February 6, 2009
Prejudgment Interest Legislation Costly to Employers
Just months after the Illinois Supreme Court handed the Illinois Trial Lawyers a major victory with its “deep pockets” decision, legislation has surfaced that once again bears costly consequences for the business community. SB 184 has recently been introduced to require prejudgement interest to be paid by defendants in lawsuits and arbitration claims where monetary damages are awarded.
The proposal, which is being pushed by the Illinois State Bar Association, assesses prejudgement interest on the amount of the total judgment, which would include damages found to be due to plaintiffs for non-economic damages such as awards for disfigurement and pain and suffering for which the plaintiff was not required to pay any out-of-pocket costs. The proposal also calls for this interest to be assessed on any future damages, such as future medical expenses and future lost wages.
The proposed legislation, which has not yet been assigned to a committee, promotes an unfair judiciary in an environment that already favors the plaintiff. Prejudgement interest penalizes defendants for exercising their legal right to bring a case to trial and further coerces these defendants with no limited or uncertain liability to settle rather than risk a trial that results in a plaintiff award subject to interest.
As reported in the December 5, 2008 Government Affairs Report, the Trial Lawyers scored a major win after the Illinois Supreme Court handed down its “Ready v. United/Goedecke Services, Inc.” decision allowing pre-trail settlements to be excluded from the verdict form for the purposes of calculating fault allocation. This decision means that any defendants remaining at trial could still be held liable for up to 100 percent of the damages, even if they only played a minor role in a plaintiff’s injury.
The Chamber, along with the Illinois Civil Justice League, strongly opposes SB 184 as it would only further the erosion of Illinois legal climate. The legislation is not only procedurally onerous, it threatens tremendous costs for employers that are already struggling to stay afloat during the current economic downturn.
Legislature Create New Joint Ethics Reform Committee
Less than a week after the Senate voted to oust former Governor Blagojevich from office and install the current Governor Pat Quinn, the House and Senate quickly moved to establish a new legislative Joint Committee on Government Reform. SJR 1, which passed the House and Senate unanimously earlier this week, creates this new bipartisan committee to be co-chaired by Senate President Cullerton and House Speaker Madigan.
The new 16-member legislative committee seeks to coordinate efforts with Governor Quinn’s recently established Illinois Reform Commission. Quinn’s Commission has been directed to evaluate current state law with an eye towards recommending possible changes to further tighten existing laws governing ethics.
Speaker Madigan stated yesterday that the new legislative committee will focus on reforms across all areas of government, starting with pension reform. Treasurer Giannoulias has already proposed consolidating the investment functions of the five state-funded pension boards into a new Illinois Public Employees’ Retirement System (ILPERS). The Treasurers’ proposal includes extensive ethics reform provisions to ensure investment processes are free from potential conflicts of interest.
The new legislative committee is also expected to take up issues pertaining to campaign finance, lobbyist restrictions, the highly contentious legislative and executive pay raise process, as well as budget expenditure and transparency issues. The Speaker stated that he hopes the new committee will produce a legislative proposal by May.
Quinn’s Commission has already stated it hopes to issue recommendations by April.
Comptroller Confirms Bleak Outlook for Fiscal Year 2010
In a report sent to the new governor this week, Comptroller Hynes confirmed what many had already feared that the state’s fiscal situation has continued to deteriorate. The Comptroller reports that absent any federal stimulus money, the state faces a $9 billion hole for Fiscal Year 2010. If Congress is successful in passing the current economic stimulus package, the state’s budget deficit could shrink to $6 billion, but that figure assumes no growth over Fiscal Year 2009 with the exception of mandated Medicaid and pension contributions.
The Comptroller’s Transitional Fiscal Report also outlines major budget pressures for Fiscal Year 2010, largely due to Medicaid and pension obligations. The state is required to make a $1.2 billion pension payment in the next fiscal year that represents approximately $500 million more than originally anticipated due to massive stock market losses last year. If the stock market continues to underperform, as is expected through 2009, the state could face an even larger increase in its pension payment obligation for Fiscal Year 2011 than originally anticipated.
