J. Matthew Dudley: Prejudgment interest law will result in earlier case resolution

The following column by ITLA President J. Matthew Dudley appeared in the Chicago Daily Law Bulletin on Thursday, June 24, 2021.

Prejudgment interest law will result in earlier case resolution

That justice delayed is justice denied is especially true for a person who has suffered a life-altering injury, incurred exorbitant medical expenses or lost the ability to work due to another party’s malfeasance or negligence. For someone who must learn to live with being seriously disabled or paralyzed, putting off the judgment to which they are entitled compounds their suffering and often leads to financial desperation.

The state’s newly approved prejudgment interest law (Public Act 102-6, effective July 1) is a victory for individuals wrongfully injured and seeking redress in our civil justice system. By attaching a meaningful financial cost, this law encourages corporations and insurers to reconsider the tactics they have long employed to prolong the resolution of meritorious cases in Illinois – a practice that disproportionately harms middle and lower-income families that lack the financial means to withstand the economic stress of being unable to earn income or losing benefits.

Prejudgment interest incentivizes the early resolution of claims by providing defendants a set off on prejudgment interest if they make a written offer within the first 12 months that the case is pending.  If that offer is rejected, the set off will accrue only on the difference between the highest written offer and the ultimate judgment.  As has been clearly established in other jurisdictions with this prejudgment interest language, both parties become more realistic about settlement value at a much earlier stage in the litigation process.

The new law entitles a plaintiff to collect prejudgment interest only after their case goes to trial and a judge or jury finds in their favor. Prejudgment interest will not be imposed on claims against governmental entities or on top of punitive damages, statutory attorney’s fees, or court-imposed sanctions. The prejudgment interest accumulation is tolled during the time a case is voluntarily dismissed.

Advocates for the wrongly injured sought to change the law because we came to realize that insurers, by continuing to defend rather than settle valid cases, were making money through investing and tax avoidance. Such an approach represented a lucrative, cold-blooded arbitrage opportunity that was creating serious civil justice system distortions and doing real harm to society. The new law helps to level the playing field and eliminates the unfair financial leverage businesses and liability insurance companies have long enjoyed.

The General Assembly and Governor JB Pritzker struck a fair balance between the need for plaintiffs to get their day in court and for defendants to have a reasonable amount of time to respond to claims against them. The measure passed following months of negotiations at the Illinois Capitol between the Illinois Trial Lawyers Association, Illinois Hospital Association, Health Care Council of Illinois and other key stakeholders, and in the end was unopposed by these interested parties.

By taking action, lawmakers and the governor have also brought Illinois in line with 46 other states which already have some form of prejudgment interest law on the books.

This measure will undoubtedly result in the earlier resolution of cases, which in turn will also decrease the burden on the already stressed court docket. Given the enormous backlog of civil cases as a result of the COVID-19 pandemic, this is a worthy outcome for all parties.

J. Matthew Dudley
President, Illinois Trial Lawyers Association