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Illinois Prejudgment Interest Law Ruled Unconstitutional in Jennifer Hyland vs. Advocate Health and Hospitals Corporation, et. al., Case no. 2017 L 003541
In a Memorandum Order dated May 27, 2022, Cook County Judge Marcia Maras concluded that a recently-enacted Illinois Prejudgment Interest statute was unconstitutional.
On May 28, 2021, Governor Pritzker signed into law Senate Bill 72, which mandated prejudgment interest awards in all actions brought to recover damages for personal injury or wrongful death. Pursuant to the bill, prejudgment interest would be due on all damages except punitive damages, sanctions, statutory attorney’s fees, and statutory costs. The prejudgment of 6% per annum interest would begin to accrue on the date of action filing. The bill included provisions for potential reduction or elimination of interest exposure where early settlement offers (rejected by a plaintiff) approached or exceeded an ultimate jury award.
The prejudgment amendment represented a considerable departure from the prior state of the law and promised to significantly alter incentives in Illinois tort litigation. We agree with Judge Maras’s interpretation of the statute as punitive to employers, business groups and other defendants. Before the enactment of the amendment, prejudgment interest was unavailable in Illinois except by contract or where specifically authorized by statute. An exception existed for certain cases brought in equity. Prejudgment interest was thus not unheard of in Illinois courts, though it was not a familiar feature of tort judgements.
The constitutionality of the statute was challenged in two main ways in Jennifer Hyland v. Advocate Health and Hospital Corporation et. al., Case No. 2017 L 003541. First, defendants argued that the statute violated the fundamental right to trial by jury under Article 1, Section 13 of the Illinois Constitution of 1970. Next, the defendants argued that the amended act separately violated the Illinois Constitution’s prohibition against special legislation under Article 4, Section 13. Judge Maras agreed with the defendants on both fronts, concluding that the statute was indeed unconstitutional.
Judge Maras agreed that the amendment undermined a defendant’s right to trial by jury. She separately concluded that the amendment arbitrarily discriminated in favor of personal injury and wrongful death plaintiffs, granting them a substantial benefit while excluding all other similarly-situated tort plaintiffs. Furthermore, Judge Maras appeared to agree with the defense that the amendment also discriminated between tort defendants, and even potentially among defendants in the same case. Specifically, initial litigants could take advantage of interest mitigation measures through early settlement negotiations while those joined later could not. Judge Maras also observed that the amendment penalized defendants regardless of whether they contributed to any delay. These distinctions, she concluded, undermined the relationship between the classes created by the legislation and the problem sought to be addressed.
The Illinois prejudgment interest amendment appears plainly intended as a direct financial incentive, creating new leverage in tort litigation to hasten dispute resolution. We anticipate appeal of the current order. Assuming Judge Maras’s ruling is upheld, questions will loom concerning whether the Illinois legislature will broaden the classes of plaintiffs to whom prejudgment interest is available or allow permissive rather than mandatory awards in order to attempt to avoid future constitutional challenge.
Questions of constitutionality and interest-rate calculation may not always quicken pulses. However, Judge Maras’s Order is certain to keep interested parties involved in upcoming legislative sessions and represents a victory for employers seeking to mitigate the cost of doing business in Illinois. If you have any questions about pre-judgment interest and Judge Maras’s recent Order, please feel free to reach out to our attorneys at Nyhan, Bambrick, Kinzie, & Lowry.