EXPAND MEDICAL MALPRACTICE INSURANCE TYPES

SB0173

SENATE BILL 173

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

INTRODUCED BY

Rex Wilson

AN ACT

RELATING TO INSURANCE; EXPANDING THE TYPES OF MEDICAL
MALPRACTICE LIABILITY INSURANCE THAT HEALTH CARE PROVIDERS CAN
OBTAIN TO QUALIFY WITHIN THE MEDICAL MALPRACTICE ACT.

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

SECTION 1.
Section 41-5-5 NMSA 1978 (being Laws 1992,
Chapter 33, Section 2, as amended) is amended to read:

"41-5-5. QUALIFICATIONS.--

A.
Unless otherwise provided in this section
, 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
insurance issued by an authorized insurer in the amount of at
least two hundred fifty thousand dollars ($250,000) per
[
occurrence
]
malpractice claim
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
]
malpractice claims
; 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
]

malpractice claim
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
]
malpractice claims
; 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 that establishes
financial responsibility through a policy of malpractice
liability insurance may use claims-made or occurrence-based
malpractice insurance; provided that a health care provider
covered by claims-made malpractice insurance shall obtain tail
coverage whenever the claims-made malpractice insurance policy
is terminated.

[
D.
]
E.
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 care
facilities shall not participate in the medical review process,
and beginning January 1, 2027, hospitals and hospital-controlled outpatient health care facilities shall have the
benefits of the other provisions of the Medical Malpractice Act
except participation in the fund.

F. For the purposes of this section:

(1) "claims-made malpractice insurance" means
a medical malpractice liability insurance policy that provides
coverage only if the policy is active both when the alleged
malpractice occurred and when the malpractice claim is filed;

(2) "occurrence-based malpractice insurance"
means a medical malpractice liability insurance policy that
provides coverage for any alleged malpractice that occurred
while the policy was active, regardless of when a malpractice
claim is filed; and

(3) "tail coverage" means a medical
malpractice liability insurance policy that is purchased by a
health care provider when a claims-made malpractice insurance
policy is terminated to provide coverage for future malpractice
claims arising from alleged malpractice that occurred while the
claims-made malpractice insurance policy was active.
"

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