MEDICAL MALPRACTICE CHANGES

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AN ACT
RELATING TO MEDICAL MALPRACTICE; CLARIFYING DEFINITIONS IN
THE MEDICAL MALPRACTICE ACT; LIMITING PUNITIVE DAMAGES IN
MEDICAL MALPRACTICE CASES; REQUIRING PAYMENTS FROM THE
PATIENT'S COMPENSATION FUND TO BE MADE AS EXPENSES ARE
INCURRED.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 41-5-3 NMSA 1978 (being Laws 1976,
Chapter 2, Section 3, as amended) is amended to read:
"41-5-3. DEFINITIONS.--As used in the Medical
Malpractice Act:
A. "advisory board" means the patient's
compensation fund advisory board;
B. "control" means equity ownership in a business
entity that:
(1) represents more than fifty percent of
the total voting power of the business entity; or
(2) has a value of more than fifty percent
of that business entity;
C. "fund" means the patient's compensation fund;
D. "health care provider" means a person, a
corporation, an organization, a facility or an institution
licensed or certified by this state to provide health care or
professional services as a doctor of medicine, a hospital, an
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outpatient health care facility, a doctor of osteopathy, a
chiropractor, a podiatric physician, a nurse anesthetist, a
physician's assistant, a certified nurse practitioner, a
clinical nurse specialist or certified nurse-midwife or a
business entity that is organized, incorporated or formed
pursuant to the laws of New Mexico that provides health care
services primarily through natural persons identified in this
subsection. "Health care provider" does not mean a person or
an entity protected pursuant to the Tort Claims Act or the
Federal Tort Claims Act;
E. "hospital" means a facility licensed as a
hospital in this state that offers inpatient services,
nursing or overnight care on a twenty-four-hour basis for
diagnosing, treating and providing medical, psychological or
surgical care for three or more separate persons who have a
physical or mental illness, disease, injury or rehabilitative
condition or are pregnant and may offer emergency services.
"Hospital" includes a hospital's parent corporation,
subsidiary corporations or affiliates if incorporated or
registered in New Mexico; employees and locum tenens
providing services at the hospital; and agency nurses
providing services at the hospital. "Hospital" does not mean
a person or an entity protected pursuant to the Tort Claims
Act or the Federal Tort Claims Act;
F. "hospital system" means a group of two or more
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hospitals that are owned, operated or controlled by the same
person or persons;
G. "independent outpatient health care facility"
means a health care facility that is an ambulatory surgical
center, an urgent care facility or a free-standing emergency
room that is not, directly or indirectly through one or more
intermediaries, controlled or under common control with a
hospital. "Independent outpatient health care facility"
includes a facility's employees, locum tenens providers and
agency nurses providing services at the facility.
"Independent outpatient health care facility" does not mean a
person or an entity protected pursuant to the Tort Claims Act
or the Federal Tort Claims Act;
H. "independent provider" means a doctor of
medicine, doctor of osteopathy, chiropractor, podiatric
physician, nurse anesthetist, physician's assistant,
certified nurse practitioner, clinical nurse specialist or
certified nurse-midwife who is not an employee of a hospital
or an outpatient health care facility. "Independent
provider" does not mean a person or an entity protected
pursuant to the Tort Claims Act or the Federal Tort Claims
Act. "Independent provider" includes:
(1) a health care facility that is:
(a) licensed pursuant to the Health
Care Code as an outpatient facility;
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(b) not an ambulatory surgical center,
an urgent care facility or a free-standing emergency room;
and
(c) not hospital-controlled; and
(2) a business entity that is not a hospital
or an outpatient health care facility that employs or
consists of members who are licensed or certified as doctors
of medicine, doctors of osteopathy, chiropractors, podiatric
physicians, nurse anesthetists, physician's assistants,
certified nurse practitioners, clinical nurse specialists or
certified nurse-midwives and the business entity's employees;
I. "insurer" means an insurance company engaged in
writing health care provider malpractice liability insurance
in this state;
J. "malpractice claim" includes any cause of
action arising in this state against a health care provider
for medical treatment, lack of medical treatment or other
claimed departure from accepted standards of health care that
proximately results in injury to the patient, whether the
patient's claim or cause of action sounds in tort or
contract, and includes but is not limited to actions based on
battery or wrongful death. "Malpractice claim" does not
include a cause of action arising out of the driving, flying