As for the Medicaid program, the Comptroller reports that the program demands an increase of nearly $2 billion in Fiscal Year 2010 in order to keep pace with its population growth and to drastically reduce the payment cycle for providers trying to maintain financial viability. The Comptroller estimates that the state’s backlog of unpaid bills could reach an unprecedented $4.5 billion by the end of the current fiscal year; nearly half of which are unpaid Medicaid claims.
NEXT WEEK:
Chamber Key Bills Assigned to Committee
The House and Senate will return next week to begin committee work on a number of bills that are of interest to the Chamber. The following bills of interest are scheduled for committee hearings next week:
HOUSE HEALTH CARE AVAILABILITY and ACCESSIBILITY COMMITTEE – Feb. 9, 4 pm, Capitol Rm. 118:
HB 29 (Flowers) requires all insurers to report to the Director of the Division of Insurance accurate and complete information for each accident and health coverage type requested. Chamber opposes.
HB 152 (Mendoza) prohibits health insurance policies or service plan contract that cover immunosuppressant drugs from limiting, reducing, or denying coverage for those drugs if the insured was using the drug and the drug was covered prior to the limitation, reduction or denial of coverage. Chamber opposes.
HB 213 (Smith) mandates coverage for diagnostic testing for cardiovascular disease. Chamber opposes.
CONSUMER PROTECTION COMMITTEE – Feb. 9, 4 pm, Stratton C-1:
HB 181 (Graham) prohibits insurers from using credit information to underwrite risk or use in determining insurance scoring methodology. Chamber opposes.
HUMAN SERVICES COMMITTEE – Feb. 10, 8:30 am, Stratton D-1:
HB 332 (Franks) requires every manufacturer and labeler that sells prescription drugs in Illinois to disclose information regarding any gifts, fees, payments, subsidies, or other economic benefit provided in connection with detailing or promotional or other marketing activities by the company to the Department of Public Health. Chamber opposes.
STATE GOVERNMENT ADMINISTRATION COMMITTEE – Feb. 10, 10 am, Capitol Rm. 118:
HB 237 (Tracy) reduces the time in which a bill must be paid (from 60 days to 30 days) before an interest penalty is added. The legislation also doubles the interest penalty from 1% to 2%. Chamber supports.
HB 239 (Tracy) places a lock box on the Road Fund. Chamber supports.
HOUSE REVENUE and FINANCE COMMITTEE - Feb. 11, 10 am, Capitol Rm. 115:
HB 1 (Bradley, J.) increases the state motor fuel tax by 8 cents per gallon to fund a capital improvements program. Chamber monitoring.
HB 23 (Turner) extends the tax exemption for graphic arts machinery and equipment and the manufacturer’s purchase credit until August 30, 2014 (these credits are currently set to expire on June 30, 2009. Chamber initiative; support.
HB 351 (Mendoza) requires the Department of Commerce and Economic Opportunity to establish and maintain a program to award grants to emerging-technology enterprises in the State. Chamber supports.
Chamber Legislative Preview Webinar on Monday
The Chamber Government Affairs Team will host its first legislative preview webinar on Monday, February 9 at 2 pm. The team will walk members through the prevalent legislative issues that have emerged or we see emerging for 2009. Members should receive an e-mail to register for the webinar.
A $24 Billion Windfall for Illinois?
As the federal economic stimulus package makes its way through Congress, Illinois could receive as much as $24.5 billion for various so-called stimulus programs. Under the version recently passed by the U.S. House, Illinois’ take-away was $22.4 billion. The U.S. Senate version, however, has increased that amount by $2 billion for various education programs, low-income assistance programs, and infrastructure improvements. For more information on Illinois’ cut of the federal stimulus package, please click here.