The problem:  In 2009, the Legislature increased the pre-judgment interest rate applied to larger awards and settlements from an index gauged to the one year Treasury bill rate (which reflects the current interest rate environment) with a floor of 4%, to a flat 10% prejudgment interest rate.  This 150% increase in the rate was unjustified, dramatically increasing costs for defendants. The higher rate is having the negative impact of causing plaintiffs to not push for an expeditious settlement of their case because of the ability to make more money generating interest under the prejudgment interest law than by investing funds in other investments.  In 2010, the legislature exempted all government units from having to pay the new higher prejudgment interest rate due to the raising costs on public entities.  Private entities face the same budget pressures as public entities do and to be fair, the same pre-judgment interest rate should be applied to all cases, not just ones involving the private sector.

 

The solution:  We support legislation re-instating the market rate calculation for pre-judgment awards and settlements so that it applies to all entities both private and public.  We also support legislation adding needed clarification of the potential conflict between two statutes so an individual cannot collect under both which was never intended (Section 549.09 and the interest provided under Section 60A.0811, which provides for similar interest on verdicts/awards/judgments which involve liability insurance policies).  This insurance law, which was agreed to by all sides in 2009, provides for a fixed 10% interest rate.