An unfriendly medical liability environment was driving New Mexico physicians out of state and making it nearly impossible to recruit new physicians to care for the state’s already underserved patients.
Physicians in New Mexico have been paying more than twice the national average for medical liability insurance. That is because of state law permitting, stackable punitive damages on stackable occurrences, so doctors have been fleeing The Land of Enchantment and another two-thirds said they were planning to leave.
A couple of years ago, New Mexico lawmakers tweaked some of the state’s medical liability laws, but this spring they went much further with reforms and passed the Medical Malpractice Act, House Bill 99. The legislation comes as the nation is seeing medical liability premiums climb for the seventh straight year, and it significantly overhauls New Mexico laws to lay the foundation for a system that is fairer for patients and physicians.
Among other things, the legislation:
- Changes the definition of “occurrence” to prevent claims stacking. The change closes a loophole that inflated physicians’ liability exposure by allowing successive medical errors or multiple negligent providers involved in a single patient’s treatment be treated as multiple separate incidents. That, in turn, inflated the total value of the lawsuit and allowed plaintiffs to bypass statutory damage caps.
- Requires that future medical expenses now be valued on what was actually paid, not what was billed. This stops plaintiffs from using inflated billing figures to drive up damage awards.
- Keeps hospitals in the Patient Compensation Fund in perpetuity, preserving the stable, predictable liability environment that keeps care accessible statewide.
- Bars punitive damages from the complaint that initiates a lawsuit. Previously, these were pled in roughly 92% of malpractice cases.
- Establishes that before punitive damages can be pled, a plaintiff must first show that they are supported by a preponderance of the evidence.
- Raises the evidentiary standard for awarding punitive damages to clear and convincing evidence, up from a from preponderance of the evidence.
- Caps any award of punitive damages at one times compensatory damages for independent physicians, their practices and independent outpatient facilities.
In a video interview with AMA President Bobby Mukkamala, MD, New Mexico Gov. Michelle Lujan Grisham said “the goal for me was to take experts in healthcare, of which we have many—including the AMA—to talk about what the national stats are and aren’t, and to help New Mexico put together a fair system that protects patients, but doesn’t unduly burden and make it unfair, impossible in fact, to hold coverage, to expand your practice, and to stay fairly in a state like New Mexico. And that’s what we accomplished.”
The New Mexico Medical Society (NMMS) worked for years, with support from the AMA, to help the state’s legislators understand that making these changes was important for patients’ health and well-being. NMMS President Robert Underwood, MD, said the stability that the legislation will provide will help stop the bleeding of physicians from the state.
“Now we have the task of being able to send the message that New Mexico is open for business and we are here to help your practice and to help you establish a great practice,” said Dr. Underwood. “There is a great need in the state of New Mexico and HB99 allows physicians to be able to really come here and provide care in a very high need environment.”
The AMA, which sent a letter supporting the bill (PDF) as the legislature was considering it and provided funding under the AMA State Advocacy Accelerator Grant Program, also sent a letter of thanks (PDF) to Gov. Lujan Grisham after HB 99 was enacted.
AMA CEO John Whyte, MD, MPH, wrote “that the medical liability reforms included in this legislation will help New Mexico retain and recruit physicians by providing long-needed stability to New Mexico’s medical liability insurance market.”
Dr. Underwood said that NMMS will continue to work to ensure the legislation stays intact when it faces the inevitable court challenges that medical liability laws nationwide encounter.
To protect patients’ access to physician care, the AMA is committed to keeping medical liability insurance premiums stable through its work with state and specialty medical associations and other stakeholders to pursue traditional and innovative medical liability reforms.
Wins beyond medical liability
In an effort to attract more physicians and to better serve the state’s patients, New Mexico lawmakers also have removed other barriers for physicians and boosting resident’s ability to access care:
- Loan repayments. Physicians can receive awards of up to $75,000 annually or $300,000 over four years to help repay medical school loans. For the first time, specialists are eligible too. The state has more than $100 million in healthcare professional loan repayment funding secured over five years.
- Tax relief. Gross receipts taxes on patient copays and deductibles have been eliminated. A new $10,000 personal income tax credit for physicians is in place through 2033. Rural physician tax credits have also been modernized and expanded.
- Fair Medicaid pay. Medicaid reimbursement rates will be the same as Medicare statewide, and 150% of Medicare for primary care, maternal/child health, behavioral health and all evaluation and management codes.
- Faster credentialing. Insurance credentialing must be done within 30 days.
- Cross state lines. New Mexico enacted the Interstate Medical Licensure Compact (PDF) so that physicians can more easily bring their licenses to the state and they can practice across the region.
- Affordable health coverage. New Mexico’s fiscal year 2027 budget includes nearly $300 million for health care affordability programs to protect coverage for more than 46,000 residents and reduce costs for 122,000 people across the state.
- No more surprise bills. Hospital and health systems are prohibited from charging facility fees directly to patients for preventive outpatient care, outpatient vaccinations and telehealth services.
You can be an advocate too
In her interview with the AMA, Gov. Lujan Grisham said the AMA and NMMS were “stunning” in their efforts on improving the medical liability climate in New Mexico.
She said they helped the state put together a fact-based healthcare summit that explained to lawmakers how New Mexico was an outlier compared to other states when it came to medical liability laws and other areas of the healthcare system. That, she said, helped take away some of the emotion that was holding up change.
“That made a big difference because now we’re educating the public, we’re educating lawmakers and then the medical society joined forces and so did the AMA with local advocacy groups,” she said. “These are everyday New Mexicans who are struggling to get a doctor. Some primary … practices can’t see people for a year. It was this effort that made it so real to lawmakers about what was at stake.”
Dr. Underwood echoed the importance of presenting facts and having real people—patients and physicians—telling their stories. When physicians first started telling their stories he said they weren’t believed. But as grassroots efforts resulted in more physicians as well as patients telling similar stories, the issue gained momentum and legislators realized that the issue was real.
In addition, he said aligning with the hospital association or others impacted by an issue to form a coalition can be helpful in having voices heard.
“Advocacy is incredibly important,” Dr. Underwood said. “It seems like a foreign concept to a lot of us, especially physicians. It’s not something that we thought we were going to be doing when we said we wanted to go to medical school. Yet, the importance of it cannot be underestimated. And if not you, then who will step up? Whether it’s advocating for what the appropriate pediatric vaccine schedule is, all the way up to medical malpractice, these things affect us and we often know more about them than the legislators do so it’s important for us to share that voice.”
Learn more about the facts needed to address the broken medical liability system with the AMA’s “Medical Liability Reform Now!” (PDF) reported.
