New York City plans to spend $735 million this year on settlements or awards in lawsuits claiming negligence, police abuse and property damage, the most in its history.
The cost of claims is forecast to rise to $815 million by 2016, more than the city pays to run the Parks and Recreation Department, according to budget documents.
Among the incidents triggering payments are malpractice in public hospitals, police beatings, improper arrests, collisions with fire trucks and potholes causing accidents.
The increase in litigation payouts may put pressure on Mayor Michael Bloomberg as he weighs job and service cuts to close a $3.5 billion deficit in a $72 billion budget next year.
"It's a huge problem for the city and trial lawyers will say it’s only justice," said E.J. McMahon, a research fellow for the Manhattan Institute’s Empire Center for New York State Policy. "But it’s also a matter of some people considering a case before a New York jury the same as winning the lottery."
The Manhattan Institute calls for changes to contingency fees for plaintiffs’ lawyers and advocates a so-called loser pays system for legal costs.
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One reason New York’s legal payouts are rising, according to the city's Law Department, is that unlike California, Illinois and Pennsylvania, the state has no laws that cap damages or limit liability in suits against municipal governments.
Deputy Police Commissioner Paul Browne, the department’s chief spokesman, countered that the Law Department is too quick to settle cases and that some lawyers manipulate the system.
"It's a cottage industry, suing the department," Browne said.