New York City plans to spend $735 million this year on settlements or awards in lawsuits claiming negligence, police abuse and property damage, the most in its history and almost six times what Los Angeles pays per capita.

The cost of claims is forecast to rise to $815 million by 2016, more than the city pays to run the Parks and Recreation Department, according to budget documents. Among the incidents triggering payments are malpractice in public hospitals, police beatings, improper arrests, collisions with fire trucks and potholes causing accidents.

The increase in litigation payouts may put pressure on Mayor Michael Bloomberg as he weighs job and service cuts to close a $3.5 billion deficit in a $72 billion budget next year. The gap widened by $1 billion last month when a court struck down a plan to sell 2,000 new taxi medallions.

“It’s a huge problem for the city and trial lawyers will say it’s only justice, but it’s also a matter of some people considering a case before a New York jury the same as winning the lottery,” said E.J. McMahon, a research fellow for the Manhattan Institute’s Empire Center for Public Policy. The institute calls for changes to contingency fees for plaintiffs’ lawyers and advocates a so-called loser pays system for legal costs.

One reason New York’s legal payouts are rising, according to the Law Department, is that unlike California, Illinois and Pennsylvania, the state has no laws that cap damages or limit liability in suits against municipal governments.

Volatile Expense

The city’s claims forecast for this year includes litigation arising from personal injury, property damage and contract disputes. Raymond Orlando, a spokesman for the budget office, said the estimate is based on experience that takes into account the potential for large payouts from lawsuits originating years ago.

“These expenses are quite volatile from year to year,” Orlando said….

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