Malpractice ‘reform’ will ravage hospitals and outpatient care

New Mexico Hospitals and Outpatient Healthcare facilities (OPHF) were essentially rejected from the protections of the New Mexico Medical Malpractice Act (MMA) as a result of House Bill 75, sponsored by the New Mexico Trial Lawyers Association, passed by the 2021 NM Legislature and signed into law by the governor.

The original HB 75’s intent was to “Clarify and modernize the New Mexico Medical Malpractice Act, raising liability limits and recovery caps and limiting participation by hospitals and outpatient health care facilities.” The New Mexico Medical Malpractice Act, as amended by the Senate wording, destroyed any pretext of including hospitals and outpatient health care facilities in HB 75. To wit:

1) Hospitals and OPHFs’ cap limits were increased from $600,000 to $4 million per occurrence in 2022; to $4.5 million in 2023; to $5.5 million in 2025; and to $6 million in 2026. In addition, the cap limits will increase each year based on the consumer price index. These increased limits in excess of the basic $750,000 for “independent health care providers” are not covered by the Patient Compensation Fund and will require some form of insurance or self-insurance, up to the maximum of $6 million in 2026, when hospitals and OHFs are eliminated entirely from the protections of the MMA.

2) The Medical Review Commission hears a case before it is filed in court, but this provision will no longer apply to hospitals and OPHFs and their business entities.

3) Hospitals and OPHF’s Patient Compensation Fund charges include an annual fee to reduce the deficits of the PCF Fund – as of Dec. 31, 2019, the PCF had estimated deficits of $62.2 million; the HB 75 mandates the PCF to be solvent by Dec. 31, 2026.

4) Ironically, hospitals and OPHFs are no longer eligible to be included in the Medical Malpractice Act coverage under HB 75 as of Dec. 31, 2026, the same date the deficits are to be eliminated.

5) It is estimated 40% to 50% of all practicing physicians are now employed by hospitals as hospitalists or employed by OPHFs. HB 75 mandates hospitalists and other “agents” of hospitals or OPHFs are subject to the same caps on malpractice damages as hospitals as of calendar year 2025.

Obviously, the Senate version of HB 75 was designed by the Trial Lawyers Association to accomplish the original intent: “To eliminate hospitals and OPFs from the New Mexico Medical Malpractice Act.”

There are very credible studies as to the reasons why government involvement in limiting Medical Professional Liability damage claims is necessary. To wit:

Zurich Insurance Co. is one of the largest insurers of Medical Professional Liability Insurance in the United States. A recent Zurich study of the monetary awards for medical accidents noted “of some 3,400 medical liabilities with ultimate loss values ​​greater than $1 million, these claims represent approximately 4% of the total ultimate number of claims, yet in terms of loss dollars, these large losses amount to 60% of dollars paid for developed losses.”

A recent PEW Report, “Public Medical Malpractice Insurance,” stated “Only government-sponsored Patient Compensation Funds can alleviate severe losses in medical professional liability and are more efficient than private insurers and essential in providing excess insurance liability coverage to the medical professions.” Private insurers are prone to leave the medical professional market liability given severe losses, as did Continental Insurance Company (CNA) early this year, canceling some $75 million in MPL premiums.

HB 75 will cause negative repercussions on hospital costs and services, and possibly fewer hospitals.

The 2023 New Mexico session allows all bills to be introduced, and it is time for hospitals and OPHFs to prepare legislation for hospitals and outpatient healthcare facilities “Professional Liability Act” to include a separate patient compensation fund. Concerned NM citizens should contact their state representatives and senators to resolve the ill effects of HB75 and the need to pass corrective legislation in the 2023 Legislature.

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