New Mexico first addressed its medical liability system through the New Mexico Medical Malpractice Act, passed in 1976 in response to the nationwide malpractice crisis of the 1970s. Written with input from the New Mexico Medical Society, the Act better defined the standard of care; restricted actions based on a lack of informed consent; prohibited the ad damnum clause (the section of a legal complaint specifying the dollar amount of damages); established a statute of limitations; establish a medical review commission; and limited the dollar amount of recoverable damages.
Among the most important parts of the act was the $500,000 limit on total damages, not including punitive damages and medical-care-related expenses. This amount has since been raised to $600,000. In 2011, there was an attempt to raise the cap on liability awards from $600,000 to $1 million in return for revising language that excluded medical corporations from the protections of the Medical Malpractice Act. The New Mexico Medical Board unanimously agreed to the amendments, but Gov. Susana Martinez vetoed the resulting bill because she felt the changes could lead to an increase in the number of frivolous lawsuits and cost of medical malpractice insurance.
Enacted as companion legislation to the Medical Malpractice Act, the New Mexico Professional Liability Fund Act of 1976 established a patient compensation fund. The fund is a state-established liability funding mechanisms that provides medical malpractice coverage in excess of the primary insurance requirements of the applicable state. The fund limits the amount of damages that may be awarded against an enrolled healthcare provider, thus limiting their liability and lowering medical professional liability insurance premiums. The fund is capitalized solely through surcharges (i.e. premiums) levied against its member healthcare providers. A total of six other states currently operate a patient compensation similar to New Mexicoâ€™s.
In 2017, the New Mexico Supreme Court took on the curious case of Montano v. Frezza. At the heart of the case was whether residents of New Mexico could sue Texas physician in a New Mexico court for malpractice that allegedly occurred in Texas. Thousands of rural New Mexico residents travel to Texas for medical treatment each year. Texas has arguably the strictest medical liability tort reforms in the nation, and New Mexico is generally considered a more plaintiff friendly state to pursue a medical liability claim. At risk was whether Texas physicians would continue to see New Mexican patients. The New Mexico Supreme Court ultimately decided Texas physicians could not be sued in New Mexicoâ€™s court system for healthcare rendered in Texas.