NCPA - National Center for Policy Analysis


November 19, 2009

Tort law is intended to fairly compensate those who have been wrongly harmed.  But according to "An Empire Disaster," a report released this week by the Pacific Research Institute, lawsuit abuse is rampant in New York State.  For too long, New York's tort system has been exploited by personal-injury lawyers and plaintiffs looking for a big payday no matter how crazy the claim, say Lawrence J. McQuillan, director of business and economic studies at the Pacific Research Institute, and Mark Kriss, executive director of New Yorkers for Lawsuit Reform.

According to the U.S. Tort Liability Index, New York has the second-highest annual tort losses of any state, the fourth-worst tort-litigation risks, and the third-worst tort system in the country.  Tort lawsuits cost the state's economy more than $16 billion in 2006.  In 2008, New York City alone spent more than half a billion dollars in tort payments.

The need for tort reform in New York is undeniable, say McQuillan and Kriss:

  • A good place to start would be to cap jury awards for impossible to quantify noneconomic damages for "mental distress" and "pain and suffering."
  • New York also needs structural reforms that target appeal bonds, class actions, labor law sections 240 and 241 regarding elevation-related accidents, and attorney/state contracts.
  • Other key reform areas include juries, e-discovery, product liability, design liability, asbestos, "venue shopping" (gaming the system by filing suit in a friendly jurisdiction), frivolous lawsuits, and evidence and witness standards.

Lawsuit reform would jump-start the state's economy and make it more competitive.  According to the Pacific Research Institute, if such reforms were put in place, New York would:

  • Create at least 86,000 new jobs.
  • Increase state output $17 billion annually.
  • Boost state tax revenues by more than $1 billion a year.
  • Raise the income of every New Yorker by more than $2,600 a year.
  • Attract new customers and entrepreneurs to the state.
  • Cut insurance premiums up to 16 percent per annum.

Source: Lawrence J. McQuillan and Mark Kriss, "To revive New York's economy, attack lawsuit abuse," New York Daily News, November 18, 2009.

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