or nonmedical acts involved in the operation, use or
maintenance of a vehicular or aircraft ambulance;
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K. "medical care and related benefits" means all
reasonable medical, surgical, physical rehabilitation and
custodial services and includes drugs, prosthetic devices and
other similar materials reasonably necessary in the provision
of such services;
L. "occurrence" means a health care provider's or
health care providers' acts or omissions in the course of
medical treatment that created or combined to create an
injury or injuries to a patient, regardless of the number of
health care providers whose acts or omissions contributed to
the injury or injuries; provided that "occurrence" shall not
be construed to limit recovery to only one maximum statutory
payment when independent medical acts or omissions cause
separate injury or injuries to a patient in a course of
medical treatment;
M. "outpatient health care facility" means an
entity that is hospital-controlled and is licensed pursuant
to the Health Care Code as an outpatient facility, including
ambulatory surgical centers, free-standing emergency rooms,
urgent care clinics, acute care centers and intermediate care
facilities and includes a facility's employees, locum tenens
providers and agency nurses providing services at the
facility. "Outpatient health care facility" does not
include:
(1) independent providers;
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(2) independent outpatient health care
facilities; or
(3) individuals or entities protected
pursuant to the Tort Claims Act or the Federal Tort Claims
Act;
N. "patient" means a natural person who received
or should have received health care from a health care
provider, under a contract, express or implied;
O. "superintendent" means the superintendent of
insurance; and
P. "value of accrued medical care and related
benefits" means the actual amount paid or owed by a patient,
or a third party on behalf of a patient, for medical care and
related benefits. "Value of accrued medical care and related
benefits" does not include any costs waived, written off or
lowered by a health care provider."
SECTION 2. Section 41-5-5 NMSA 1978 (being Laws 1992,
Chapter 33, Section 2, as amended) is amended to read:
"41-5-5. QUALIFICATIONS.--
A. To be qualified under the provisions of the
Medical Malpractice Act, a health care provider, except an
independent outpatient health care facility, shall:
(1) establish its financial responsibility
by filing proof with the superintendent that the health care
provider is insured by a policy of malpractice liability
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insurance issued by an authorized insurer in the amount of at
least two hundred fifty thousand dollars ($250,000) per
occurrence or by having continuously on deposit the sum of
seven hundred fifty thousand dollars ($750,000) in cash with
the superintendent or such other like deposit as the
superintendent may allow by rule; provided that hospitals and
hospital-controlled outpatient health care facilities that
establish financial responsibility through a policy of
malpractice liability insurance may use any form of
malpractice insurance; and provided further that for
independent providers, in the absence of an additional
deposit or policy as required by this subsection, the deposit
or policy shall provide coverage for not more than three
separate occurrences; and
(2) pay the surcharge assessed on health
care providers by the superintendent pursuant to Section
41-5-25 NMSA 1978.
B. To be qualified under the provisions of the
Medical Malpractice Act, an independent outpatient health
care facility shall:
(1) establish its financial responsibility
by filing proof with the superintendent that the health care
provider is insured by a policy of malpractice liability
insurance issued by an authorized insurer in the amount of at
least five hundred thousand dollars ($500,000) per occurrence
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or by having continuously on deposit the sum of one million
five hundred thousand dollars ($1,500,000) in cash with the
superintendent or other like deposit as the superintendent
may allow by rule; provided that for independent outpatient
health care facilities, in the absence of an additional
deposit or policy as required by this subsection, the deposit
or policy shall provide coverage for not more than three
separate occurrences; and
(2) pay the surcharge assessed on
independent outpatient health care facilities by the
superintendent pursuant to Section 41-5-25 NMSA 1978.
C. For hospitals or hospital-controlled outpatient
health care facilities electing to be covered under the
Medical Malpractice Act, the superintendent shall determine,
based on a risk assessment of each hospital or hospital-
controlled outpatient health care facility, each hospital's
or hospital-controlled outpatient health care facility's base
coverage or deposit and additional charges for the fund. The
superintendent shall arrange for an actuarial study before
determining base coverage or deposit and surcharges.
