City hit with added fees after being slow to pay settlements – lawyers
New York City has 90 days to pay up whenever it reaches a settlement in a civil lawsuit — but several lawyers tell the Daily News that they’ve been waiting twice that long to get their clients’ money.
It often takes six to seven months — and sometimes even longer — for the city to cut a settlement check, leaving attorneys with angry, suspicious clients demanding to know where their cash is.
Taxpayers are also on the hook for interest payments that go to lawyers and their clients when the payments are late.
“You’re supposed to get paid in 90 days, you can’t even get a human on the phone anymore,” said civil rights attorney Scott Rynecki. “So instead of the city paying me what they owe me, I’m gonna make them pay me in the judgment amount or they’re gonna have to bring an action.”
Here’s how state law says it’s supposed to work:
Once the city gets the closing papers in a legal settlement, it has 90 days to pay a settlement. The city Law Department reviews all of the relevant documents, and sends the closing papers to the city comptroller’s office, which processes payment.
The city’s on the hook for 9% interest if it misses the 90-day deadline — though plaintiffs’ attorneys typically have to file a judgment in court to collect that interest money.
Though the comptroller’s office regularly releases data on the amount the city pays out in tort claims — $688.4 million in 2022, up from $583 million paid out in 2021 — officials say that they don’t track and wouldn’t normally track how much is spent on interest payments.
The Law Department refused to say how many settlements are paid past the deadline, or how much goes out in interest payments.
“The city settles over 3,500 state tort cases a year and receives about as many closing packages a year. We endeavor to pay all settlements timely,” the Law Department said in a statement to The News. “Almost all accurately prepared and properly tendered closing papers are timely forwarded to the comptroller for payment.“
Rynecki said he’s filed four judgments in court for four separate cases in recent weeks to collect settlement cash, as well as about $10,000 in interest.
Three of those cases were filed on Aug. 1. Two of Rynecki’s clients were waiting nearly six months for settlements of $22,000 and $22,500, while a third was waiting almost six months for a nearly $175,000 payout.
“It’s not fair to the average person. They want to know, ‘How come it takes so long to get paid?’ ” said Rynecki.
Civil rights attorney Jeff Rothman filed judgments to collect interest in two cases in June — one with a $15,000 settlement, the other with a $161,000 payout. The settlements themselves were paid a month late, and the city took several months to make good on the owed interest, court records show.
“They actually agreed that the interest was due, and then they were late and they never paid the interest,” Rothman said. He also asked a judge to make the city pay his legal fees, attaching a nearly yearlong chain of emails between him and Law Department staff on the money owed.
“It’s very frustrating, primarily for indigent plaintiffs who really need their money, but also as a taxpayer,” Rothman said. “You see all these cuts they make — the library, problems with negotiations for the teachers union, the occupational therapists are currently asking for better wages — and you have the city basically just throwing money in the garbage.”
Lawyers suspect varying reasons for the delays.
Rynecki says he’s been sent a river of emails from Law Department officials over the past 18 months saying they’re severely short-staffed.
“Short-staffed — that’s the excuse on every case, on every stage of the case, from beginning to end,” said Bronx lawyer Mike Braverman, who said he often will get notifications six or eight weeks after settlements that the paperwork his office filed is incomplete in some way.
Lawyer Cary London said that the Law Department and the comptroller’s office often blame each other for delays, and that the Law Department regularly returns his queries about payment with replies claiming his paperwork wasn’t submitted properly.
“They’re claiming we didn’t submit the right document. We did. They’re claiming they didn’t get it when I send them a receipt,” he said. “You send it to specific people that are in the settlement department but they’ll claim they left the office or they were on vacation and never got it.”
The delays have left London with angry clients, some of whom show up at the his firm’s office to accuse them of stealing their settlement cash. And it’s left his firm “between a rock and a hard place,” he said, since filing a judgment to collect interest could lead to more delays.
No judgment filed means zero interest payments, but the extra cash isn’t worth the longer wait, London said.
At one point last month, his firm was chasing payouts from 62 overdue settlements, though that number has dropped to 38 over the past three weeks.
“I have two clients who settled the case the same case, it’s the exact same case,” London said. “One of the guys got his check in five months, the other guy’s now waiting 11 months, but he emails me every day how angry he is.”
Another lawyer familiar with the procedure says he owes it to his clients to file judgments and collect interest.
“I will tell you, in my opinion, this is probably a very big problem. But unfortunately, the plaintiffs’ lawyers don’t attack it aggressively. … like they don’t want to bite the hand that feeds them,” he said.
He’s also heard word of short-staffing, and the Law Department losing personnel to departures and attrition, but he also talks up the delays to “a combination of incompetence, incompetence and more incompetence.”
“If anyone was to calculate or see how much money they paid in interest … even just the last two or three years,” he said, “I think the public would be very irritated.”