Damage Awards Against City Fell in 2010, Comptroller Says

For the first time in 30 years, awards for claims against the Police Department surpassed those generated by city's hospitals.

New York City paid out $520.6 million in settlements and judgments of personal injury and property damages claims in fiscal year 2010, down 7 percent from $559.9 million in 2009, according to a report released Wednesday by Comptroller John C. Liu.

Read the report.

For the first time in 30 years, awards for claims against the Police Department surpassed those generated by city's hospitals, which usually involve medical malpractice claims.


The vast majority of the money the city paid in tort settlements-98 percent in 2009 and 99 percent in 2010-goes to personal injury claims. Personal injury claims "include, but are not limited to, medical malpractice, civil rights, motor vehicle accidents, police actions, uniform services, schools and defective sidewalk," the report said. Claims against the police department, HHC and the Department of Transportation account for most of the tort payouts, about 67 percent, according to the report.

Awards in actions against the police increased to $135.8 million from $135.2 million. But the amount paid by the city for Health and Hospitals Corp. claims declined to $134.4 from $134.9 million. Those numbers represent a sharp decrease from the 10-year high of $193 million, which it reached in 2003. Mr. Liu credited HHC's success in keeping down awards to risk and litigation management initiatives that he said could be adopted for other city agencies.

HHC spokesman Ana Merengo said that the agency's cost-controlling measures included "aggressive investigations, a focus on risk management reviews, court-assisted mediation and using claims information to inform our patient safety efforts."

The agency contracts with a third party administrator to conduct investigations into any new claim, and encourages the risk management teams at its hospitals to look at claims filed in determining how to reduce risks, according to HHC counsel Suzanne Bundi.

Still, medical malpractice claims continue to represent a larger portion of total payouts than any other kind of claim, even though they account for a small portion of claims filed-about 3 percent in 2010-because individual payments are very high. Among the large payouts of the last two years are a $5.7 million settlement to a woman who suffered brain damage after improper treatment of post-childbirth complications; $4.9 million to a claimant who suffered cardiac arrest after gastric bypass surgery; and $4.9 million for a claimant who went blind due to improper treatment of diabetes.

The cost of civil rights claims increased 67 percent to $78.8 million, largely due to a $33 million settlement in December 2009 of a class action over strip search procedures in correctional facilities, according to the report. This made civil rights claims the second-costliest kind of claim filed against the city after medical malpractice.

Motor vehicle accident claims, which cost the city $65.1 million in 2010, and police action claims, which cost $56.4 million, were the third and fourth costliest in that year. The rest of the money paid out on behalf of the police department went toward claims not directly targeting police actions, like civil rights claims and motor vehicle claims involving police vehicles.

Deputy Police Commissioner Paul J. Browne said in a statement, "More often than not nuisance suits are settled as matter of economic efficiency, not police culpability." He added that Commissioner Raymond Kelly formed a "lessons learned" panel two years ago, to examine settlements and verdicts against the department.

Non-tort settlements jumped to $165.1 million from $94.5 million. These settlements are paid from individual agency's budgets, rather than from city funds set aside for legal claims, and are not counted in the report's total. According to the report, the increase is largely due to tuition reimbursement claims to parents who must send their children to private schools to receive special educational services not offered in public school. A Department of Education representative could not be reached to comment on the sharp increase. Other non-tort lawsuits include salary disputes with city workers and contractors.

Downward Trend

Despite the increases in some areas the latest report reflects a long-term downward trend. Claims payouts by the city have dropped 12 percent since 2001, according to the Corporation Counsel's Office.

"These numbers are proof that risk management strategies we have employed over the years are making a difference," said Corporation Counsel spokeswoman Connie Pankratz. "This includes settling non-frivolous cases early, but tort reform has also been an important component."

Ms. Pankratz cited a 2003 law, drafted by the corporation counsel, that shifted liability for defective sidwalks from the city to adjacent private property owners, saying it has saved the city "tens of millions" of dollars. The city paid $34 million for sidewalk claims in 2010, compared with more than $70 million in 2001.

Ms. Pankratz said the office would continue to push for legislative reforms to further reduce costs, including a law that would end "double-dipping"-awarding injured city employees both disability benefits and tort recovery.

Mr. Liu also noted a number of cost savings he said his office achieved in the last two years, including savings of $17.2 million in 2009 and $18.2 million in 2010 by settling claims early; and $1.3 million collected by the city from companies that damaged city property. He said he would continue to try to bring costs down.

"City agencies generally work hard to serve our residents, but we need to collectively minimize and prevent costly settlements that continue to hover at a half-billion dollars annually." Mr. Liu said in a press release accompanying the report. "My office will continue to work with Corporation Counsel to reduce the overall cost of litigation and settlements while being fair to people who have been harmed."

Despite the downward trend, forecasters in both the mayor's and comptroller's offices foresee an uptick in fiscal year 2012, without tying the increase to a specific event. Mayor Michael Bloomberg has set aside $655 million for settling tort claims for the 2012 fiscal year, which begins on July 1. The comptroller's office said in the report that it believed the figure overestimated the amount the city would actually need by about $50 million.

The forecast partly reflects an increase in personal injury filings during 2010, which the comptroller's report attributed largely to people alleging injury from working at the World Trade Center site.

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