July 17, 2006
New report finds New York has one of nation's worst liability climates
New York's liability climate is among the worst in the nation, and could be damaging the state's already fragile economy, a new report by the Pacific Research Institute has found.
The study, the U.S. Tort Liability Index: 2006 Report, ranked states on 39 variables in five groups including monetary tort losses, threats, monetary caps, and substantive-law rules.
New York consistently ranked near the bottom in all five categories.
Among the worst rated characteristics of New York’s legal system were the numbers of resident and active attorneys per dollar of Gross State Production in 2005. New York had the highest number of attorneys per dollar of output in 2005.
New York’s ranking is not surprising given the absence of a state cap on payouts for medical malpractice, punitive damages, and noneconomic damages such as pain and suffering, the report's co-author, Hovannes Abramyan told the New York Sun.
But continuing to tolerate the state’s lawyer-and-lawsuit friendly environment could damage the state’s economy, the report said. Enacting reforms, such as caps on nonecomic damages, could help the state’s economy.
“It is interesting to note that four of the states in the top 10—Colorado, Kansas, Utah, and Virginia—are also in the top 10 in the 2004 U.S. Economic Freedom Index, which ranks the states according to how friendly, or unfriendly, their state policies are toward free enterprise and consumer choice,” the report said. “Five states are in the bottom 10 of both indexes—Connecticut, Massachusetts, New York, Pennsylvania, and Rhode Island. [. . .] In other words, a better tort climate in a state is a solid predictor of more economic freedom in the state—the two go hand in hand.”
“A poor civil-justice system lowers the standard of living for ordinary citizens,” said co-author Hovannes Abramyan, a PRI public policy fellow. “By limiting job and business opportunities, imposing excessive costs on consumers, and inhibiting innovation in products and services, the many are suffering for the few who gain from unnecessary civil lawsuits,” he said.