RI Supreme Court Upholds Constitutionality of Rhode Island’s Prejudgment Interest Statute

Rhode Island has one of the most plaintiff-friendly prejudgment interest statutes in the nation. In most personal injury actions in Rhode Island, pre-judgment interest runs at a rate of 12% per year from the date of the accident per Rhode Island Gen. Laws § 9-21-10(a). The statute of limitations for personal injury claims is three years. Therefore, a plaintiff can wait almost three years after an accident and after 35% interest accrues before filing an action for personal injuries. Since it typically takes two years or longer for a case to be reached for trial, defendants and their insurers frequently face a scenario in which more than 50% interest will automatically be added to any judgment rendered against them. Thus, prejudgment interest oftentimes plays a significant role in deciding whether to settle or take a case to trial.

The constitutionality of Rhode Island’s prejudgment interest was recently challenged in Oden v. Schwartz, 71 A.3d 438 (R.I. 2013), where the RI Supreme Court upheld the statute’s constitutionality.

Mr. Oden underwent open-heart mitral valve replacement surgery. Following the surgery, he was diagnosed with aortic insufficiency (a leaky aortic valve). An echocardiogram showed that the aortic insufficiency was due to an errant suture placed in the aortic valve during surgery. Consequently, Mr. Oden underwent a second open-heart surgery. While in recovery for the second surgery, he suffered cardiac arrest.

Mr. Oden brought suit against the surgeon, the hospital and the echocardiologist. The case against the echocardiologist proceeded to trial. After trial, the jury returned a 1.5 million dollar verdict in favor of Mr. Oden. The echocardiologist was found to be 25 % liable for Mr. Oden’s injuries. The echocardiologist appealed raising several issues. Notably, he challenged the constitutionality of the prejudgment interest statute.

The echocardiologist argued that the prejudgment interest statute violates a party’s fundamental right to a jury trial and should therefore be subject to strict scrutiny analysis. The court found that a jury trial in a civil case is not a fundamental right and therefore not subject to strict scrutiny analysis. Instead, like other economic legislation, it is subject to a rational basis review. The court found that prejudgment interest statutes are rationally related to the legitimate goals of encouraging prompt resolution of disputes and ensuring prompt payment of compensation.

This decision ensures that the only way the prejudgment interest statue will change will be through the Legislature. Legislation is routinely introduced to the General Assembly to amend the prejudgment interest statue. For example, two bills were introduced to amend the prejudgment interest statute last year: H5284 which would reduce the rate from 12% to 6% and H52849 which would change the date interest begins from the date of accrual of the action to the date the lawsuit is filed. Each bill was held for further study and the 2013 Legislative session is now over. Thus, reform of the prejudgment interest statute seems unlikely in the future.

 

Photo Credit: LeHigh Valley Health Network