Medical malpractice insurance premiums are moderate in the state of New Mexico. The restrained cost of malpractice insurance can be attributed to the 1976 passage of the New Mexico Medical Malpractice Act.
New Mexico first addressed its medical malpractice insurance conditions during the nationwide malpractice crisis of 1975, when 45 states across the country were galvanized into enacting varying tort reforms in an attempt to relieve the malpractice dilemma in full bloom. Specifically, New Mexico politicians took notice after Travelers Insurance Companies—the state’s largest medical malpractice insurance provider at the time—announced it would withdraw as the underwriter of the state medical society’s professional liability program.
Travelers’ attitude was typical of the insurance industry at the time. Insurers pointed to an increase in claims frequency, an increase in the size of jury verdicts and increasing actuarial difficulties as the reason for abandoning—or restricting their participation in—the medical liability line of coverage. Those same companies argued that many of their objections to writing medical malpractice insurance could be remedied by legislation modifying the underlying tort rules for allocating losses.
New Mexico’s response was the Medical Malpractice Act of 1976. Teaming with the New Mexico Medical Society, the state legislature sought to greater define the standard of care; restrict actions based on a lack of informed consent; prohibit the ad damnum clause (the section of a legal complaint specifying the dollar amount of damages); establish a statute of limitations; establish a medical review commission; and limit the dollar amount of recoverable damages.
Prior to Medical Malpractice Act, the standard for a malpractice claim was defined as any cause of action against a healthcare provider for medical treatment, lack of treatment or claimed departure from accepted standards of healthcare that proximately results in injury to the patient. The Medical Malpractice Act narrowed that definition for standard of care to “a departure from the recognized standards of medical practice in the locality or community.”
An ad damnum clause refers to the section of a legal complaint specifying the damages that were suffered by the plaintiff. While the Medical Malpractice Act’s removal of the ad damnum clause has had little—if any—effect on the ultimate verdict in a medical malpractice lawsuit, the elimination of the clause was important to the healthcare lobby because if plaintiffs are free to allege any amount of damages, local press often picks up the story and prints the dollar amount, exaggerating the negative publicity of a lawsuit on a healthcare provider.
The Medical Malpractice Act established a medical review commission charged with prescreening any alleged act of medical malpractice. Prior to the action being filed in the court system against a healthcare provider, a plaintiff must first present his or her case to the commission, which consists of three members of the state bar association and three licensed healthcare providers. The commission is entrusted with determining whether there is substantial evidence that the acts complained of occurred and constitute malpractice as well as whether there is a reasonable probability the patient was injured by those acts.
The Medical Malpractice Act established a statute of limitations where a person claiming medical malpractice has three years from the time of injury to file a lawsuit.
New Mexico’s Medical Malpractice Act limited the dollar amount a plaintiff can win in a medical liability lawsuit to $500,000—except for punitive damages and medical-care-related expenses. A cap on damages has long been acknowledged as the most important aspect of any medical malpractice tort reform law. By limiting the amount of recoverable damages to $500,000, medical liability insurance underwriters can better plan the amount they will have to payout in a calendar year, and adjust downward the premiums healthcare providers pay. (In 1992 and 1993, the Liaison Committee of the New Mexico Bar and Medical Society agreed to increase both the overall limit of liability from $500,000 to $600,000 and lower limit from $100,000 to $200,000.)
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 states currently operate a patient compensation similar to New Mexico’s.
Between 2008 and 2011, the Liaison Committee of the New Mexico Bar and Medical Society again met to discuss amendments to the Medical Malpractice Act that would improve the system for all New Mexicans. The group agreed to raise the maximum 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. Gov. Martinez’ veto did mention support for clarifying the Medical Malpractice Act, asking the legislature to revisit the topic in future sessions.
Medical malpractice insurance premiums are relatively inexpensive in New Mexico. Because the insurance climate is physician-friendly, medical malpractice insurance carriers compete for your business. This is why it is critical to your success to employ a broker who specializes in medical malpractice insurance when searching for a policy. Only an experienced agent will be able to shop your coverage among all the available carriers in order to find the best coverage at the best price.
This write-up of New Mexico was put together by Michael Matray, the Editor of the Medical Liability Monitor