Could Settling A Personal Injury Claim Eliminate Your Right To Prejudgment Interest?

Posted on: 10 March 2017

If you've recently suffered physical injuries due to another person's negligence, you may be exploring your legal and financial options, including a personal injury lawsuit. While filing a civil complaint is often the best way to ensure you'll be able to recover all the funds to which you're entitled, it can take time for a lawsuit to wind its way through the discovery process before it's presented to a judge or jury – and if you're already dealing with the financial fallout of your injury, you may not feel that you have the extra time. 

In many cases, prejudgment interest can be available for any eventual judgment you're awarded, adding to your total recovery to help offset any of the costs you may have incurred while waiting for these funds – but according to at least one recent Colorado case, this interest is not available if the case settles before trial. Read on to learn more about when prejudgment interest is available, as well as some of the factors you may want to consider when deciding whether to push your personal injury case forward. 

When (and why) is prejudgment interest assessed in personal injury cases?

Prejudgment interest, or interest on the damages awarded in a personal injury case, is available in most situations in which a personal injury lawsuit is filed and a judgment is awarded. This interest often dates back to the filing date of the lawsuit, depending upon your specific state's laws, but can also begin accruing once a final judgment is entered. 

Because many personal injury defendants who lose at the trial court level choose to take advantage of their appeal rights, it can often be some time before your case is decided with finality, even if the appellate courts in your state or district decline to hear (or overturn) the verdict. During this time, prejudgment interest will continue to accrue so that when your judgment is unequivocally final, you'll be able to collect interest dating back to the day the jury returned its verdict, and sometimes even back to the day the lawsuit was initially filed. 

However, prejudgment interest is generally not available in cases that are settled prior to trial or in cases where a personal injury lawsuit is never actually filed. In one recent case, the Colorado Court of Appeals held that a settlement entered into absent litigation did not entitle the plaintiff to prejudgment interest; indeed, even if a case had been filed, unless a judgment was entered by a judge or jury, an award of prejudgment interest was not appropriate. 

What factors should you consider when deciding whether to settle your case or proceed to trial? 

Because prejudgment interest can often be a substantial amount – especially in cases that drag on for some time after the initial injury or complaint filing date – it is often in your best interest to push your case forward to trial rather than settling for a smaller amount pre-trial. Although it can be tempting to want to put this case behind you and move on as quickly as you can, and there is always the adage "a bird in the hand is worth two in the bush" to consider, you could be selling yourself short by settling. 

However, personal injury cases are highly fact-specific, and the best decision for you will likely depend on the strength of your case, the amount of personal and financial support you have, and the long-term impact of your injuries. For example, a person in their twenties who suffers permanent spinal or brain damage in an auto accident is likely to experience long-term complications as a result of this injury, and any sum offered in settlement should take the potential for decades of treatment costs (or lowered income) into account. Meanwhile, someone who suffers a fractured metatarsal in an auto accident but who is still able to work and perform most of the activities of daily living may be better off accepting a settlement rather than risking a smaller judgment at trial.

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