Scaffold Law Blamed for Soaring Construction Costs on Long Island
Some Long Island builders and contractors are pointing the finger at the rising costs of new construction, attributing the surge not only to the increasing prices of materials like steel and concrete but also to the climbing cost of commercial insurance. They’re placing a significant amount of blame on what they see as a growing number of construction workers allegedly recruited and trained to stage fake construction accidents for substantial insurance payouts.
These staged, often unwitnessed, accidents are designed to exploit a 140-year-old New York law known as the Scaffold Law. This law places the blame squarely on owners and contractors in cases of construction site falls.
The Scaffold Law leaves contractors and commercial property owners with virtually no legal defense in the event of an accident, even if the worker was negligent. This means that a fall can quickly lead to heavy legal fees, medical bills, and large payouts to the alleged victim. “It impacts whether you’re building a school, a hospital, or a commercial building,” said Michael Florio, chief executive of the Long Island Builders Institute, a nonprofit trade association, in regard to the Scaffold Law.
Sean Grubert, vice president of environmental health and safety at Haugland Group, speaking about the Scaffold Law’s impact.
While many of the financial burdens fall on private construction firms and their clients, New York taxpayers are also paying out an estimated $785 million annually. These costs trickle down from publicly funded projects, including school construction, bridge projects, and rail projects, according to the Nelson A. Rockefeller Institute of Government, an Albany think tank.
For example, Willis of New York, which provides insurance and risk management services to the construction industry, stated that the Scaffold Law added between $200 million and $400 million in additional insurance costs to one of its projects: the reconstruction of the Governor Mario M. Cuomo Bridge over the Hudson River, which was completed in 2018.
Construction industry advocates argue that the law is being increasingly exploited by unscrupulous individuals. These individuals often work in concert with medical providers and law firms to file false lawsuits stemming from staged accidents. In these scenarios, workers pretend to be injured on job sites, frequently involving ladders or scaffolds.
The precise number of staged accidents is difficult to determine. However, critics point to a significant increase in lawsuits in recent years involving people accused of staging accidents. These actions, critics say, are part of vast criminal rings. One key problem, critics say, is that anyone allegedly caught staging an accident faces an A misdemeanor, which carries a maximum penalty of one year in jail.
Currently, legislators in Albany are considering multiple proposals. These proposals would allow prosecutors to charge people who allegedly stage accidents with a felony. Yet, there is significant resistance to these changes. Some influential groups contend that this is a ploy by contractors to leave low-wage workers on some of the most dangerous job sites in the country with minimal financial recourse if they’re legitimately injured on the job.
The New York Committee for Occupational Safety and Health (NYCOSH), a nonprofit advocating for workplace safety, maintains that the law keeps workers safe by holding employers and property owners liable for unsafe conditions. The group released a March 4 report stating construction fatalities statewide increased 48% from 50 deaths in 2022 to 74 in 2023. This figure included seven deaths on Long Island.
“Almost three out of every four incidents could have been prevented,” said Charlene Obernauer, NYCOSH’s executive director, in an interview. “But at the same time, New York City is one of the most dangerous places to be a construction worker, because they’re working from heights in ways that workers in most other cities in the United States are not.”
The issue places developers and trial lawyers, both influential groups in Albany, against each other.
Sean Grubert, vice president of environmental health and safety at Haugland Group, a Melville-based contractor, says that his company’s insurance premiums have gone up in recent years, primarily due to what he sees as an increasing exploitation of the Scaffold Law. Grubert stated that these additional costs are ultimately passed on to the customer. The company works on projects such as highway repaving, overhead and underground electrical distribution, and sewage treatment plant repairs. “Because parts of the system are, in essence, broken, it winds up being a ripple effect that impacts many of us,” Grubert said.
Officially known as New York Labor Law 240(1), the Scaffold Law holds commercial property owners, employers, and contractors fully responsible for accidents on construction sites. These include falls or objects dropping from high places that injure workers. Workers are not required to prove contractor or property owner negligence in a lawsuit, only that they sustained an injury involving “gravity.” The law applies to commercial property owners, such as those with apartment complexes and residential subdivisions. However, it doesn’t apply to owners of one- or two-family homes unless they’re acting as contractors or managing their construction or renovation projects.
