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How is Interest Calculated on Personal Injury Judgments?

Litigating a personal injury claim can be a costly, time-consuming process. Factors—such as waiting for treatment of injuries to end before bringing suit or the backlog of civil cases—may result in considerable time elapsing from the date the injury occurred to the rendering of a jury verdict.

Generally, the prevailing plaintiff in a personal injury matter is entitled to an award of costs incurred before and during the trial. The plaintiff is also generally entitled to prejudgment interest on the verdict amount and postjudgment interest on the judgment amount. By statute, in a tort judgment in Massachusetts, a court clerk adds 12 percent annually to personal injury, consequential or property damages from the date the court action began until the date of judgment. Interest is not compounded, but rather, calculated as “simple” interest of 12 percent of the verdict amount annually. Assessing such interest is intended to compensate the prevailing plaintiff for the delay in obtaining the monetary award.

Under a separate statute, the same 12 percent interest rate is assessed on a recovery under the Commonwealth’s wrongful death statute. Prejudgment interest does not attach to an award of punitive damages in Massachusetts. To avoid providing incentive to a defendant not to pay a prevailing plaintiff, however, courts have allowed postjudgment interest on punitive damages.

Damages for loss of consortium are assumed to be subject to prejudgment interest. Interest on a judgment for loss of consortium is calculated from the date the tort action commenced, even though, as in one 1982 case, the consortium claim was not added to the complaint until more than three years after the lawsuit was brought.

Like prejudgment interest, postjudgment interest on tort awards in Massachusetts accrues at a rate of 12 percent interest per year. Postjudgment interest is calculated from the date the judgment enters and is added to an award of costs. It is added to the entire judgment amount, which encompasses compensatory damages, prejudgment interest and costs. Postjudgment interest continues to accrue until a judgment is satisfied fully. Depending on the circumstances of a given case, a settlement figure may reduce the amount on which postjudgment interest accrues from the date the prevailing party receives the settlement sum.

Arbitration may impact the awarding of prejudgment interest. In 2010, a Massachusetts Appeals Court decision reversed a Superior Court award of prejudgment interest because both the binding arbitration agreement negotiated by the parties and the arbitrator’s award were silent on the issue of assessing pre-award interest. The appellate court in that case acknowledged that the lower court had jurisdiction to hear a motion confirming the arbitrator’s award that did include post-award interest.

Last year, the Appeals Court reversed a trial judge’s decision against an insurance carrier for violating the Commonwealth’s Consumer Protection Statute (Chapter 93A) and Unfair and Deceptive Practices Act, after the carrier offered a tow truck driver who sustained serious personal injuries his full policy limits, but not postjudgment interest. The appellate court held that the carrier had made only a conditional, not an unconditional offer of settlement to the injured driver, and therefore, had not acted in bad faith. Courts don’t add prejudgment interest to multiple damages under Chapter 93A because doing so would compound the penalty and violate the underlying purpose of awarding prejudgment interest.

Personal injury, negligence, damages and other accident-related topics are as nuanced and unique as the people involved in every case. If you have any questions about car accidents, personal injury law, tort law, damages, or other legal incidents, please contact our offices. You may schedule a free consultation with an experienced professional today. Call 978-225-9030 during business hours or complete a contact form online.

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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