In the State of Colorado is one of the few states that allow for Pre-Judgment Interest in a negligence action if the victim recovers. Often, the majority of cases stemming from injuries due to car accidents or the negligence of others settle out of court due to the hard work of injury lawyers fighting with insurance companies for victims’ rights. Some cases do inevitably go to trial and once they do, lawyers have to litigate and fight for victims’ recovery. When the lawyers win on behalf of their victims, the judgment is entitled to pre-judgment interest stemming from the date of the accident.
The Colorado rules allow for both pre- and post-judgment interest. Pre-judgment interest is a higher percentage than post-judgment. However, not every state has these same rules and there are various camps on whether pre-judgment interest is a good idea at all.
Currently, there are two bills in Florida that would allow Plaintiffs (injured people) to recover prejudgment interest in actions stemming from Defendants’ negligence. This means that Defendants would risk much more on litigation than they are currently. The two bills allow for Pre-Judgment Interest in a negligence case when Plaintiffs receive money based as far back as the first payment the plaintiff makes. The interest will begin to accrue from the first day of the month after the first month the money was paid. So if a Plaintiff has to go to the hospital following a car accident, for example, their costs due to the serious injuries they receive from the collision begin accruing pre-judgment interest from the following month.
The bills address both economic and non-economic damages. Economic damages are actual costs paid—like medical bills or property damage like fixing a car after the car accident. Non-economic damages are those like emotional turmoil, pain and suffering, and inability to live his or her life as he or she had been accustomed prior to the accident. The second proposed house bill in Florida allows for non-economic damages to receive pre-judgment interest from the day Defendant receives notice of the claim, plus attorneys’ fees and costs if they are recoverable. Both bills will come into effect July 1, 2017.
The idea behind not allowing plaintiffs to recover prejudgment interest from negligence claims is that damages are too speculative. Plaintiffs currently can receive Pre-Judgment interest when a court finds that plaintiffs have suffered out-of-pocket losses some time before the judgment is entered by the court. The Florida Plaintiff’s bar association of lawyers are for the bills but many businesses, including the American Tort Reform Association, oppose them.
Neither bill has been passed yet and the House and Senate in Florida have to approve them. There will likely be changes to both bills before they are fully passed so there is no way to ensure the final form of the laws. More likely than not, Pre-judgment interest will likely apply to all economic damages though non-economic damages are still up in the air. The rate is currently set for 5.05% per year, which is significantly higher than Colorado’s 3%.
If payouts in Florida increase, the cost of litigation will probably increase. This means Defendants will likely shoulder the burden but the costs may be passed on to all consumers of insurance. The pre-judgment interest change might also cause Plaintiffs to push back the filing of their cases to get the largest award they can.