Report: New York City is nation's second worst 'Judicial Hellhole'

(The Center Square) — New York City has moved up several spots in a dubious annual ranking of the nation's top "judicial hellholes," according to a new report, which says the city was hit by a "fraudemic" of bogus lawsuits this year.

The American Tort Reform Foundation ranked the Big Apple second on its annual list, citing lawsuit abuse under the Americans with Disabilities Act, rampant abuse in RICO filings, "nuclear" verdicts, abusive food and beverage litigation, and the state’s outdated scaffold law. That's up from fourth place just one year ago.

"Lawsuit abuse is driving up the cost of goods and services and driving employees and insurance companies out of the state," the report's authors wrote. "Unique New York laws like the Scaffold Law and the state's consumer protection act are ripe for abuse and plaintiffs' lawyers have seized the opportunity to cash in, leaving New York small businesses and unknowing residents left to pick up the pieces."

In 2024, New York City was hit by a "fraudemic" of claims under its Scaffold Law that were highlighted by several RICO [Racketeer Influenced and Corrupt Organizations Act] cases, including one that involved a group of 46 individuals and businesses, some with ties to organized crime, whom prosecutors allege systematically exploited the New York State Workers’ Compensation system and state labor laws.

The Big Apple's automobile insurance market was also "overwhelmed" by a surge of fraudulent claims last year, "with dire consequences for both insurers and consumers," the report authors noted.

Likewise, law firms are spending millions in ads to recruit more clients, according to the report. In 2024, spending on nearly 526,000 local legal services TV ads across New York state media markets exceeded $55 million, with much of the spending concentrated in New York City, the report noted. Law firms have also spent millions of dollars on campaign contributions to maintain the status quo, the report's authors noted.

Overall, the report's authors estimated the economic impact of excessive tort costs on New York City at $2,318 per person, every year, with an estimated $29.1 billion a year in "lost" impersonal income, citing a recent report by the Perryman Group. That report estimated that at least 418,355 jobs are lost yearly because of lawsuit abuse.

Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York, said widespread lawsuit fraud "is an economic and social crisis that costs jobs, drives up prices, and exploits vulnerable communities."

"Lawmakers must step up by passing stricter laws to punish staged car and construction site accidents and by increasing transparency around third-party funding of lawsuits," he said in a statement. "Local prosecutors, the Attorney General, and the DOJ needs to break up these fraud rings and punish the shady lawyers, medical providers, and lawsuit lenders that are making our roads more dangerous and mutilating migrants for profit."

"These measures are critical to protecting hard working citizens, our economy, and restoring balance to our justice system," Stebbins added.