AVOID Act may push businesses to avoid New York State

Legal practitioners in New York State, and across its court systems, are bracing for a sea change as the Avoiding Vexatious Overuse of Impleading to Delay Act, better known as the AVOID Act, took effect on April 18.

While framed by its author – a veteran medical malpractice attorney – as a leveling of the legal playing field, in truth, the legislation tips the scales significantly in favor of plaintiffs in civil litigation and is anticipated to drive up auto and construction insurance rates, among other things. Not only does this fly in the face of the principle of fair trials, but it will likely have major downstream effects in a state where it is already litigious and expensive to do business.

Signed into law by Gov. Kathy Hochul on Dec.19, 2025, the AVOID Act establishes far more stringent rules surrounding third-party actions in civil litigations, where there might be evidence of another party (“impleader”) not yet specifically named in the lawsuit as being culpable for at least some of the liability.

Prior to this becoming law, there was no strict time clock for defendants – often corporations, insurers and even municipalities – who are served with litigation to file a third-party summons or other actions.

Now, civil defendants will have only 60 days after being served with the case to conduct their own review and fair investigation, and retain counsel, in order to determine if the case might possibly involve a third party.  Yet another more stringent time limit in the law gives only 45 days to implead an additional third-party defendant, and 30 days to implead a third.

Justice must not be subservient to a stopwatch

The law’s sponsors claim a wrong within the justice system is being righted, warning of “clever defendants” who implement “egregious strategies to add years to any case and, during that respite, avoid financial accountability.” That language may evoke images of sinister defense lawyers working to stifle justice. However, for those suing for monetary damages, pain and suffering, it is a misguided oversimplification that overlooks the fact that our U.S. legal system offers the presumption of innocence and the right to a defense, as enshrined in the Sixth Amendment.

The loaded language enshrined within this law casts negative aspersions on those being sued and simply wanting to present an effective defense to accusations, as is their right. New York already suffers from excessive litigation, with a tendency towards runaway jury verdicts that have only exacerbated the affordability crisis.

According to a recent report from the Partnership for New York City, New Yorkers’ insurance premiums are, on average, 15% higher than those in the rest of the country. The report goes on to say, “New York laws encourage outsized jury awards and settlements, exorbitant attorney fees, staged accidents and fraud.” This is no mere hyperbole, as the Empire State has the second highest tort costs in the country at more than $7,000 per household, bested only by Delaware.

The new AVOID Act is expected to have an outsized impact on the cost of New York construction and infrastructure projects.  New York’s Scaffold Law, a relic of the Gilded Age, already mandates that all property owners, general contractors and subcontractors are responsible for 100% of job-site injuries, regardless of who is to blame.  That translates to insurance costs currently eating up an average 7%-10% of the overall cost of construction in New York, versus 3%-5% in the rest of the country.

The 2025 AVOID Act also runs contrary to Hochul’s 2026 plan to bring down the cost of auto insurance and to tackle fraudulent claims. In 2024, the New York State Department of Financial Services estimated that there were nearly 39,000 cases of no-fault healthcare fraud in 2024.

Lawsuit abuse already carries a high price

According to a report by Americans for Trial Reform, lawsuit abuse and excessive tort costs already cost every man, woman or child in New York State an extra $2,534.85 annually. By making the state even more litigation-friendly, the AVOID Act adds salt to that very costly wound.

Third-party actions are critical for the defense, especially in slip-and-fall construction lawsuits.  Routine practice had long been for the defense to wait until after the pretrial evidence and legal discovery period to identify any other key parties involved, including subcontractors present or materially involved in any incident related to the injured party.

This allowed defendants to more factually identify the appropriate parties in their defense, instead of mistakenly bringing in irrelevant parties and adding confusion to already-complex legal proceedings. Construction sites – and associated litigation – are complicated things involving a web of moving parts and relationships between contractors, subcontractors, designers, suppliers and consultants. Major multiparty vehicular accidents are also complex and require evidence gathering, forensic investigation, police and witness reports, and more.

According to a 2020 study from the National Association of Home Builders, constructing the average new home requires 24 different subcontractors. With those myriad moving pieces come mountains of paperwork, permits and records that establish details that are vital to prove liability.  Now think about the complexity of building an apartment or office building or industrial facility in any city or town across New York.

In such cases, legal teams seek to ensure that true responsibility for any incidents is not randomly and inaccurately pinned upon an incorrect party.  With the archaic 140-year-old Scaffold Law, now further bolstered by the 2025 AVOID Act, New York companies and insurance underwriters can forget about ever having a level playing field in the Empire State.

Some insurers might flee New York

This law is likely to strengthen plaintiffs’ leverage for larger settlements, recognizing that defendants’ rights have now been further compromised by leaders in Albany.  For some insurers, their actuaries will need to analyze if remaining in the New York insurance market is simply worth the risk.

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Michael Coffey is an American Board of Trial Advocates attorney and founding partner of insurance litigation firm Coffey Modica, with offices across five states. Contact him at [email protected].