New Mexico Caps Medical Malpractice Claims at $1 million

Governor Michelle Lujan Grisham signed into law the Medical Malpractice Act, which caps medical malpractice claims at $ 1 million for independent physicians and independently-owned health care facilities.

S.B. 523

On March 14th, 2023, S.B. 523 was introduced to the Senate Tax Committee. The bill amended the Medical Malpractice Act by lowering the cap of damages from $5 million to $1 million for independent healthcare providers and independently-owned healthcare facilities, like ambulatory surgical centers, urgent care facilities, and independently-owned emergency rooms. The bill carves out an exception for punitive damages, which are not capped under the statute.

S.B. 523, which was sponsored by Senate Majority Leader Peter Wirth (D), Senate Minority Leader Greg Baca (R), House Speaker Javier Martinez (D), and Minority Floor Leader Ryan Lane (R), passed unanimously through the Senate Tax Committee before being introduced to the Senate floor on March 15th.

Sen. Joe Cervantes (D) of Las Cruces opined that the bill was deliberately sent to the Senate Tax Committee, rather than the Senate Judiciary Committee, so that it could easily pass without close scrutiny. Sen. Cervantes believed that the bill, as written, created ambiguities, inconsistencies, and problems, which would require further amendments in the future. Despite such concerns, after a two-hour debate, the measure passed on the Senate floor by a 40-2 vote. The bill was then introduced to the House of Representatives, before arriving on Gov. Lujan Grisham’s desk for signing.

On April 7, Governor Lujan Grisham signed the bill into law, which will take effect in 2024.

Advocacy for the Amendment

Changes were last made to New Mexico’s Medical Malpractice Act in 2021. At which time, the cap for damages was set at $5 million for both independent clinics and hospitals. However, independent healthcare providers and independently-owned healthcare facilities complained that the cap was far too high. According to the medical community and other advocates for lowering the cap on damages for medical malpractice claims, the high cap made it difficult to obtain affordable malpractice insurance, which scared physicians away from establishing their practices in New Mexico.

Gov. Lujan Grisham, who helped broker the bill, opined that amending the Medical Malpractice Act would benefit the patients who would have access to more healthcare providers, and also the physicians who can now afford malpractice insurance in New Mexico. Sponsors of the bill believe that S.B. 523 strikes the right balance by being fair to both patients and physicians.

The Impact of the New Law

S.B. 523 drastically cuts the cap on damages for medical malpractice settlements. Proponents of the law believe that lowering the cap will enable physicians and independently-owned healthcare facilities to afford malpractice insurance, which will make New Mexico a friendlier state to the medical community.

Prior to the amendment, many local healthcare providers reported being forced to close their clinics due to high medical malpractice settlements and expensive malpractice insurance. Such closures created a fear that access to healthcare across the state would be limited. According to the proponents, a climate where physicians and clinicians are more widely available will increase access to quality care for patients.