New York Post, November 18, 2009
Report: Legal costs rob economy of $16B
New York’s court system is among the most lawsuit-friendly in the country — socking citizens with millions of dollars in wacky jury awards, higher taxes and increased costs of insurance and health care, a study released yesterday found.
The state ranks dead last in 18 of 28 legal categories, costing the state economy $16 billion in economic activity in 2006, according to the analysis by the Pacific Research Institute, a conservative think tank.
“It is little exaggeration to say there is a lawyer on every corner in New York waiting to chase the next ambulance in the hope of filing another lawsuit and hitting the jackpot to rake in sky-high fees,” the study claims.
The report particularly singled out New York’s highest-in-the-nation medical-malpractice costs for doctors and hospitals, and charged that litigation contributed to the closure of the maternity ward at Long Island College Hospital.
New York City — struggling with a multibillion-dollar deficit — paid out $528 million last year in litigation costs after being sued in a variety of cases, ranging from trips and falls to botched surgeries. The MTA paid an additional $57.6 million.
“New York now faces a perfect storm of high tort costs, high tort-litigation risks, clogged courthouses, and nearly no tort reforms to balance a lopsided civil-justice system,” said the report’s author, Lawrence McQuillan.
Mayor Bloomberg and prior mayors have pushed Albany to pass laws to help rein in litigation costs. But they’ve been rebuffed because of the clout of the trial lawyers, who contribute millions of dollars to lawmakers’ political campaigns.
“New York is facing the gravest fiscal crisis in generations,” said Kathryn Wylde, president and CEO of the New York City Partnership. “At the same time, our economy is challenged by the highest effective unemployment rate since the Great Depression.”
“This study shows that systemic reform of our tort system would result in significant savings for both government and the private sector,” she added.
Of the top 100 jury awards issued nationwide in 2006, 10 were in New York.
The report recommends 10 tort-reform laws that it claims would create 86,000 new jobs, increase tax revenues by $1 billion, lower health-care costs and increase the number of doctors, and slash insurance costs by 16 percent.
The proposed changes include imposing caps on awards for pain and suffering and mental distress and creating special health courts to help weed out frivolous medical suits.
Meanwhile, health-care providers should not be held liable for personal injuries caused by prescribed drugs or medical devices sanctioned by the Food and Drug Administration.
In order to combat “junk-food” lawsuits, the researchers said in some cases food manufacturers and distributors should be exempt from obesity litigation.
The study also recommends stricter requirements for including plaintiffs in class-action lawsuits, and providing better compensation to jurors.
But the group representing trial lawyers said the proposals are dead on arrival.
“They want to take away victims’ rights,” said Jeffrey Bloom, head of a medical panel for the New York Trial Lawyers Association.
“We are doing a service. Nobody else is policing the medical profession,” he said.