Illinois Legislature Passes Bill Allowing for Prejudgment Interest on Personal Injury Claims

Illinois law traditionally has not allowed for prejudgment interest on personal injury claims, but that rule is about to change. On January 13, 2021, the Illinois legislature passed House Bill 3360. The original purpose of the bill was to amend Illinois law relating to mortgage foreclosures and abandoned residential property. However, Senate Floor Amendment No. 1 modified the bill to introduce prejudgment interest for personal injury claims in Illinois.

Prejudgment interest on personal injury actions was not available under the common law, so generally it is only allowed when authorized by a statute. Illinois HB 3360 provides that in all actions for personal injury or wrongful death, the plaintiff shall recover prejudgment interest on all damages set forth in a subsequent judgment at the interest rate of 9% per annum.

Of note is when prejudgment interest begins to accrue under the bill. Among the jurisdictions allowing prejudgment interest on personal injury claims, a plethora of approaches has emerged for determining the starting point. Some states require the rejection of a formal demand with specific requirements (such as Missouri, § 408.040 RSMo.), others from the date of the loss (such as Florida, Fla. Stat. § 687.01), or still others from the date of the filing of the complaint (such as Michigan, Mich. Comp. Laws § 600.6013).

Under the Illinois Senate’s amendment, prejudgment interest shall begin to accrue on the date the defendant has notice of the injury. The defendant may have notice of the injury either from the incident itself that caused the injury or from written notice. This standard creates the potential for considerable uncertainty, particularly in scenarios where it was not immediately obvious that anyone sustained any injuries in an incident, but a claim of injuries arose after the fact. Further, given the two-year statute of limitations, prejudgment interest potentially could accrue for years before a suit is even filed.

The bill will go into immediate effect upon becoming law. For any personal injury or wrongful death occurring before the effective date of the act, prejudgment interest shall begin to accrue on the latter of the effective date of the act or the date the alleged tortfeasor has notice of the injury.

Although the full impact of the bill remains to be seen, it assuredly will increase the cost of personal injury claims in Illinois, and it gives plaintiffs’ attorneys leverage by putting pressure on defendants to settle early to stall the prejudgment interest clock.

HB 3360 currently awaits Illinois Governor JB Pritzker’s signature.

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