By: Mike Madey, MBA, RPLU, MJ, Vice President / Business Insurance
Illinois Governor JB Pritzker is reviewing a new bill which would allow for prejudgment interest of 9% to be tacked onto medical malpractice awards in the event of a plaintiff judgement.
In order to understand the significance of this bill, let’s review the basics. Prejudgment interest accrues from the time the defendant found out about the claim until the settlement date – on a $1,000,000 verdict, interest would accrue at $90,000 per year.
Currently, most policies in Illinois are silent as to the handling of prejudgment interest. However, in other states, where prejudgment interest is written into the law, most if not all insurance policies include the interest as part of the limit or “within the limit”.
In the above example, if you only have a $1,000,000 limit, that would mean you were on the hook for the other $540,000. As you can imagine, this leverage weighs heavily on the defense and the insurance companies representing the defense to settle out of court.
There is no doubt, if passed, this bill will add to the overall cost of malpractice insurance in a state which is already one of the most expensive in the country. If a physician wanted to buffer the cost and add another $1,000,000 limit to their malpractice policy, the cost could range from 30-50% depending on the specialty and territory. For other healthcare operations, we may have more complexity added if the prejudgment is excluded from the form or if we cannot obtain additional limit.
There is still time to contact your representative as the bill has not yet been signed, however it appears that the Governor is in alignment with both chambers, and he will support and sign the bill. Once that happens, this law will take effect immediately and interest with start to accrue on all open cases that qualify.
If you have any questions, please contact one of our Healthcare Team members.
Mike Madey
Mike came to The Horton Group in 1994 and has built some of the organization’s strongest client relationships. In 2008, when The Horton Group combined its operations with Medical Arts Insurance (now Healthcare Practice) out of Lisle, Illinois, Mike knew his focus on medical malpractice insurance would be a great fit.
Material posted on this website is for informational purposes only and does not constitute a legal opinion or medical advice. Contact your legal representative or medical professional for information specific to your legal or medical needs.
