Ambulance Chasers Fiddle While New York Burns
Even before the chaos of 2020, New York was buckling under both the nation’s highest taxes and highest litigation costs per household. Unsurprisingly, these twin burdens have led to the nation’s single-greatest taxpayer exodus, a brain-and-wallet-drain that makes the Empire State weaker, less competitive, and less fiscally sound.
Toss in the pandemic, and it’s no wonder that New York’s basic public services and municipal agencies are struggling.
While all of this is going on, what have the state’s personal injury attorneys been up to?
Business as usual. They’re plundering away.
Over the past two years, New York’s courts have been rocked by some of the highest “runaway” verdicts in personal injury actions in their history. The chief culprit in these sky-high, “nuclear” verdicts is outsized pain and suffering awards.
Unmitigated jury awards produce massive and unpredictable payouts that, in turn, require companies and public entities like the Transit Authority to secure pricey, high-limit insurance. The costs of insurance is then passed on to the general public in the form of higher prices, higher taxes, and fee hikes.
The same out-of-control cycle confronted then-Governor Mario Cuomo in the 1980s. During New York’s last bout with a series of nuclear verdicts, he assembled the Jones Commission to examine the crisis and propose a solution.
The Jones Commission recommended, among other proposals, to cap pain and suffering awards at $300,000. The Legislature, which has long-been swayed by the powerful lobbying wing of the trial lawyers, rejected this recommendation and instead enacted a law known as CPLR 5501(c) to allow judges to review and control damages awards. In practice, judges have used CPLR 5501(c) to impose a de facto cap of $10 million as reasonable compensation for pain and suffering – but this practice is in constant jeopardy.
While many states, including progressive California, adopted strong reforms, New York’s trial lawyer-friendly approach was tepid at best.
The trial lawyers lobby won the 1980s showdown, securing a fragile legal standard over the proposed $300,000 cap. The plaintiffs’ bar won, and New Yorkers lost.
But the present wave of nuclear verdicts shows that this was not enough to satiate the trial bar. Instead, plaintiffs’ lawyers are applying pressure like never before. Their chief weapon is a practice called “anchoring.” As the name suggests, anchoring places a metaphorical weight on the award. In each of five recent nuclear verdicts, the plaintiff’s counsel represented to jurors that reasonable compensation is far above the fragile, de facto $10 million cap.
Expectations “anchored”, juries responded as intended, awarding up to $90 million for pain and suffering alone. If sustained, these outrageous verdicts will do far more than explode the value of the very worst cases.
The cost of doing business and living in New York is sure to increase. Plaintiffs’ attorneys’ efforts to increase verdict awards beyond reasonable compensation is irresponsible in the best of times. Aggressively pursuing rapacious awards while New York businesses and citizens are struggling with the economic devastation of the Covid-19 pandemic is appalling.
These jury awards do not just threaten to trigger a re-run of the 1980s crisis. By raising the price on all future cases, in turn, raising the cost of insurance premiums, and these nuclear verdicts will raise the cost of all goods and services in New York. They also threaten to clog up an already byzantine and backlogged court system with defective, illegitimate verdicts, which force additional litigation and seemingly endless appeals.
These nuclear verdicts are dangerous – just as irrationality is dangerous in the financial markets. Like market participants, litigants must act on perceived value, and perceived risk. The plaintiffs’ bar uses gargantuan verdicts – even when they are not sustained – as a marketing tool, publicizing verdicts and creating an often-unrealistic assessment of value in its own clientele. We do not allow this practice for financial advisors – past performance not indicative of future results – but personal injury lawyers tout these awards with impunity. This creates irrational expectations – injured persons do not and cannot be expected to monitor real jury awards – which then impede settlement and, ironically, delays recovery by those who actually need and deserve it.
The plaintiffs’ bar has adopted a clear and persistent talking-point during settlement negotiations in the higher courts. They argue that the CPLR 5501(c) $10 million de facto cap is de facto kaput. The logic is that the appellate courts have been effectively stacked with trial lawyer-friendly judges as a side-effect of long Democratic control of the governor’s mansion. This talking point has yet to bear out in reality, but trends suggest that it is a question of when, not if. This is especially true now, as New York’s court administration has taken the budget crisis presented by the pandemic as an opportunity to execute a purge the ranks of the state court system of older judges, leaving it leaner, younger, and much more progressive.
In short, New York’s business community and its citizenry as a whole cannot count much longer on the judiciary to hold back the deluge of nuclear verdicts which threaten to drain already struggling municipal budgets and increase the cost of goods for all. Sooner or later, the legislature must fight back against the trial lawyers’ agenda and enact real civil justice reform to put an end to abusive, verdict-inflating tactics like anchoring.
Hopefully, lawmakers will act before the litigation industry compounds the coronavirus crisis with one of their own making.
These lawyers are choosing to misrepresent reasonable compensation, as defined by the Courts, with their unreasonable requests and anchors. And they do it under the guise of compassion and emotion, for the good of their sympathetic clients, and to maximize their clients’ financial recovery. These attorneys’ personal financial gain is, of course, not at the heart of the issue. Pay no attention to the folks with the golden fiddles while the rest of New York burns.
Tom Stebbins is executive director at the Lawsuit Reform Alliance of New York.
