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New York City's legal claim costs projected to keep rising

New York City's legal claim costs projected to keep rising

New York City will spend $675 million to settle legal claims this fiscal year and is projected to spend $782 million by fiscal 2018, according to an analysis released by New York City Comptroller Scott Stringer on Wednesday.

Twenty years ago, the city paid $246 million in judgments and claims costs related to tort claims. Today, that figure is up 146%, or about $80 per resident, the comptroller says.

A majority of claims settled by the city originate from the New York Police Department, which racked up 9,500 claims and $137.2 million in settlement costs in fiscal 2013 alone.

Most of those claims originated from precincts in Central Brooklyn and the South Bronx. But high crime did not appear to be a factor: The comptroller found that precincts with comparable crime rates in the Bronx and Lower Manhattan had a wide gap in the number of injury claims against the NYPD, with more claims reported in the Bronx than Manhattan.

Mr. Stringer said there was no direct correlation between the number of claims against the NYPD and the rise in stop-and-frisk during the Bloomberg years.

"Maybe its stop-and-frisk, maybe it's something else," he said. "There's so many factors."

Critics claimed that new rules passed by the New York City Council to allow people to seek civil damages for stop-and-frisk incidents would result in an increase in claims filed against the NYPD. Any such trend would not yet be reflected in the data.

Phil Walzak, the mayor's chief spokesman, reacted to the comptroller's report by citing a number of efforts being undertaken by the city to curb claim costs.

"The mayor looks forward to reviewing this proposal more closely in the coming days, and welcomes all ideas to make the city more effective and better able to serve its citizens," Mr. Walzak said. "That's why the city already takes a number of steps to drive down city costs related to claims, including recently launching a new NYPD unit focused specifically on this issue. In fact, the city's judgment and claim tort payouts have remained flat over the last 12 years — the result of continued effective risk management strategies like early settlement in meritorious cases, and aggressive litigation strategy when circumstances warrant."

Other agencies examined by the comptroller's office include the Health and Hospital Corp. and the departments of Parks and Recreation, Sanitation and Environmental Protection. Claims against other city agencies will be included in subsequent reports, which Mr. Stringer says will be released by his office quarterly.

The analysis is part of the semiannual report by the comptroller's office examining thousands of claims filed against the city each year. But Mr. Stringer says his report, dubbed ClaimStat, "drills deeper" and uses data more comprehensively than reports by previous comptrollers.

"The goal is to give agencies the information they need to cut down on claims and lawsuits before they happen," he told Crain's. "That is new territory for a comptroller's office."

As such, ClaimStat includes several interactive maps that allows users to track, for example, where fallen trees have resulted in injury claims against the Parks Department, or where heavy flooding has resulted in claims filed against the Department of Environmental Protection.

"It's the CompStat for claims," Mr. Stringer said, referring to the ballyhooed crime-tracking system used by the NYPD.

Some agencies, like the Health and Hospitals Corp., have excelled at reducing the number of claims filed against them, while others have struggled, Mr. Stringer said. Payments from lawsuits and claims filed against the NYPD rose nearly 31% between fiscal 2008 and 2013 to $137.2 million, while payments of claims against the Parks Department soared 143% over the same period.

The amount of money allocated by the city to tree pruning appears to directly correlate to the number of claims filed against the Parks Department. In FY 2010, the city sharply reduced the budget for tree pruning. Following that cut, the number of tree-related claims soared, including one settlement for $11.5 million that was nearly double the city's pruning budget. After the City Council's restoration of tree-pruning funding in FY 2013, claims dropped sharply.

In 2012, The New York Times ran a three-part series on legal claims against the city resulting from fallen tree limbs.

The public hospitals system, though, has "embraced proactive-risk and litigation-management reforms," said Mr. Stringer, citing a specialized legal team within the agency that analyzes malpractice cases to understand and respond to events that resulted in the lawsuits. However, some hospitals have had great success in implementing these reforms, while others continue to rack up legal claims.

In fiscal 2013, Woodhull Hospital in Brooklyn had more medical malpractice claims filed against it than in any previous year since 2009, and Kings County Hospital had the highest number of new medical malpractice claims filed than in any year since 2010.

The city's recent approval of a record $40 million settlement with the five men wrongfully convicted in the Central Park jogger case, which was approved by Mr. Stringer, are expected to drive up claim payments by the city in subsequent fiscal years, as it established $1 million per year of wrongful imprisonment as the new standard. But the comptroller said confidentiality agreements bar him from commenting on the case.

Andrew J. Hawkins writes for Crain's New York Business, a sister publication of Business Insurance.

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