Those involved with Illinois litigation should be aware of the progress of Illinois Senate Bill 184 (Haine, D-Alton). This bill would amend the Illinois Code of Civil Procedure to allow prejudgment interest in certain cases.
As now proposed, the bill will automatically allow for the assessment of prejudgment interest against a defendant from the date notice of a claim is forwarded to the defendant or suit is filed, whichever is earlier, to the date of judgment. Defendants seeking to avoid the application of prejudgment interest must make a settlement offer within 120 days of the filing of their initial answer. After that, the parties may agree in writing to extend the 120-day period.
If the plaintiff does not accept the made offer of settlement, he or she must receive a verdict greater than the offer of settlement in order to receive prejudgment interest. As proposed, defendants may also use this statute and seek prejudgment interest if they file counter-claims, third-party claims, or contribution claims. Prejudgment interest is not awarded if a civil case settles and will only be awarded if the plaintiff receives a verdict, and that verdict is greater than any tendered offer of settlement by the defendant.
The interest rate to be applied would be the average U.S. Treasury bill rate plus two percentage points (for example, given the current 0.47% rate, January 2009’s rate would be 2.47%). Currently, the bill exempts certain situations or parties from the application of prejudgment interest: (1) A unit of local government or any other governmental entity, (2) actions in small claims, (3) awards for punitive damages, and (4) if the cause of action is governed by a more specific statute such as the Interest Act.
Obviously, if passed, this bill will result in increased pressure on defendants to make settlement offers early in the case. However, in many cases facts supporting the defense of many claims are not revealed within the first three months of the case, making it difficult to apply a reasonable settlement value.
In particular, in many complicated claims the process of obtaining a plaintiff’s medical records, accident records and statements from witnesses can easily exceed the provided 120 day time period. Likewise, where plaintiffs have had months to investigate an accident before forwarding their claim, plaintiffs can delay defendants from obtaining necessary records via withholding necessary releases, stalling in answers to written discovery and failing to appear for depositions. Nevertheless, as proposed, the bill offers no exceptions to defendants based on the unavailability of information needed to make a reasonable settlement demand, or actions by plaintiffs blocking early investigation of a claim.
Conversely, as written, the bill’s only pressure on plaintiffs is the potential loss of prejudgment interest if they reject a made settlement offer, something that plaintiffs are not entitled to under current Illinois law. Unlike Federal Rule of Civil Procedure 68, there are no provisions in the proposed bill allowing defendants to make offers of judgment to a plaintiff, whereby a plaintiff rejecting an offer and obtaining a judgment equal to or less than the offer made being subject to paying a defendant’s costs incurred following the date of the offer. As a result, the bill is unfortunately “one-sided” in its approach to promoting settlement of claims, placing all pressure on the defense with no real risk placed upon claimants.
Senate Bill 184 has been assigned to the Senate Committee on Assignments for referral to a substantive committee. Action is expected on the bill during the current legislative term. We will report on any amendments to the bill, as well as should the bill be voted upon by the legislature. While recently impeached Governor Rod Blagojevich was understood to be a supporter of the bill, current Governor Pat Quinn has not commented on the proposal. A full copy of the bill is available at http://tinyurl.com/arj87d.
* * *
Terrence Guolee, a shareholder in our Chicago office, has successfully represented defendants, plaintiffs and carriers in dozens of complex, multi-million dollar claims covering a wide area of facts and law, in both state and federal court. Terrence represents several municipalities, elected governmental officials and their employees in very complicated civil rights class actions and claims brought under state and federal whistleblower laws. Mr. Guolee also represents several businesses in defense of various clams and has a long record of successful representation of businesses, property owners, utilities and contractors in high-exposure catastrophic injury claims. Terrence also represents insurance carriers, claims administrators and companies in coverage claims and litigation involving third-party claims administration practices.
If you have any questions regarding Senate Bill 184, please contact Terrence via 312-540-7544, or via tguolee@querrey.com.
