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New Mexico Supreme Court upholds damage caps – protecting physicians and how much they pay for malpractice coverage

Our take: The historical payout data in NM can play a major role in determining the overall cost that insurance companies charge physicians for their malpractice coverage……and how hospital systems determine the malpractice coverage part of their financials. This decision, and the follow-up compromised legislation, will keep the damage cap in place. We have been tracking historical medical malpractice insurance rates for decades, and we have steadily seen a small uptick over the past years. This will help NM stabilize their rates. If there are any doctors practicing in NM, and you have questions about this decision and how it will affect your malpractice rates, fill out our Contact Us form and you can speak to one our NM specialists that can walk you through this.

The New Mexico Supreme Court determined last month, in the case of Siebert v. Okun, that the state’s $600,000 cap on nonmedical, nonpunitive damages in medical liability lawsuits is constitutional.

According to the unanimous decision, Second Judicial District Court Judge Victor Lopez erred in 2018 when he denied a motion by Rebecca C. Okun, MD, and Women’s Specialists of New Mexico to reduce a $2.6 million medical malpractice judgment to conform with the $600,000 damage cap established by the New Mexico Medical Malpractice Act. The Supreme Court remanded the case back to the district court to conform the judgment with the cap.

Judge Lopez had refused to reduce the $2.6 million medical malpractice verdict, determining the legislature exceeded its constitutional authority when implementing the New Mexico Medical Malpractice Act to the extent that it restricts a plaintiff’s “right to receive an unaltered jury verdict.”

The five justices disagreed. According to the Supreme Court’s opinion, while Article II, Section 12, of the New Mexico Constitution holds that the right to a jury trial shall remain “inviolate,” an “inviolate right is not beyond the reach of regulation, so long as that regulation does not substantially impair the core essence of the right” and that the statutory cap on damages “merely gives legal consequence to the jury’s determination of the amount of the verdict.”

Two days after the decision in Siebert v. Okun, New Mexico legislators unveiled a compromise bill intended to modernize the state’s Medical Malpractice Act. Prior to the agreement, competing bills had divided the legislature as well as the state’s hospitals, physicians and trial lawyers.

At issue was whether to remove hospitals from the definition of “healthcare provider” under the Medical Malpractice Act in order to exclude them from accessing the state’s patient compensation fund (PCF). The PCF currently carries a $56 million deficit, and supporters of the proposal argued that, as written, the Act’s excess coverage was never intended for hospitals.

The New Mexico Hospital Association and Medical Society warned that without access to the PCF and the other protections afforded by the Medical Malpractice Act, a number of already struggling hospitals could be forced to close their doors.

The compromise legislation, which was signed into law by Gov. Michelle Lujan Grisham on April 1, maintains hospitals’ “healthcare provider” status under the Medical Malpractice Act and makes a number of changes to the New Mexico medical liability law. Some of these changes are as follows:

• The cap on nonmedical, nonpunitive damages will increase to $750,000.

• Healthcare providers will be required to carry a medical malpractice insurance policy of $250,000 per occurrence with a $750,000 aggregate. The requirement was previously $200,000/$600,000.

• The PCF will cover any amount due from a judgment or settlement in excess of $250,000. It previously covered damages in excess of $200,000.

• For hospitals, outpatient healthcare facilities or business entities electing to be covered under the Medical Malpractice Act, the superintendent will determine, based on an annual risk assessment, the hospital, outpatient healthcare facility or business entity’s additional charges for accessing the PCF.

• Payment for future medical care and related benefits shall be made as expenses are incurred. The court must approve any lump-sum settlement, and the portion of settlement funds intended for future medical care must be placed into a medical savings trust.

If you want to take a deep dive into New Mexico and view current medical malpractice rates, historic rates and learn everything there is to know about medical malpractice insurance for physicians in New Mexico, then click here.