RI Lawyer Prejudgment Interest Following Successful Personal Injury Claimsby Mike Bottaro (Bottaro Law Firm, LLC)
Courts do not move quickly for a number of reasons. However, courts do recognize the ongoing price that a personal injury victim pays due to legal delay. In order to address this ongoing financial injury, courts add both post- and prejudgment interest to damage awards when a personal injury victim wins a lawsuit. When adding interest to judgments, courts only calculate simple rather than compound interest. Imperial Cas. and Indem. Co. v. Bellini, 947 A. 2d 886 (R.I. 2008). This means that interest is calculated only based on the original amount, rather than on the original amount plus accumulated interest under the compound interest approach. Judges are not supposed to discuss the topic of interest payments with the jury, since interest payments are an administrative function rather than a component of personal injury damage awards. DiMeo v. Philbin, 502 A. 2d 825 (R.I., 1986).
Post-judgment interest encourages the defendant to pay a personal injury victim as quickly as possible after the court has awarded damages. Post-judgment is paid at an annual rate of 12% on the court’s award plus prejudgment interest, starting on the date of the court’s decision until the judgment is paid. G.L. § 9-21-8, 10(a). Following the success of a personal injury victim’s case, the losing party can avoid paying post-judgment interest by promptly depositing the full amount of the award with the court. Wayne Distributing Co. v. Piti Bldg. Co., Inc., 512 A. 2d 870 (R.I. 1986) It is important to note that a successful personal injury victim that files an unsuccessful appeal cannot collect additional post-judgment interest for this additional time, since the other party is powerless to discharge the debt. Paola v. Commercial Union Assurance Co., 490 A.2d 498, 499 (R.I. 1985)
Prejudgment interest was created to fully compensate personal injury victims for the time they wait for a judgment. Prejudgment interest is calculated at the rate of 12% annually from the date the cause of action occurred. G.L. § 9-21-10 For personal injury or wrongful death claims filed due to medical malpractice, the annual twelve percent interest begins to accrue once the health care provider or malpractice liability insurer receives written notice of the personal injury claim. G.L. § 9-21-10(b)
Prejudgment interest is a leading topic discussed by tort reform advocates. The courts have supported awards of prejudgment interest since it encourages early settlements, reduces delays in settling cases, and ultimately decreases the number of cases that go to trial. See, e.g. Isserlis v. Director of Public Works, 111 R.I. 164, 300 A.2d 273 (R.I. 1973) People opposing prejudgment interest argue these interest payments can result in over compensation of an injured party, hold a defendant financially responsible for legal delays beyond their control, diminish the likelihood an injured party would accept a settlement offer, and penalize a defendant for exercising their right to a jury trial.
States do not need to pay pre- or post-judgment interest. The right to receive pre- or post-judgment interest was created by a statute, rather than by common law. Because this right was created by statute, the state’s sovereign immunity prevents recovery of pre- or post-judgment interest unless a statutes specifically waives this immunity. Andrade v. State, 448 A.2d 1293, 1294-95 (R.I. 1982).