The list of Matters shown when you click on the Select/Defer Matters within Selection Criteria Button defaults to showing you Open Matters only.  The Include Closed Matters option is used ONLY for displaying Matters in that list and is not used as a parameter when printing Prebills.  If your Closed Matters are within the Selection criteria, there is some activity that would cause a Prebill to print, and they are Selected for Billing, then Prebills will print.  If you do not want Prebills to print on Closed Matters (assuming there is activity), you need to defer them from Billing,