practical means of opposing the legislation on the short time frame that developed was action limited to filing slip opinion witness oppositions. Notably, there were 143 oppositions recorded and only 10 proponent – yet the legislation passed.

What is the current proposed legislation for prejudgment as amended?

Since the passing of HB3360, the original legislation, there have been recent attempts to amend the bill in March 2021. The good news is that each proposed amendment has tended to make the bill a bit better. The bad news, of course, is that the entire concept of prejudgment interest proposed by the legislation is still bad policy and still subject to the same procedural objections that prevent full and fair consideration.

The new legislation is now a stand-alone bill, House Amendment 2 to SB72. It also started its life as a completely unrelated bill related to electronic wills and remote witnesses. It was changed by floor amendments to completely re-write that bill as well. A link to the current legislation:

https://www.ilga.gov/legislation/fulltext.asp?DocName=10200SB0072ham002&GA=102&SessionId=110&DocTypeId=SB&LegID=128357&DocNum=72
&GAID=16&SpecSess=&Session

While there are still many legitimate reasons to oppose the legislation, it has improved and become “less bad.” It still suffers from the same concerns that make it fundamentally unfair: it’s one-sided, arbitrary, applies interest before liability is determined, applies interest to future damages, and other reasons that will be explored in more detail below.

Notably, the new legislation, HA2 to SB72, would change the tort law in Illinois to provide for prejudgment interest and specifically would do the following:

  • set the interest rate at 6% (instead of 9% in the original legislation);
  • start the clock running for interest at the time the lawsuit is filed (as opposed to some nebulous notice of the claim in the prior bill);
  • exclude from interest calculation punitive damages, sanctions, attorney fees, and statutory costs;
  • exclude from interest calculation the highest written settlement offer from defendant;
  • deny any prejudgment interest if the verdict is lower than the highest written settlement offer from defendant;
  • stop 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;
  • exclude public entities; and
  • apply to existing lawsuits on the date of enactment with interest running from that date.

The law, if enacted would apply to current lawsuits on the day it is enacted. It would, of course, also apply to all lawsuits filed after the date of enactment.

Why is the proposed legislation for prejudgment interest unfair?

The legislation completely changes the state of personal injury law in Illinois. Moreover, it seeks to do so without full and fair opportunity for consideration by lawmakers and the public through the undemocratic “warp speed” process where the legislation skips the required hearings and full consideration and debate which should be given to such a significant shift in the law.

The change in the law would unfairly punish defendants, and not plaintiffs, from exercising the right to a trial. Our court system is designed to create a level playing field such that litigants are subjected to the same rules and opportunity for a determination of their lawsuit by a jury of their peers.

The proposed legislation, moreover, does little to discourage a plaintiff from delaying court proceedings or the discovery process – at least up to five years. The longer a lawsuit takes, the greater the damages to be awarded under a prejudgment interest scenario. Delays caused by a plaintiff will be unfairly borne by the defendant,

The primary unfairness is that Defendants in Illinois should be able to properly defend a lawsuit without the threat of being unfairly punished for doing so. At worst, this legislation seeks to extort settlement offers for any lawsuit regardless of merit. It also seeks to punish a defendant from presenting a legitimate defense to an unmeritorious and frivolous lawsuit for fear that jury may, even if unlikely, ultimately fix an award for the plaintiff. At best, even in a case of “close call” where reasoned minds may disagree as to liability, this legislation punishes the defendant for appropriately seeking a determination and judgment of the evidence by a jury of peers. That is unfair.

The unfairness of this proposed legislation is easily demonstrated. Where is the reciprocal penalty for a plaintiff who advances a lawsuit through a jury trial determination and loses? Perhaps, one might argue that reciprocity would suggest that plaintiffs who lose at jury trial pay the costs of the defendant in defending? The point is simply that the current legislation makes determinations and fixes damages well before a jury ever makes a determination that damages are even owed.

In all, the unfairness of the current legislation is most demonstrated in the process by which it may become law. Now is the time to hit the pause button and to slow down this dramatic shift in the law with respect to personal injury lawsuits so that there can be reasoned consideration and debate. Legislators should seek - and presumably would welcome - input from lawyers, judges, litigants, and stakeholders in Illinois. To create a law that significantly changes the tort system in Illinois without such input, consideration, and debate is simply unfair.