New York’s clogged and bloated legal system is costing taxpayers and companies a whopping $89 billion a year in excessive litigation expenses, according to a report released this week.
Lenient liability laws and lawsuit-friendly policies have fostered an environment where greedy attorneys can make bank, often off the backs of local businesses and city government, the report, conducted by the American Tort Reform Association, suggests.
“The City’s courts are a playground for fraudsters and opportunistic trial lawyers, while honest New Yorkers foot the bill,” said ATRA President Tiger Joyce.
As a result, the Big Apple ranks No. 2 on the group’s list of Top 10 worst judicial hellholes in the country, with the Philadelphia Court of Common Pleas and Pennsylvania Supreme Court tied for first.
The tort reform report cites a study conducted by the economic consultancy the Perryman Group last year to estimate the economic impact of excessive litigation. In New York, the group estimates, businesses spent a massive $88.6 billion dealing with frivolous lawsuits.
“The state’s liability environment and lawsuit-friendly policies drive up costs and are a major factor driving businesses and residents to greener pastures in other states,” said Ashley Ranslow, the New York State director for the small business advocacy group National Federation of Independent Business.
ATRA points to several key policies it says are especially responsible for driving up costs — including the state’s scaffold law, which holds construction companies entirely liable for injuries on work sites, even if an employee was negligent.
Critics say the law has been weaponized by dubious litigation lenders who front costs for plaintiffs — sucking millions of dollars out of businesses and municipal governments, many of which settle claims instead of bearing the costs of letting them languish in court.
The ATRA report also cites New York’s high auto insurance rates as a policy that encourages and increases the cost of fraudulent claims.
And it notes a vague statute that allows people to receive compensation in court for ambiguous and undefined “pain and suffering.”
“Lawsuit abuse isn’t just a courtroom problem – widespread fraud is an economic and social crisis that costs jobs, drives up prices, and exploits vulnerable communities,” said Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York.
“Lawmakers must step up by passing stricter laws to punish staged car and construction site accidents and by increasing transparency around third-party funding of lawsuits,” Stebbins wrote in a statement.
ATRA places a large amount of blame for the excessive tort costs on New York’s powerful trial lawyers groups.
The New York Trial Lawyers Association maintains a robust lobbying presence in Albany. Top law firms and political groups aligned with the association have pumped millions of dollars into Democrats as well as Republican campaigns statewide.
The organization — one of the largest and most robust trial lawyers groups in New York — has been pushing an expansion of the state’s wrongful death statute that critics argue could be a driver of excessive litigation costs on healthcare providers if passed.
Also referred to as the Grieving Families Act, it would allow people to seek emotional damages in wrongful death cases, among other changes.
“If we are serious about making New York more affordable for businesses and consumers alike, tort reform is a great place to start, including a veto on the wrongful death bill,” a spokesperson for the Business Council of New York wrote in a statement.
Proponents of the legislation say its a timely update to the statute, which hasn’t been updated in decades.
“After losing my partner in childbirth, I’ve watched insurance companies use the pain of families like mine to justify their greed. While we struggle to rebuild our lives after real, devastating losses, they cry ‘lawsuit abuse’ to defend their skyrocketing premiums and record profits. It’s not the lawsuits that are breaking the system—it’s the insatiable greed of these insurers,” Bruce McIntyre, an activist involved in the coalition Justice for Grieving Families, wrote in a letter reported on by POLITICO, this week.
Gov. Kathy Hochul — who received over half a million dollars from the top law firms and trial lawyer PAC’s since 2017, according to the ATRA report — has vetoed the bill twice in the last two years.
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