D. A health care provider not qualifying under
this section shall not have the benefit of any of the
provisions of the Medical Malpractice Act in the event of a
malpractice claim against it; provided that beginning July 1,
2021, hospitals and hospital-controlled outpatient health
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care facilities shall not participate in the medical review
process."
SECTION 3. Section 41-5-6 NMSA 1978 (being Laws 1992,
Chapter 33, Section 4, as amended) is amended to read:
"41-5-6. LIMITATION OF RECOVERY.--
A. Except for punitive damages and past and future
medical care and related benefits, the aggregate dollar
amount recoverable by all persons for or arising from any
injury or death to a patient as a result of malpractice shall
not exceed six hundred thousand dollars ($600,000) per
occurrence for malpractice claims brought against health care
providers if the injury or death occurred prior to January 1,
2022. In jury cases, the jury shall not be given any
instructions dealing with this limitation.
B. Except for punitive damages and past and future
medical care and related benefits, the aggregate dollar
amount recoverable by all persons for or arising from any
injury or death to a patient as a result of malpractice shall
not exceed seven hundred fifty thousand dollars ($750,000)
per occurrence for malpractice claims against independent
providers; provided that, beginning January 1, 2023, the per
occurrence limit on recovery shall be adjusted annually by
the consumer price index for all urban consumers.
C. The aggregate dollar amount recoverable by all
persons for or arising from any injury or death to a patient
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as a result of malpractice, except for punitive damages and
past and future medical care and related benefits, shall not
exceed seven hundred fifty thousand dollars ($750,000) for
claims brought against an independent outpatient health care
facility; for an injury or death that occurred in calendar
years 2022 and 2023.
D. In calendar year 2024 and subsequent years, the
aggregate dollar amount recoverable by all persons for or
arising from an injury or death to a patient as a result of
malpractice, except for punitive damages and past and future
medical care and related benefits, shall not exceed the
following amounts for claims brought against an independent
outpatient health care facility:
(1) for an injury or death that occurred in
calendar year 2024, one million dollars ($1,000,000) per
occurrence; and
(2) for an injury or death that occurred in
calendar year 2025 and thereafter, the amount provided in
Paragraph (1) of this subsection, adjusted annually by the
prior three-year average consumer price index for all urban
consumers, per occurrence.
E. In calendar year 2022 and subsequent calendar
years, the aggregate dollar amount recoverable by all persons
for or arising from any injury or death to a patient as a
result of malpractice, except for punitive damages and past
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and future medical care and related benefits, shall not
exceed the following amounts for claims brought against a
hospital or a hospital-controlled outpatient health care
facility:
(1) for an injury or death that occurred in
calendar year 2022, four million dollars ($4,000,000) per
occurrence;
(2) for an injury or death that occurred in
calendar year 2023, four million five hundred thousand
dollars ($4,500,000) per occurrence;
(3) for an injury or death that occurred in
calendar year 2024, five million dollars ($5,000,000) per
occurrence;
(4) for an injury or death that occurred in
calendar year 2025, five million five hundred thousand
dollars ($5,500,000) per occurrence;
(5) for an injury or death that occurred in
calendar year 2026, six million dollars ($6,000,000) per
occurrence; and
(6) for an injury or death that occurred in
calendar year 2027 and each calendar year thereafter, the
amount provided in Paragraph (5) of this subsection, adjusted
annually by the consumer price index for all urban consumers,
per occurrence.
F. The aggregate dollar amounts provided in
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Subsections B through E of this section include payment to
any person for any number of loss of consortium claims or
other claims per occurrence that arise solely because of the
injuries or death of the patient.
G. In jury cases, the jury shall not be given any
instructions dealing with the limitations provided in this
section.
H. The value of accrued medical care and related
benefits shall not be subject to any limitation.
I. Except for an independent outpatient health
care facility, a health care provider's personal liability is
limited to two hundred fifty thousand dollars ($250,000) for
monetary damages and medical care and related benefits as
provided in Section 41-5-7 NMSA 1978. Any amount due from a
judgment or settlement in excess of two hundred fifty
thousand dollars ($250,000) shall be paid from the fund,
except as provided in Subsections J and K of this section.
