New Illinois Law To Impose Strict Timing Requirements on Settling Defendants

Getting a settling defendant to pay is sometimes a Herculean task. So much so that it often spawns multiple rounds of satellite litigation just to enforce the settlement terms. I recall one case I had in McHenry County that required no less than five or six 2-hour drives to the courthouse in order to enforce a settlement agreement.  The defendant’s continual delays in making good on its settlement payment obligations caused my client considerable frustration and unnecessary expense.

Enter Public Act 98-548 (Raoul, D-Chicago; Sims, D-Chicago). This law goes into effect January 1, 2014 and amends the Code of Civil Procedure to provide personal injury plaintiff’s with an enforcement tool to enforce settlement agreements. It requires a settling defendant to (a) provide a release within 14 days of written confirmation of a settlement agreement; and (b) to pay the settlement funds within 30 days of receiving signed settlement documents from a plaintiff.  If a particular case requires court approval of a settlement, the plaintiff must provide to the defendant a copy of the court order approving settlement.

To protect third-party lien claimant’s (such as physicians or attorneys), a plaintiff receiving settlement funds should provide (a) a signed release of the lien to the defendant and (b) a letter from the plaintiff’s attorney or from health care provider, Medicare or health insurer in which the parties agreeing to hold the full amount of the third-party’s claimed lien in the plaintiff’s attorney’s client-fund account pending final resolution of lien amount.

The rule’s “teeth”: if the court finds, after a hearing, that payment has not been made within 30 days of tender of the necessary documents, judgment must be entered against that defendant for the amount in the executed release, costs (but not attorneys’ fees) incurred in obtaining the judgment, and 9 percent interest from the date of the plaintiff furnishing the necessary documents.  The Act exempts units of local government, the State of Illinois, and state employees. Effective January 1, 2014. 

Defense firms should notify clients of these rule changes with sufficient lead time to ensure a seamless transition to the new settlement payment obligations.

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Litigation attorney representing businesses and individuals in business litigation, post-judgment enforcement, collections and real estate litigation.

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