The Office of the Comptroller recently released its Annual Claims Report for Fiscal Year (FY) 2022, spanning from July 1, 2021, to June 30, 2022. As per the New York City Charter Section 93(i), the duty of resolving city-related claims rests with the Comptroller. This report scrutinizes the claims made by and against New York City and provides an overview of claim trends across different city agencies.
During FY 2022, there was a resolution of 12,188 claims and lawsuits against New York City, totaling $1.5 billion, marking the highest payout in the city’s history. Over the past decade, the city has been spending approximately $1 billion annually to settle various types of claims. The unprecedented surge in FY 2022 primarily resulted from the $366.8 million judgment paid out for the long-standing Gulino class action lawsuit lodged against the Department of Education (DOE) in 1996. The lawsuit revolved around state-mandated teacher certification exams that were found discriminatory against Black and Latino teachers. According to an agreed schedule with plaintiffs, Gulino payments will be carried forward over the coming five years.
Claims related to personal injury and property damage (referred to as “tort claims”) cost the city $688.4 million, a significant leap from the previous year’s expenditure of $583.0 million, marking an 18 percent rise. The five most expensive claim settlements in FY 2022 encompassed civil rights, motor vehicle accidents, police actions, school incidents, and medical malpractice claims. Collectively, these five types of claims accounted for $482.7 million, making up 71 percent of all personal injury claim settlements in FY 2022.
The top eleven individual tort claim settlements consisted of seven wrongful convictions, two medical malpractice claims, one assault case at Rikers Island, and an incident related to a science experiment at a public school. In FY 2022, the city resolved 16 wrongful conviction cases, setting a new record for a single year, with a total payout of $86.8M. The city also disbursed $818.5 million for settlements and judgments on non-tort claims in FY 2022, such as contract claims, equitable claims, refund claims, salary claims, and special education claims (collectively termed as “law claims”). This represents a 117 percent increase from the $377.0 million disbursed in FY 2021. Of these, 53 percent were salary claims. Including the Gulino judgments, salary claim payouts saw a drastic increase of $419.5 million, or 2,326 percent. If we discount Gulino’s judgments, the increase in salary claim payouts was $52.7 million, or 293 percent. This rise can be largely attributed to claims that alleged violations of the Fair Labor Standards Act make up 97 percent of the non-Gulino salary claim payments.
This Claims Report also underscores the Comptroller’s office’s continued dedication to settling viable city-related claims before they escalate to litigation, a measure that saves both the city and claimants high litigation costs. For instance, the Bureau of Law & Adjustment managed to settle six pre-litigation wrongful conviction claims, which involved a total of 86 years of unjust imprisonment, for a sum of $25 million. In FY 2022, the Bureau was instrumental in resolving 43 percent of all tort claim settlements. However, these pre-litigation settlements only accounted for 9 percent of all tort settlement payouts in FY 2022. Swift resolution of claims, hence avoiding protracted litigation, offers prompt relief to claimants and safeguards the city’s legal resources. This allows the Law Department to divert resources to handle more complex lawsuits, while the judiciary benefits from fewer city-related lawsuits to adjudicate.
City agencies will use this report as a tool for risk management, with the aim of reducing the annual number of claims filed, thereby limiting future harm and the city’s financial liabilities. Earlier this year, the Comptroller’s office published “Wreckless Spending,” a report detailing the settlement of traffic crash-related claims against the city, which have cost the city a staggering $653.0 million over the past decade. The report offers suggestions for city agencies to implement measures to reduce future traffic accidents.
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