By fixing the damage cap, New Mexico managed to prevent a crisis in medical malpractice insurance

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In March of this year, the New Mexico Legislature passed a bipartisan update to the state’s Medical Malpractice Act just days before the end of the 2023 session. This move prevented a potential medical liability insurance crisis. Senate Bill 523, a compromise between trial lawyers and healthcare professionals, establishes a $1 million cap on medical malpractice payouts for independent outpatient clinics. These include urgent care centers, ambulatory surgical centers, and free-standing emergency rooms that are not hospital-controlled. The cap is expected to allow these clinics to maintain their medical liability insurance coverage and remain open. From 2024 onwards, the cap will adjust annually based on the prior three-year average consumer price index.

In 2021, an amendment to the New Mexico Medical Malpractice Act allocated some independent clinics into the same category as hospitals. This meant that the cap on their potential payouts in medical malpractice actions was set to rise from $750,000 to $4 million on Jan. 1, 2022. However, most medical professionals and their medical liability insurance representatives could not obtain or afford insurance with such a high cap. Emergency legislation was passed on Dec. 31, 2021, to maintain the $750,000 cap for outpatient facilities majority-owned by independent physicians in 2022 and 2023. After that, the cap was set to increase to $5 million per occurrence on Jan. 1, 2024.

Last month’s compromise legislation should provide a lasting fix for New Mexico’s independent clinics. The $1 million cap balances the clinics’ need for affordable liability insurance with the rights of patients harmed by medical error. Additionally, it offers greater predictability for future independent urgent care centers, ambulatory surgical centers, and free-standing emergency rooms looking to open in New Mexico.

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