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New York Post


Lawsuit Heaven -- NYC's Hell

June 15, 2006

By Walter Olson

A report released Tuesday by the city's Independent Budget Office found that the share of the city bud­get devoted to lawsuit outlays doubled from 1990 to 2004. And the whopping $575 million the city spent to settle lawsuits in 2004 is expected to balloon to nearly $800 million by 2010.

The 2004 figure testifies eloquently to the cost of the Litigation Lobby's stranglehold on Albany. It amounts to $71 for every man, woman and child in the city, a sum that gets passed directly into the city's tax burden. (Although trial lawyers like to portray the liability crisis as one of the insurance system rather than of the lawsuit system, New York City happens to be self-insured, so the raw numbers tell the tale.)

Is this just the inevitable cost of running a big city? Well, the 2004 budget for the city of Denver is available online, and it includes a line item for liability claims of—no misprint—$3.9 million, a number that would practically disappear as a rounding error in Gotham's legal budget. That's $7 per resident, about one-tenth the burden New York taxpayers face.

Yes, New York's government does more than Denver's—especially in running hospitals—but much of the tenfold difference per capita remains once you control for such factors. And the $575 million figure doesn't include several huge sources of lawsuit exposure for New York taxpayers—starting with the MTA, with its subways and buses, and the Port Authority, which was a magnet for liability lawsuits even before 9/11. Add them to the count, and you'd vault the figures far higher.

The bigger story here is not just the continued growth in lawsuit outlays. It's that Gotham was already facing a crisis in liability payouts 10 or 15 years ago, and things keep getting worse rather than better, despite the vocal complaints of virtually every mayor.

And also despite some concerted efforts by the city to limit its exposure. Sidewalk slip-fall claims are off sharply, for example, because of a 2003 law backed by Bloomberg that sticks adjacent property owners (as opposed to City Hall) with liability for many slip-falls. Victor Serby, a. New York attorney who often represents plaintiffs, says the Health and Hospitals Corp. has acted lately to clean up its chaotic patient record-keeping, a step that is likely to help the city in its defense of malpractice claims.

Overall, 30 percent of city lawsuit outlays go to medical liability claims, where million-dollar payouts are common. The most important category of these claims by far are cases of infant brain damage, most of which are not avoidable by obstetricians no matter how skillfully they practice, but which (particularly before plaintiff-friendly Bronx and Brooklyn juries) can generate enormous verdicts even when they rest on highly -doubtful scientific theories of blame. In fact, the most likely hope for reducing the incidence of these cases is probably improved social conditions (e.g. fewer premature births, less substance abuse by moms), rather than error-free obstetrics.

Attorney Ellen Lombardi, with the city's Law Department, said the state's appeals courts are more willing to uphold high verdicts than formerly. Plus, the city's new push to settle cases early has led to some short-term bulging of outlays.

The city has some highly regarded legal talent, and it's quite possible its strategy is sound. But the overall direction of the numbers is unlikely to improve any time soon.

Why not? Some judges in the city's own back yard are considered deeply unsympathetic to the city as defendant. But the wider reason lies in Albany: New York is one of the very few states that has enacted little or no liability reform worth the name.

And that's exactly the way the immensely successful trial-lawyer lobby—along with its favorite representative, Assembly Speaker Sheldon Silver of Weitz & Luxenberg—aims to keep it.



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