N.Y. City Continues to Pay More Each Year to Settle Claims

June 14, 2006

The cost to New York City of settling legal claims against the city has more than doubled since 1995 and to reach more than $575 million in 2005.

Ten years ago, the city paid out $265 million on claims, according to the New York City Independent Budget Office.

The claims settled include personal injury, property damage, civil rights and other complaints against the city.

The $575 million cost in 2005 was more than two-and-a-half times the amount the city spent on the Department of Parks and Recreation during that same fiscal year.

Personal injury claims against the city account for the vast majority—about 90 percent—of the city’s expenses for judgment and claims. In 2004 the city paid a total of $536.8 million to settle personal injury claims.

In 1995, four categories of personal injury claims accounted for 65 percent of total expenditures and in 2004, these same categories accounted for 60 percent— medical malpractice (30 percent), sidewalk trips and falls (12 percent), motor vehicle accidents (11 percent), and police actions (7 percent).

The IBO says it expects the payout for settlements to grow even bigger. From 1995 through 2004, the cost of settling these lawsuits grew at an average rate of nine percent annually, nearly twice the rate of all other city spending, the agency reports. The Mayor’s most recent budget projections anticipate that the cost of resolving legal claims against the city will rise to nearly $800 million by 2010—a rise in spending that continues to exceed the growth rate for most other city programs.

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