RURAL HOSPITAL MALPRACTICE LIABILITY

HB0316

HOUSE BILL 316

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

D. Wonda Johnson

AN ACT

RELATING TO HEALTH CARE; ENACTING THE RURAL HOSPITAL
MALPRACTICE LIABILITY INSURANCE ACT; CREATING A GRANT THAT
RURAL HOSPITALS CAN RECEIVE TO COVER THE COSTS OF MEDICAL
MALPRACTICE LIABILITY INSURANCE PREMIUMS; MAKING AN
APPROPRIATION; DECLARING AN EMERGENCY.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1.
[
NEW MATERIAL
]

SHORT TITLE.--This act may be
cited as the "Rural Hospital Malpractice Liability Insurance
Act"
.

SECTION 2
. [
NEW MATERIAL
] DEFINITIONS.--As used in the
Rural Hospital Malpractice Liability Insurance Act:

A. "department" means the department of health;

B. "health care underserved area" means a
geographic area or practice location in which it has been
determined by the department, through the use of indices and
other standards set by the department, that sufficient health
care services are not being provided;

C. "premium grant" means money provided to a rural
hospital pursuant to the Rural Hospital Malpractice Liability
Insurance Act to cover the costs of malpractice liability
insurance premiums; and

D. "rural hospital" means a health care facility
licensed by the health care authority as a hospital that is
located in a rural or frontier area of the state, including a
critical access hospital.

SECTION 3.
[
NEW MATERIAL
] RURAL HOSPITAL MALPRACTICE
LIABILITY INSURANCE TRUST FUND.--

A. The "rural hospital malpractice liability
insurance trust fund" is created as a nonreverting fund in the
state treasury. The fund consists of distributions,
appropriations, gifts, grants and donations. Income from
investment of the fund shall be credited to the fund. Money in
the fund shall be expended only as provided in this section.

B. The state investment officer shall invest money
in the fund in accordance with the prudent investor rule as set
forth in Chapter 6, Article 8 NMSA 1978 and in consultation
with the department.

C. The state investment officer shall report
quarterly to the legislative finance committee and the state
investment council on the investments made pursuant to this
section. An annual report shall be submitted no later than
October 1 of each year to the legislative finance committee,
the revenue stabilization and tax policy committee and any
other appropriate interim committees.

D. On July 1, 2027 and each July 1 thereafter, a
distribution shall be made from the rural hospital malpractice
liability insurance trust fund to the rural hospital
malpractice liability insurance program fund in an amount equal
to five percent of the average of the year-end market values of
the trust fund for the immediately preceding three calendar
years. If, on July 1 of a year, the trust fund has been in
effect for less than three calendar years, the distribution
shall be in an amount equal to five percent of the average of
the year-end market values of the trust fund for the
immediately preceding number of calendar years that the trust
fund has been in effect.

SECTION 4.
[
NEW MATERIAL
] RURAL HOSPITAL MALPRACTICE
LIABILITY INSURANCE PROGRAM FUND.--

A. The "rural hospital malpractice liability
insurance program fund" is created as a nonreverting fund in
the state treasury. The fund consists of appropriations,
gifts, grants, donations, income from investment of the fund
and any other revenue credited to the fund. The department
shall administer the fund. Money in the fund is subject to
appropriation by the legislature to carry out the provisions of
this section. Expenditures shall be by warrant of the
secretary of finance and administration pursuant to vouchers
signed by the secretary of health or the secretary's authorized
representative.

B. A rural hospital may apply to the department, in
a form and manner prescribed by the department, for a premium
grant. To be eligible for a premium grant pursuant to this
section, a rural hospital shall:

(1) demonstrate coverage, or an intent to be
covered, by a medical malpractice liability insurance policy
approved by the department of health;

(2) certify that all money granted to the
hospital pursuant to this section will be used exclusively for
paying malpractice liability insurance policy premiums;

(3) maintain operations and provide access to
essential health care services within a health care underserved
area;

(4) provide documentation required by the
department; and

(5) satisfy any other eligibility requirements
established by the department.

SECTION 5.
[
NEW MATERIAL
] DEPARTMENT DUTIES--REPORTING.--The department shall:

A. promulgate rules to develop:

(1) a premium grant application form for rural
hospitals to use;

(2) eligibility criteria for receiving a
premium grant; and

(3) reporting requirements for rural hospitals
that receive a premium grant. Reporting requirements shall
include the requirement to submit:

(a) financial documentation indicating
the financial stability of the rural hospital;

(b) information on staffing levels at
the rural hospital, including efforts to recruit and retain
health care providers; and

(c) information on the types of services
provided and the number of patients served by the rural
hospital; and

B. submit an annual report to the legislative
finance committee and the legislative health and human services
committee that includes:

(1) the name of each rural hospital that has
received a premium grant;

(2) the amount of money used to provide
premium grants to rural hospitals;

(3) an update on the cost of medical
malpractice liability insurance for rural hospitals; and

(4) an analysis of the effect that the premium
grant has had on each rural hospital's:

(a) financial stability;

(b) health care workforce; and

(c) ability to provide access to health
care.

SECTION 6.
APPROPRIATION.--One hundred million dollars
($100,000,000) is appropriated from the general fund to the
rural hospital malpractice liability insurance trust fund for
expenditure in fiscal year 2026 and subsequent fiscal years to
carry out the purposes of the Rural Hospital Malpractice
Liability Insurance Act. Any unexpended balance remaining at
the end of a fiscal year shall not revert.

SECTION 7.
EMERGENCY.--It is necessary for the public
peace, health and safety that this act take effect immediately.

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