J. An independent outpatient health care
facility's personal liability is limited to five hundred
thousand dollars ($500,000) for monetary damages and medical
care and related benefits as provided in Section 41-5-7 NMSA
1978. Any amount due from a judgment or settlement in excess
of five hundred thousand dollars ($500,000) shall be paid
from the fund.
K. Amounts due from a judgment or settlement
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against a hospital or hospital-controlled outpatient health
care facility in excess of seven hundred fifty thousand
dollars ($750,000), excluding past and future medical
expenses, shall be paid by the hospital or hospital-
controlled outpatient health care facility and not by the
fund."
SECTION 4. Section 41-5-7 NMSA 1978 (being Laws 1992,
Chapter 33, Section 5, as amended) is amended to read:
"41-5-7. MEDICAL EXPENSES.--
A. Awards of past and future medical care and
related benefits shall not be subject to the limitations of
recovery imposed in Section 41-5-6 NMSA 1978.
B. The health care provider shall be liable for
all medical care and related benefit payments until the total
payments made by or on behalf of it for monetary damages and
medical care and related benefits combined equals the health
care provider's personal liability limit as provided in
Section 41-5-6 NMSA 1978, after which the payments shall be
made by the fund.
C. Payments made from the fund for the cost of
medical care and related benefits shall be made as expenses
are incurred."
SECTION 5. A new section of the Medical Malpractice
Act, Section 41-5-7.1 NMSA 1978, is enacted to read:
"41-5-7.1. PUNITIVE DAMAGES.--
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A. Punitive damages may only be awarded in a
malpractice claim if the prevailing party provides clear and
convincing evidence demonstrating that the acts of the health
care provider were malicious, willful, wanton, reckless,
fraudulent or in bad faith.
B. A judgment of punitive damages against any of
the following persons shall not be in an amount greater than
the applicable limitation on monetary damages provided in
Section 41-5-6 NMSA 1978:
(1) an independent provider;
(2) an independent outpatient health care
facility and the facility's employees, locum tenens providers
and agency nurses;
(3) a hospital operated by a New Mexico
resident or domestic corporation that is not part of a
hospital system and the hospital's employees, locum tenens
providers and agency nurses; and
(4) employees, locum tenens providers and
agency nurses of a hospital or a hospital-controlled
outpatient health care facility.
C. Except as provided in Subsection B of this
section, a judgment of punitive damages against a hospital or
hospital-controlled outpatient health care facility shall not
be in an amount greater than two and one-half times the
applicable limitation on monetary damages provided in Section
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41-5-6 NMSA 1978.
D. A judgment of punitive damages against a health
care provider shall not be paid from the fund.
E. The initial claim for relief in a malpractice
claim shall not include punitive damages. A claim for
punitive damages may be asserted by amendment to the
pleadings only after the plaintiff has presented sufficient
evidence to the court that it is more likely than not that
the claim has a triable issue after substantial completion of
discovery. If the court allows amendment to the complaint
pursuant to this subsection, the court, in its discretion,
may permit additional discovery on the question of punitive
damages."
SECTION 6. Section 41-5-25 NMSA 1978 (being Laws 1992,
Chapter 33, Section 9, as amended) is amended to read:
"41-5-25. PATIENT'S COMPENSATION FUND--THIRD-PARTY
ADMINISTRATOR--ACTUARIAL STUDIES--SURCHARGES--CLAIMS--
PRORATION--PROOFS OF AUTHENTICITY.--
A. The "patient's compensation fund" is created as
a nonreverting fund in the state treasury. The fund consists
of money from surcharges, income from investment of the fund
and any other money deposited to the credit of the fund. The
fund shall be held in trust, deposited in a segregated
account in the state treasury and invested by the investment
office and shall not become a part of or revert to the
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general fund or any other fund of the state. Money from the
fund shall be expended only for the purposes of and to the
extent provided in the Medical Malpractice Act. All approved
expenses of collecting, protecting and administering the
fund, including purchasing insurance for the fund, shall be
paid from the fund.
B. The superintendent shall contract for the
administration and operation of the fund with a qualified,
licensed third-party administrator, selected in consultation
with the advisory board, no later than January 1, 2022. The
third-party administrator shall provide an annual audit of
the fund to the superintendent.
