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Court Settles Confusion Over Prejudgment Interest

In recognition of the lost value of money, Indiana, like most states, enacted a statute awarding prejudgment interest at a rate of at least 6% per year if certain conditions are met. The Tort Prejudgment Interest Statute was enacted to encourage settlement of civil actions. Under the statute, if a plaintiff makes a qualified settlement offer within one year of filing the claim in court and the defendant fails to make a qualified settlement offer, then the court is allowed to award interest on the amount awarded by the court as a result of defendant’s delay in resolving the matter. Although the statute has been in effect for quite some time, there has been some confusion over whether or not the statute replaces the old standard for determining prejudgment interest or whether the statute merely supplements the old standard. In the recent case of Kosarko v. Padula, 979 N.E.2d 144 (Ind. 2012), the Indiana Supreme Court finally put an end to the confusion by ruling that the Tort Prejudgment Interest Statute overrules and supplants the old common law standard governing availability of prejudgment interest. In that case, Kosarko was injured in a car accident and filed suit against the driver of the other vehicle. Kosarko offered to settle the case for $100,000, but the defendant never responded. Two years later, the case went before a jury, which ultimately found in favor of Kosarko and awarded her $210,000. Kosarko then asked that prejudgment interest be awarded in the amount of $79,627, but the trial court denied her request saying that she failed to meet the requirements under the old standard. The court of appeals reversed, agreeing with Kosarko that she should be awarded prejudgment interest based on the statute. Upon review, the Supreme Court agreed with the court of appeals and held that the statute creates conditions for an award of prejudgment interest and authorizes the court to award the interest as part of a judgment without making any reference to the old standard. Therefore, the statute was intended to replace the old common law standard for determining prejudgment interest. As both the case and the statute illustrate, settlement of civil lawsuits is highly encouraged. The courts recognize that it is unfair for a defendant to drag out the proceedings and delay when a plaintiff receives the damages he or she is entitled to. If you or a loved one have been injured by the negligent or wrongful act of another and believe you are entitled to damages, please call 877-877-LAW2 (5292) or 219-924-2427 for a free consultation with one of our top personal injury attorneys.

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