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On August 26, 2013, Governor Patrick Quinn signed into law Illinois Senate Bill 1912, now Public Act 098-0548, which will require settling defendants to tender a release document to the plaintiff within 14 days after written confirmation of the settlement, and to tender payment of the settlement within 30 days after receipt of the executed release and other specified documents.  The law applies to all cases involving personal injury, property damage, wrongful death and tort actions seeking money damages, which would include business torts seeking economic damages, and claims for professional negligence, such as accounting and legal malpractice cases.

Under the new law, which becomes effective on January 1, 2014, a settling defendant has 14 days after receiving written confirmation of a settlement to tender a release to the plaintiff.   If the settlement requires court approval, the plaintiff shall tender a copy of the order approving the settlement to the defendant.

If there are known liens or other third party rights to recover from the settlement, including attorneys’ liens, Medicare or Medicaid liens, the plaintiff “may protect the third party’s right of recovery” by tendering to the defendant

(1)   a signed release of the attorney’s lien;

(2)   either:

(a) a signed release of the healthcare provider’s lien; or

(b)  a letter from the plaintiff’s attorney agreeing to hold the full amount of the claimed lien in the plaintiff’s attorney’s client fund account pending final resolution of the lien; or

(c) an offer that the defendant hold the full amount of the claimed right of recovery pending final resolution of the amount of recovery

(3) either:

(a) documentation of an agreement with CMS or other health insurers concerning the amount of the settlement that will be accepted in satisfaction of the right of recovery or

(b) a letter from the plaintiff’s attorney agreeing to hold the full amount of the claimed right of recovery in the plaintiff’s attorney’s client fund account; or

(c) an offer that the defendant hold the full amount of the claimed right of recovery pending the resolution of the amount of the right of recovery.

Once the defendant has received the documentation listed above, the defendant must tender full payment of all sums due to the plaintiff within 30 days.  If the defendant fails to tender full payment in a timely manner, the court shall enter judgment against the defendant for the full amount set forth in the executed release plus the cost to obtain the judgment and interest at the statutory post-judgment interest rate (currently 9%) starting the date the plaintiff tenders the required documents.

Significantly, the Act applies to personal injury, property damage, wrongful death and tort actions involving claims for money damages “except as otherwise agreed by the parties.”  Therefore, the parties can, by mutual agreement, opt out of the requirements of the Act.  This likely has to take place during the negotiations for the settlement, and it will be unlikely that a plaintiff will agree to this after negotiations have been concluded.

This new law could seriously impact defendants who settle complex cases involving multiple parties, insurance coverage disputes and third party liens. Therefore, in any case involving a settlement reached after January 1, 2014, defendants in cases with these types of issues should stipulate that any offer is contingent upon an agreement by the plaintiff to waive the requirements of this Act.  If such an agreement cannot be reached, defense counsel should consider delaying any act to confirm the settlement for as long as possible, so that there will be more time to resolve the issues concerning the terms of the settlement agreements and the various lien issues.

For more information or other inquiries, please contact William K. McVisk.

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Clients rely on Johnson & Bell to defend their interests in court.  Since 1975, Johnson & Bell has developed a reputation for providing legal counsel that accomplishes our clients' business objectives.  Building on a track record of success handling major catastrophic personal injury cases, Johnson & Bell continues to represent numerous clients across a broad array of business concerns.  Johnson & Bell works with clients to mediate, settle or litigate their business issues. In addition, our lawyers represent clients in a wide range of commercial transactions and commercial litigation in both State and Federal court, locally and throughout the country.  The firm has received national recognition for its trial and appellate advocacy, including American Lawyer’s Corporate Counsel Magazine’s acknowledgement as one of the Top 100 Law Firms in the country in client satisfaction.