By Hank Russell
As New York continues to face an affordability crisis and an ongoing exodus of businesses and residents, a new report recently released by the Empire Center for Public Policy finds that modernizing the state’s liability laws could help lower costs and strengthen New York’s ability to compete with states like Texas and Florida for business creation, workers, and investment.
The report, titled New York at the Crossroads: Will It Modernize Liability Law or Expand It?, finds that New York’s legal climate exposes residents and businesses to greater liability than most other states and outlines a roadmap for bringing the Empire State more in line with the national mainstream.
The think tank’s report found that the current system contributes to higher insurance premiums, makes healthcare more expensive, drives up the cost of housing and infrastructure projects, and increases the price of everyday goods and services. Here is what they found when it comes to frivolous lawsuits:
- New York, unlike most states, doesn’t place caps on punitive damage awards. In fact, New York has among the most nuclear verdicts — that is, verdicts of $10 million or more — in personal injury and wrongful death cases in the country. Most of these cases involve premises liability, medical liability and auto crashes.
- Meanwhile, victims of a frivolous personal injury lawsuit can recover no more than $10,000 in damages. That level has remained unchanged in the past 40 years.
- The Empire State hosts among the most class action lawsuits, resulting in New York families paying more than $7,000 per household — the second-highest in the nation and 67% higher than the national average ($4,207).
“New Yorkers pay a steep price for the state’s costly liability environment,” said Zilvinas Silenas, President and CEO of the Empire Center for Public Policy. “As this report shows, expansive liability laws act as a hidden tax on businesses and every household in the state. If Albany is serious about improving affordability, strengthening the economy, and keeping the state competitive, liability reform must remain part of the conversation.”
What has also driven up the cost of living and doing business in New York is the Scaffold Law, which, the Empire Center said, imposes “absolute liability” on contractors and property owners who can be held liable for a worker’s injuries, even if the worker was at fault. New York is the only state to have this law on the books and it has been nearly 150 years. But since then, “courts have vastly expanded this liability,” the report stated.
“Juries cannot consider a worker’s carelessness or recklessness, which courts consider irrelevant,” the report stated. “Even a worker’s impaired condition because of drug or alcohol use at work is not a factor in liability.”
The think tank cited a study showing that, from 1990 to 2012, Scaffold Law cases shot up 500% while the overall rate of injury decreased. Further, a Scaffold Law claim can settle for over $1 million, Willis Towers Watson; if a back or neck surgery was alleged, the settlement can reach $2-$3 million. The report showed that, between 2018 and 2023, the settlement value doubled.
This has resulted in higher insurance costs for construction projects. According to the Empire Center, construction projects in New York take up 8% to 10 of costs, while in New Jersey, Massachusetts and Illinois, the rate is just 2% to 4%.
“The reforms advanced by Gov. Hochul were an important first step toward restoring balance to New York’s civil justice system and lowering costs for New Yorkers,” said Cary Silverman, the report’s author and partner in Shook, Hardy & Bacon LLP’s Public Policy Group. “But this year’s reforms addressed only part of the problem. Policymakers should seize the opportunity to bring New York’s liability laws more in line with the rest of the country. Doing so would reduce lawsuit abuse, discourage fraud, and make life more affordable — ensuring that the Empire State remains an attractive place to build a business, create jobs, and raise a family.”
Another reason why insurance costs are skyrocketing, the Empire Center said, is the number of staged auto crashes. Last year, the Department of Financial Services recorded 43,811 incidents of auto insurance fraud; that is up an astonishing 80% from 2020. Further, there were at least 1,729 crashes that were staged — the second-highest in the nation.
This year, as part of the 2026-2027 state budget, Governor Kathy Hochul included a bill that cracks down on auto insurance fraud by allowing prosecutors to seek criminal penalties against those involved in staging the crash, not just the driver.
Because of frivolous litigation, New York has not only become a more expensive place to live and work, but less competitive, the report stated. Since the start of the decade, New York’s population went down 3%, the largest decline in the nation, as the U.S. population grew 2.6%. New York City alone has lost 5,000 jobs since last spring. “Unless there is a course correction, businesses facing a scarcity of labor and high costs may shift their operations to other states,” the report said.
The report identifies five major opportunities to modernize New York’s liability laws, reduce costs, and improve the state’s competitiveness:
- Expand modified comparative fault. Build on reforms enacted this year by applying modified comparative fault beyond motor vehicle cases, preventing plaintiffs who are primarily responsible for their own injuries from recovering damages
- Align liability with responsibility. Reform New York’s joint and several liability rules so defendants are responsible for damages proportionate to their actual level of fault.
- Fix the New York-only Scaffold Law. End New York’s unique system of absolute liability by allowing juries to consider the actions of all parties involved in construction accidents.
- Further address predatory lawsuit loans and dark money litigation financing. Expand consumer protections, regulate commercial litigation funding, and require disclosure of outside litigation funding arrangements.
- Index judgment interest rates to the market. Replace New York’s outdated fixed nine percent judgment interest rate with a market-based rate consistent with most other states.
While recognizing the reforms enacted through this year’s budget process, the report urges lawmakers to reject proposals that would create new private rights of action, broadly expand subjective damages, further encourage consumer class action litigation, or expand New York courts’ jurisdiction over out-of-state businesses.
Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York, reiterated Silverman’s sentiments. “The Empire State is well known as the lawsuit capital of the world and every New Yorker pays the price for our laws that incentivize profiteering and fraudulent claims. Gov. Hochul made liability reform a priority this year. Albany should finish the job by building on those reforms and making New York more affordable.”