Legal Claims Add to New York City's Budget Woes

Spiraling settlement costs add to New York City’s budget woes

The Big Apple expects to pay record legal claims this year, probably led by cases of alleged medical malpractice and police abuseApples: Getty Images(2)

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By Henry Goldman

September 13, 2012 at 10:12 PM UTC

This article is for subscribers only.

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This article is part of the September 17, 2012 issue of businessweek.

If you walk into a Manhattan bodega and buy a ticket, your odds of winning the Mega Millions jackpot are 1 in 175,711,536, according to the New York Lottery. If on your way home the New York Police Department violates your civil rights, your chances of a payday get much better.

New York City plans to spend a record $735 million on settlements or court awards in thousands of the personal injury, property damage, and contract dispute lawsuits it’s facing in the fiscal year ending next June. The state has no cap on municipal liability or civil damages, and the legal tab continues to rise even as Mayor Michael Bloomberg weighs job and service cuts to plug a $3.5 billion hole in next year’s $72 billion budget. The mayor (the founder of Bloomberg LP, owner of Bloomberg Businessweek) called on state and federal lawmakers to “reform tort law” at a Sept. 4 news briefing. “A lot of times we just make a business decision to settle, rather than run the risk of a much greater tort judgment against us,” he said.