The law dates back to 1885 when there were few federal and state regulations to protect scaffold workers, who were increasingly getting injured on the job. At that time, many states had similar measures. However, laws in every state except New York were repealed or amended in the 20th century. In 1995, Illinois was the last state to repeal its law.
Building and insurance industry experts indicate that staged construction site accidents are most prevalent in New York City but are becoming more common on Long Island. Some large contractors have seen a 200% to 300% increase in Scaffold Law litigation against them in the past two to three years, according to the New York City Special Riggers Association, which represents people working on scaffolds, platforms, and vertical lift devices. Depending on the nature of the alleged injuries, settlements in Scaffold Law lawsuits can reach tens of millions of dollars, according to attorneys litigating these claims.
Parts of the new Governor Mario M. Cuomo Bridge next to the old Governor Malcolm Wilson Tappan Zee Bridge.
As a result, last year, Ionian Re, a business that provides insurance to insurance companies, filed separate federal racketeering lawsuits in the Eastern District of New York. These lawsuits named four law firms, five medical providers, and numerous individuals who filed claims under the Scaffold Law.
The claims allege that the law firms recruited and groomed individuals, including non-English-speaking immigrants in some cases, to stage construction accidents and submit fraudulent lawsuits, along with workers’ compensation claims. In many instances, the lawsuits allege, the accidents occurred on the final day of a construction project and when there were no witnesses.
The Ionian lawsuits, filed in October and November, claim that the defendants “orchestrated a widespread fraud scheme” to exploit the Scaffold Law and file multimillion-dollar claims for debilitating injuries stemming from non-existent accidents.
The suits allege that law firms employed runners to recruit people to work at construction sites and stage accidents. These alleged victims were then sent to specific medical facilities to receive expensive and unnecessary treatment for ailments that the lawsuits claim were false. The November suit documents a dozen allegedly staged construction accidents. The injured workers either had family ties or knew each other through friendships and/or because they worked together.
Attorneys for the defendants have described the allegations as “frivolous” and maintain that they make “unsubstantiated” claims without supporting evidence. Medical providers, meanwhile, contend that they only provided needed care for patients and were unaware of any fraud.
Assemblyman Michael Fitzpatrick (R-Smithtown) is proposing amendments to the law.
Assemb. Michael Fitzpatrick (R-Smithtown) recently reintroduced legislation to amend the law to prevent workers who may be impaired by drugs or alcohol, or who failed to follow safe work practices, from being guaranteed lawsuit damages following an accident. He stated that adding a “comparative negligence standard” would allow contractors to defend themselves fairly.
Critics of the law within the construction and insurance industries claim that previous attempts to amend the statute failed in Albany. They point to intense lobbying efforts from the New York State Trial Lawyers Association, an organization of plaintiffs’ lawyers, along with the Building and Construction Trades Council of Greater New York.
Michael Elmendorf, president and CEO of the New York chapter of Associated General Contractors of America, said that the Scaffold Law is “making it very difficult to get insurance for construction activity in New York, because most of the carriers that write this type of liability coverage have fled the New York market.”
An April 2024 report by the New York Civil Justice Institute, a nonpartisan research organization, found that construction insurance costs statewide represent 12.5% of a typical commercial project’s cost, the highest in the nation. This is compared to approximately 2.5% in neighboring states such as New Jersey, Connecticut, and Pennsylvania.
However, Obernauer, head of the New York Committee for Occupational Safety and Health, maintained the state’s construction industry is still showing post-pandemic growth, while insurance rates are influenced by factors including regional safety records. “Employer responsibility does improve safety. When employers bear responsibility for accidents, they invest more in safety measures, training and proper equipment. And our belief is, it does reduce accident rates over time,” she added regarding the Scaffold Law.
East Islip-based insurance broker James Sutton.
James Sutton, an East Islip-based insurance broker, describes the Scaffold Law as a “hidden tax” on New Yorkers, who consequently inherit the higher costs of construction. With a smaller pool of companies offering construction insurance, costs for businesses like his have gone up drastically. Sutton estimates that, on average, insurance policies for builders in New York cost 40% to 50% more than in nearby states like Connecticut or Pennsylvania. One of his clients now pays upwards of $500,000 annually for liability coverage, he said. “It’s adding tremendous cost to the system,” he said.
