Hitting where it hurts: Pre-judgment interest statute ruled constitutional in personal injury and wrongful death cases

The Illinois Appellate Court First District’s recent ruling in Cotton v. Coccaro[1] just raised the stakes in personal injury and wrongful death claims in Illinois.

In Cotton, plaintiff succeeded on her medical malpractice claim against the defendant for failing to timely diagnose her breast cancer, receiving a damages award of $6,528,000.00. After plaintiff’s post-trial motion for pre-judgement interest on that amount was granted, defendant timely appealed. Defendant’s appeal challenged the constitutionality of statute 735 ILCS 5/2-1303(c), which allows for the accrual of pre-judgement interest on select damages in personal injury and wrongful death claims for up to five years after the later of its effective date or the date the action is filed, with certain exceptions. The appellate court did not only affirm the pre-judgment interest award, but went on to explain that the pre-judgment interest statute is constitutional on the grounds that it: (1) promotes the stability of the jury’s function to calculate damages; (2) provides compensation for a plaintiff’s delay in being made whole and (3) promotes a more fair and even disbursement of damages to successful tort versus contract plaintiffs.

Despite the proposed merits behind the ruling, the Cotton decision now paves a vastly altered landscape as to damages awards in future personal injury and wrongful death cases and raises major concerns for any private entity or individual subject to personal jurisdiction in Illinois. The most notable of these is the sliding scale for pre-judgement interest award calculations from which various strategic moves and consequences are sure to follow.

735 ILCS 52-1303(c), effective July 1 2021, initially states that pre-judgement interest on damages[2] shall accrue at a rate of 6% per year for up to five years from the later of the effective date of the statute or the filing of any corresponding claim[3]. The statute further specifies, however, that if a final judgment is greater than the highest written settlement offer by defendant within 12 months after the later of July 1, 2021, or the filing of the case and not accepted or rejected by plaintiff within 90 days, interest added to the amount of judgment shall equal 6% per year on the difference between the judgment and highest settlement offer. Conversely, if the judgment is equal to or less than the amount of the highest written settlement offer by defendant within 12 months after the later of July 1, 2021, or the filing of the case and not accepted or rejected by plaintiff within 90 days, no pre-judgment interest shall be added to the amount of the judgment. Whether this stratagem will encourage or discourage settlement negotiations and how it will affect the trial court’s management of their dockets remains to be seen.

If you have questions about this or any other litigation matter, please feel free to contact any of the experienced and talented litigators at Chuhak & Tecson.

Client alert authored by Loretto M. Kennedy (312 85 5444), principal and Adrienne Arlan (312 855 4315), associate.

This Chuhak & Tecson, P.C. communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.