C. The superintendent, as custodian of the fund,
and the third-party administrator shall be notified by the
health care provider or the health care provider's insurer
within thirty days of service on the health care provider of
a complaint asserting a malpractice claim brought in a court
in this state against the health care provider.
D. The superintendent shall levy an annual
surcharge on all New Mexico health care providers qualifying
under Section 41-5-5 NMSA 1978. The surcharge for health
care providers shall be based on sound actuarial principles,
using data obtained from New Mexico claims and loss
experience. The surcharges for independent providers and
independent outpatient health care facilities shall be
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determined by the superintendent with the advice of the
advisory board and based on the annual independent actuarial
study of the fund. The surcharge for hospitals and
outpatient health care facilities shall be no less than the
actuary's recommended surcharges based on an expected value
basis to fully fund the current and projected claims
obligations of the hospitals and outpatient health care
facilities. A hospital or outpatient health care facility
seeking participation in the fund during the remaining
qualifying years shall provide, at a minimum, the hospital's
or outpatient health care facility's direct and indirect cost
information as reported to the federal centers for medicare
and medicaid services for all self-insured malpractice
claims, including claims and paid loss detail, and the claims
and paid loss detail from any professional liability
insurance carriers for each hospital or outpatient health
care facility and each employed health care provider for the
past eight years to the third-party actuary. The same
information shall be available to the advisory board for
review, including financial information and data, and
excluding individually identifying case information, which
information shall not be subject to the Inspection of Public
Records Act. The superintendent, the third-party actuary or
the advisory board shall not use or disclose the information
for any purpose other than to fulfill the duties pursuant to
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this subsection.
E. The surcharge shall be collected on the same
basis as premiums by each insurer from the health care
provider. The surcharge shall be due and payable within
thirty days after the premiums for malpractice liability
insurance have been received by the insurer from the health
care provider in New Mexico. If the surcharge is collected
but not paid timely, the superintendent may suspend the
certificate of authority of the insurer until the annual
premium surcharge is paid.
F. Surcharges shall be set by October 31 of each
year for the next calendar year. Beginning in 2021, the
surcharges shall be set with the intention of bringing the
fund to solvency with no projected deficit by December 31,
2026. All qualified and participating hospitals and
outpatient health care facilities shall cure any fund deficit
attributable to hospitals and outpatient health care
facilities by December 31, 2026.
G. If the fund would be exhausted by payment of
all claims allowed during a particular calendar year, then
the amounts paid to each patient and other parties obtaining
judgments shall be prorated, with each such party receiving
an amount equal to the percentage the party's own payment
schedule bears to the total of payment schedules outstanding
and payable by the fund. Any amounts due and unpaid as a
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result of such proration shall be paid in the following
calendar years.
H. Upon receipt of one of the proofs of
authenticity listed in this subsection, reflecting a judgment
for damages rendered pursuant to the Medical Malpractice Act,
the superintendent shall issue or have issued warrants in
accordance with the payment schedule constructed by the court
and made a part of its final judgment. The only claim
against the fund shall be a voucher or other appropriate
request by the superintendent after the superintendent
receives:
(1) until January 1, 2022, a certified copy
of a final judgment in excess of two hundred thousand dollars
($200,000) against a health care provider;
(2) until January 1, 2022, a certified copy
of a court-approved settlement or certification of settlement
made prior to initiating suit, signed by both parties, in
excess of two hundred thousand dollars ($200,000) against a
health care provider; or
(3) until January 1, 2022, a certified copy
of a final judgment less than two hundred thousand dollars
($200,000) and an affidavit of a health care provider or its
insurer attesting that payments made pursuant to Subsection B
of Section 41-5-7 NMSA 1978, combined with the monetary
recovery, exceed two hundred thousand dollars ($200,000).
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I. On or after January 1, 2022, the amounts
specified in Paragraphs (1) through (3) of Subsection H of
this section shall be two hundred fifty thousand dollars
($250,000)."
SECTION 7. SEVERABILITY.--If a provision of this act or
its application to any person or circumstance is held
invalid, the invalidity does not affect other provisions or
applications of this act that can be given effect without the
invalid provision or application, and to this end the
provisions of this act are severable.
SECTION 8. APPLICABILITY.--The provisions of this act
apply to all claims for medical malpractice that arise on or
after the effective date of this act.