The latest “Judicial Hellhole” report released by the American Tort Reform Foundation (ATRF) pointed out that New York ranks second in the nation for having the “worst judicial environment,” only behind Los Angeles, which holds the top spot. The report directly addresses the widespread issues of lawsuit abuse and fraud in New York, which have a long-term negative impact on the business environment, insurance costs, and taxpayers.
The report highlights a serious “fraudemic” in the New York court system, involving tactics such as staged accidents, false construction injuries, medical insurance fraud, and “intentional car crashes.” Investigations reveal that some lawyers, doctors, and medical clinics are suspected of exploiting New York’s no-fault insurance system for profit, even arranging unnecessary surgeries to support false claims.
According to data from the New York State Department of Financial Services, the number of suspected no-fault fraud and healthcare fraud reports in 2024 nearly doubled compared to 2020, reaching around 39,000 and 42,000 cases, respectively. As a result, intentionally staged traffic accidents have driven insurance premiums in New York to alarming levels, with personal injury protection (PIP) insurance fees in New York being over 200% higher than in New Jersey and over 500% higher than in Massachusetts. In 2024, the New York City government paid out $2 billion for litigation and settlements.
New York is a hotspot for fraudulent “slip and fall” cases in the United States, ranging from false claims made by individuals against small businesses to more organized criminal schemes, resulting in significant losses for both citizens and businesses. In January of this year, a man in the Bronx intentionally spilled liquid in a supermarket and faked a fall in an attempt to claim compensation. The plot was exposed through surveillance footage, preventing a spike in the store’s insurance fees, and the man’s lawyer terminated the contract upon the evidence being revealed. However, such cases that are successfully uncovered are rare, with many fraudulent claims slipping through the cracks, ultimately leading to honest businesses and consumers bearing the consequences of rising costs.
Litigation abuse also affects small and medium-sized enterprises, including ADA accessibility lawsuits and asbestos lawsuits. In 2024, New York recorded a total of 2,220 ADA Title III lawsuits, ranking second in the nation. The legal requirement for physical public places (including online platforms) to be accessible to blind individuals, if not compliant with web content accessibility guidelines (WCAG) and other accessibility standards, can result in lawsuits when blind individuals cannot navigate websites smoothly.
According to a mid-year report released by the data management and risk analysis company KCIC, asbestos lawsuits in New York City continue to rise, with data up to July 31 showing a significant 23.5% increase. In 2024, there were 317 asbestos lawsuits in New York City, a 3.3% increase from the previous year, making it the third-largest jurisdiction in the United States. Some cases with astronomical judgments have garnered attention, such as in May of this year when an asbestos-induced cancer patient and their spouse were awarded a record $117 million, with $78 million allocated for compensating pain and suffering, and $39 million for spousal losses, making it the highest individual asbestos compensation case in the state’s history.
Additionally, the ATRF criticizes the New York state legislature for “pouring gasoline on the fire,” failing to address the issue of frivolous lawsuits. Instead, they are pushing for legislation to expand wrongful death liability and loosen the thresholds for class action lawsuits, which are said to further worsen the situation.
According to the rankings in the national “Judicial Hellhole” list, Los Angeles holds the top spot due to frequent billion-dollar “nuclear verdicts,” new liability theories, and attacks on the arbitration system, while New York closely follows with “fraud issues” and high litigation costs.
Many business and public policy researchers are warning that overzealous litigation is forcing investments and businesses to flee, exacerbating pressure on consumer goods and insurance price hikes. A report from the New York Public Policy Institute states, “New York’s highly litigious environment is limiting business growth and capital investment.” The detailed ATRF report can be found at: https://tinyurl.com/2sn3au4p