HB 3360, vetoed by Gov. Pritzker on March 25, would have imposed 9 percent prejudgment interest on personal injury and wrongful death claims in Illinois. This is the governor's first bill rejection in two years and his ninth veto since taking office.
HB 3360's pathway to Gov. Pritzker's desk was unusual: it was passed quickly and quietly during the Illinois legislature's January lame duck session, where lawmakers worked through the night to get the bill finalized. The governor was expected to sign the bill as soon as it passed, but, surprisingly, a wait ensued after it reached his desk, suggesting that the bill would require some work. See our prior analysis of HB 3360's provisions.
Veto Letter
Gov. Pritzker released a letter accompanying his veto, detailing his concerns with HB 3360's existing provisions. The governor expressly stated that he supports prejudgment interest, as he believes it promotes prompt resolution, resulting in aggrieved parties getting money faster. However, the governor fears the downstream effects that 9 percent interest could have on hospitals, medical professionals, and other businesses financially crippled by COVID-19. Most importantly, the governor fears that 9 percent interest could potentially drive up healthcare costs for patients and deter physicians from practicing in Illinois. This is particularly significant in Illinois, where the majority of Illinois hospitals are self-insured and, therefore, would be required to pay the costs of this legislation directly.
Issue with Prejudgment Interest
The governor also expressed concern over imposing prejudgment interest on non-economic damages like pain and suffering. Pritzker noted that other states that recognize prejudgment interest in personal injury actions, e.g. Minnesota and Massachusetts, limit application to pecuniary damages. He further noted that Minnesota law explicitly excludes future, punitive or non-compensatory damages. This is particularly important for litigation in Illinois, where there is no cap on non-economic damages. Gov. Pritzker's veto, however, may only serve as a temporary setback, as Illinois lawmakers work to finalize a new version of HB 3360 that would still penalize Illinois defendants for trying cases.
Revised Bill
The new iteration of the bill—HA2—is currently before the Senate and is ostensibly less burdensome. For example, instead of 9 percent interest, HA2 would impose 6 percent prejudgment interest on the same personal injury and wrongful death lawsuits. In addition to a decreased interest rate, interest would not apply to punitive damages, sanctions, statutory attorneys' fees, statutory costs, and the amount of the highest timely written settlement offer. Further, HA2 caps prejudgment interest at five years, and interest would be tolled where cases are voluntarily dismissed.
Looking Forward
Defendants must remain conscious of the pre-judgment interest that could soon be imposed in their cases. Although society is slowly returning to normalcy, Illinois courts are still backlogged and hampered by COVID-19 delays that could lengthen the life of a lawsuit, equating to more time for interest accrual. Although HA2 makes a few significant changes that are more favorable than the initial bill, it will still create unique obstacles that will require maneuvering.
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