The Partnership for New York City today released a report on the high cost of litigation in New York and the resulting impacts on consumers, businesses, government, and nonprofits, as well as the broader affordability crisis. Among the report’s findings is that expensive and excessive litigation is driving up the cost of insurance, including health insurance premiums, which are 12% higher in New York than the rest of the country, and auto coverage, which is 52% higher. New Yorkers pay insurance premiums that average 15% higher than the rest of the country.

The report attributes New York’s high insurance costs to several outdated laws and policies:

• New York Labor Law § 240(1) (the “Scaffold Law”), does not account for the strong worker protections and compensation benefits that have taken effect since its enactment in 1885. As a result, litigation risks associated with costly, lengthy Scaffold Law claims can add up to 7% in additional insurance costs for new construction.
  
  

• Medical malpractice payouts are significantly higher in New York than in other states, driving up the cost of medical malpractice insurance premiums. As a result of these higher medical costs, employer-sponsored single health insurance premiums in New York were 12% higher than the national average in 2023, impacting residents, businesses, and consumers. Medical malpractice payouts by New York City’s municipal health system have cost taxpayers $963 million in settlements and judgement payments over the past decade.
  
  

• Auto insurance premiums in New York can also be excessive, due to fraud and regulatory issues. The American Transit Insurance Company – New York City’s largest taxi and for-hire vehicle insurer – claims that 60 to 70% of the claims it processes each year are fraudulent. New York is also one of just 12 states with no-fault insurance, which accounted for 93% of health care fraud and 75% of all fraud reports received by the state’s insurance regulator in 2024.
  
  

• Small businesses in New York City, like restaurants and other retail businesses, face a litany of lawsuits with exorbitant five-, six-, and seven-figure demands. Public accommodation lawsuits under the federal Americans with Disabilities Act are so common that one individual has filed 113 lawsuits since 2018. New York is also a popular jurisdiction for class action lawsuits against food and consumer packaged goods companies, accounting for 33% of all filings nationwide in 2024.

Accompanying its findings, the report puts forth several policy recommendations to bring New York’s legal standards in line with national norms while maintaining appropriate safeguards, including:

• Bringing New York state’s labor laws in line with nationwide standards by replacing absolute liability for workplace injuries on property owners and contractors with the comparative negligence standard used across the rest of the United States
  
  

• Enacting legislation like Senate Bill S8413A to disincentivize staged accidents and insurance fraud
  
  

• Imposing a reasonable cap on non-economic damage awards in medical malpractice cases to reduce the cost of insurance coverage for hospitals
  
  

• Enacting legislation like Bill A6576/S5941B, passed by the Senate and Assembly with bipartisan support, to reduce the insurance coverage requirements for peer-to-peer car-sharing companies to provide more affordable alternatives to customers and increased income for car owners to offset their costs
  
  

• Introduce a “notice and cure” provision in accessibility cases to grant restaurants and other establishments notified of a purported accommodation violation a reasonable period to correct the problem to reduce lawsuits while still encouraging accessibility

“New York will never solve its affordability crisis without taking on the special interests that are directly and indirectly responsible for the high costs of litigation. These soaring costs are driving up insurance premiums and making amenities like housing, health care, and transportation more expensive for everyday New Yorkers. With thoughtful reforms that bring our laws in line with the rest of the country, New York can tackle the affordability issue, maintain fairness and safety, and take a huge step toward building a more livable and more prosperous city,” said Kathryn Wylde, president and CEO of the Partnership for New York City.

To read the report in full, visit pfnyc.org/research.

About the Partnership for New York City

The Partnership for New York City represents the city’s business leaders and largest employers. We work with government, labor, and the nonprofit sector to promote economic growth and maintain the city’s prominence as a global center of economic opportunity, upward mobility, and innovation. The Partnership Fund for New York City is the Partnership’s investment arm. The Fund invests in entrepreneurs and innovators in the for-profit and nonprofit sectors who contribute to building a more vibrant and inclusive New York City economy. Visit pfnyc.org to learn more.