Update: Recent Amendments to New York’s AVOID Act and Their Impact on Third-Party Practice and Risk Transfer

In a prior publication, we examined the enactment of the Avoiding Vexatious Overuse of Impleading to Delay (AVOID) Act, which was signed into law by New York Governor Kathy Hochul on December 19, 2025. Today, we broaden our initial analysis to delve deeper into the subsequent amendments negotiated by the legislature and ratified on February 13, 2026. The AVOID Act—which at inception was touted as a “fix” to delay tactics by defendants particularly in New York Labor law and related insurance cases—enacted sweeping changes that will significantly alter third-party practice across the state.

The Act, which will apply to all cases pending on or after its effective date of April 18, 2026, aims at imposing accelerated deadlines for the commencement of third-party actions. In practice, however, it demands a fundamental shift in how defendants, insurers, and counsel approach risk transfer and litigation as a whole. To date, most of the amendments are reflective of the practical challenges the original text posed for litigants and the Courts.

What Does the AVOID Act Change?

At its core, the AVOID Act forces defendants to identify and implead potentially responsible parties at the earliest stages of litigation. Instead of having months—or years—to file third-party actions, defendants must now do so under stricter deadlines. Defendants must:

• Implead (i.e. file third-party summons and complaints) against potential indemnitors within ninety (90) days of serving their answer without leave of the court;
• After 90 days, seek leave of the court, by showing good cause, justification for the delay, and lack of prejudice to the parties;
• Avoid filing third-party summons and complaint after the filing of a note of issue unless good cause is shown, or the filing is in the interest of justice;
• When facts develop indicating a potential claim for indemnity under Workers Compensation Law Section 11 for a “grave injury,” or when the employer’s identity was not originally known, implead the employer within 90 days of when the defendant knew or should have known the identity of the employer or that the plaintiff sustained a grave injury.
• Forego attempts to consolidate––the Act prohibits consolidation where a third-party action is severed from the initial action pursuant to this section, and the third-party plaintiff commences a new action against a severed third-party defendant. Courts may not grant orders consolidating the second action with the first action.

What Should Defendants and Claims Professionals Do Before the Act Comes into Effect

With the effective date fast approaching, proactive preparation is critical given that the AVOID Act fundamentally shifts the timing of risk transfer analysis.

The time to follow up after issuing tenders before commencing third-party action has closed. Defendants, insurers, and claims professionals can no longer afford a “wait and see” approach. Instead, they must conduct early, thorough investigations and be prepared to act quickly, often before the full factual record has developed.

Upon notice of an incident, parties should promptly identify, collect, and analyze all relevant contracts, incident reports, and early communications between employers and their allegedly injured employees. Those who delay may lose the ability to implead altogether and risk litigating the same facts in two separate actions.

Before the Act takes effect, insurers, third-party administrators, and attorneys should:

• Conduct a comprehensive review of all pending litigation;
• Identify all vendors, contractors, and potentially responsible third parties;
• Analyze all relevant contractual agreements, including indemnification and insurance procurement provisions; and
• When in doubt, initiate third-party actions promptly to avoid being barred by the Act’s strict deadlines.

And going forward, immediately after any incident, they should:

• Conduct thorough, early-stage investigations focused on identifying risk transfer opportunities;
• Review all potentially applicable contracts without delay;
• Tender claims immediately to any potential indemnitor and their insurer; and
• Initiate legal analysis—whether through in-house counsel or outside consultants—at the earliest possible stage.

For insurers and claims professionals, this will require a significant shift in claims handling protocols. Early investigation of third-party exposure, immediate contractual analysis, timely tendering to potential indemnitors, and prompt action are no longer best practices: they are required.

For defense counsel, the message is even more direct. Waiting for discovery is now a risky strategy. Even where claims for common-law indemnification or contribution may not ultimately apply, the risk of missing the statutory window is too great. Until case law further defines what constitutes “good cause” or “in the interest of justice” in the context of third-party practice, defendants should consider commencing third-party actions early, even where the factual basis for that party’s involvement has not yet been fully developed.

Anticipated Effects on Litigation and Case Strategy

The AVOID Act is likely to reshape litigation dynamics in several ways:

1. Increased Motion Practice. In the near term, courts can expect a surge in motion practice as defendants seek leave to file third-party actions in cases that were pending prior to the Act’s effective date or by third-party defendants who were named and should not have been. This will, ironically, delay the advancement of an action. The very thing the AVOID Act purports to stop.
2. Separate Actions and “Pay and Chase” Risk. Defendants who are unable to implead third-parties are not without recourse, but their options become more complicated. They may be forced to initiate separate actions for contractual indemnification or breach of duty to procure insurance. This creates the potential for a “pay and chase” scenario, where defendants resolve the underlying claim before their indemnity rights are adjudicated, shifting both financial and strategic risk.
3. Plaintiff Strategy and Settlement Dynamics. Some plaintiffs may attempt to leverage these new requirements by accelerating filings, including Notes of Issue, to limit defendants’ ability to bring in additional parties. This approach may have unintended consequences. Fewer parties at the table may reduce available coverage and settlement contributions, potentially complicating resolution efforts and limiting recovery.

What to Watch as the AVOID Act Takes Effect

As courts begin interpreting and applying the AVOID Act, several important questions remain:

• How will courts handle requests for a late impleader, particularly in borderline or fact-intensive cases?
• Will the Legislature revisit or refine the statute if it leads to increased motion practice, expanded discovery disputes, or a rise in separate indemnification actions?

What is certain is that the AVOID Act will not simply change timelines, it will reshape litigation across New York. Organizations that adapt quickly will be best positioned to protect their rights and manage exposure. Those that do not will risk losing critical avenues for risk transfer.

Connect with Chartwell

Chartwell’s New York General Liability and Insurance Coverage teams are actively advising clients on how to handle the AVOID Act and implement strategies in response to these changes. If you have questions about how the Act may impact your current or future litigation, or if you would like assistance reviewing your protocols and cases ahead of the effective date, we welcome the opportunity to connect.