A group advocating for limitations on lawsuits has recognized New York Governor Kathy Hochul as a "Tort Reform Trailblazer" for her role in passing a new state law designed to address costly accident litigation and auto insurance fraud. The American Tort Reform Association (ATRA) commended Hochul for securing a package of auto liability and anti-fraud reforms as part of the state budget, approved on May 27. According to ATRA, this move addressed issues that lawmakers had resisted for years.
New Yorkers face average annual car insurance costs exceeding $4,000, which is $1,500 above the national average, according to the governor's office, which aims to reduce insurance premiums by 10% through these reforms. The legislation faced initial resistance from trial lawyers and some Democratic lawmakers who were hesitant to curb lawsuits related to fraud, negligent driving, and excessive insurance payouts.
The new law imposes caps on damages for individuals primarily at fault in causing a crash who seek to sue their victims for substantial compensation. Payouts are limited to $100,000 for those driving uninsured, under the influence of alcohol, or while committing a felony, regardless of fault. Furthermore, the threshold for what constitutes a serious injury has been made more restrictive, meaning damages for pain and suffering or emotional distress will be awarded only to victims who can demonstrate a severe injury.
On the anti-fraud front, the law criminalizes the act of hiring, recruiting, or orchestrating individuals to stage car accidents. It also prohibits medical providers with a history of misconduct from treating workers' compensation patients or conducting independent medical examinations. Lauren Sheets Jarrell, ATRA's vice president and counsel for civil justice policy, stated that these reforms target New York's "fraudemic," asserting that the law provides prosecutors and insurers with tools to pursue those involved in staged accidents and inflated claims, not just drivers.
Tom Stebbins, executive director of the Lawsuit Reform Alliance of New York, noted that Hochul's efforts to push back against powerful special interests and enact liability reforms demonstrate "true leadership" and an "affordability agenda." Despite these advancements, Stebbins and Sheets Jarrell described New York as remaining a "judicial hellhole," urging the legislature to modernize outdated, lawsuit-friendly laws to improve affordability for working families.
The law also introduces increased oversight for insurance companies, subjecting their rate-setting practices to tougher scrutiny to prevent excessive profits. Governor Hochul is currently seeking re-election for a second four-year term. She is running against Republican Bruce Blakeman.