MEDICAL MALPRACTICE CHANGES, the official text

HOUSE BILL 99

57th legislature - STATE OF NEW MEXICO - second session, 2026

INTRODUCED BY

Christine Chandler and Gail Armstrong and Dayan Hochman-Vigil
and Sarah Silva and Doreen Y. Gallegos

AN ACT

RELATING TO MEDICAL MALPRACTICE; CLARIFYING DEFINITIONS IN THE
MEDICAL MALPRACTICE ACT; LIMITING PUNITIVE DAMAGES IN MEDICAL
MALPRACTICE CASES; REQUIRING PAYMENTS FROM THE PATIENT'S
COMPENSATION FUND TO BE MADE AS EXPENSES ARE INCURRED.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 41-5-3 NMSA 1978 (being Laws 1976,
Chapter 2, Section 3, as amended) is amended to read:

"41-5-3. DEFINITIONS.--As used in the Medical Malpractice
Act:

A. "advisory board" means the patient's
compensation fund advisory board;

B. "control" means equity ownership in a business
entity that:

(1) represents more than fifty percent of the
total voting power of the business entity; or

(2) has a value of more than fifty percent of
that business entity;

C. "fund" means the patient's compensation fund;

D. "health care provider" means a person, a
corporation, an organization, a facility or an institution
licensed or certified by this state to provide health care or
professional services as a doctor of medicine, a hospital, an
outpatient health care facility, a doctor of osteopathy, a
chiropractor, [podiatrist] a podiatric physician, a nurse
anesthetist, a physician's assistant, a certified nurse
practitioner, a clinical nurse specialist or certified nurse-midwife or a business entity that is organized, incorporated or
formed pursuant to the laws of New Mexico that provides health
care services primarily through natural persons identified in
this subsection. "Health care provider" does not mean a person
or an entity protected pursuant to the Tort Claims Act or the
Federal Tort Claims Act;

E. "hospital" means a facility licensed as a
hospital in this state that offers [in-patient] inpatient
services, nursing or overnight care on a twenty-four-hour basis
for diagnosing, treating and providing medical, psychological
or surgical care for three or more separate persons who have a
physical or mental illness, disease, injury or rehabilitative
condition or are pregnant and may offer emergency services.
"Hospital" includes a hospital's parent corporation, subsidiary
corporations or affiliates if incorporated or registered in New
Mexico; employees and locum tenens providing services at the
hospital; and agency nurses providing services at the hospital.
"Hospital" does not mean a person or an entity protected
pursuant to the Tort Claims Act or the Federal Tort Claims Act;

F. "independent outpatient health care facility"
means a health care facility that is an ambulatory surgical
center, an urgent care facility or a free-standing emergency
room that is not, directly or indirectly through one or more
intermediaries, controlled or under common control with a
hospital. "Independent outpatient health care facility"
includes a facility's employees, locum tenens providers and
agency nurses providing services at the facility. "Independent
outpatient health care facility" does not mean a person or an
entity protected pursuant to the Tort Claims Act or the Federal
Tort Claims Act;

G. "independent provider" means a doctor of
medicine, doctor of osteopathy, chiropractor, [podiatrist]
podiatric physician, nurse anesthetist, physician's assistant,
certified nurse practitioner, clinical nurse specialist or
certified nurse-midwife who is not an employee of a hospital or
an outpatient health care facility. "Independent provider"
does not mean a person or an entity protected pursuant to the
Tort Claims Act or the Federal Tort Claims Act. "Independent
provider" includes:

(1) a health care facility that is:

(a) licensed pursuant to the [Public
Health Act] Health Care Code as an outpatient facility;

(b) not an ambulatory surgical center,
an urgent care facility or a free-standing emergency room; and

(c) not hospital-controlled; and

(2) a business entity that is not a hospital
or an outpatient health care facility that employs or consists
of members who are licensed or certified as doctors of
medicine, doctors of osteopathy, chiropractors, [podiatrists]
podiatric physicians, nurse anesthetists, physician's
assistants, certified nurse practitioners, clinical nurse
specialists or certified nurse-midwives and the business
entity's employees;

H. "insurer" means an insurance company engaged in
writing health care provider malpractice liability insurance in
this state;

I. "malpractice claim" includes any cause of action
arising in this state against a health care provider for
medical treatment, lack of medical treatment or other claimed
departure from accepted standards of health care that
proximately results in injury to the patient, whether the
patient's claim or cause of action sounds in tort or contract,
and includes but is not limited to actions based on battery or
wrongful death. "Malpractice claim" does not include a cause
of action arising out of the driving, flying or nonmedical acts
involved in the operation, use or maintenance of a vehicular or
aircraft ambulance;

J. "medical care and related benefits" means all
reasonable medical, surgical, physical rehabilitation and
custodial services and includes drugs, prosthetic devices and
other similar materials reasonably necessary in the provision
of such services;

K. "occurrence" means [all] an injury or set of
injuries to a patient caused by [health care providers'
successive] acts or omissions in the course of medical
treatment that combined [concurrently] to create a malpractice
claim, regardless of the number of health care providers whose
acts or omissions contributed to the injury or injuries;
provided that an occurrence shall not be construed to limit
recovery to only one maximum statutory payment when independent
medical acts or omissions are causes of separate injuries to a
patient;

L. "outpatient health care facility" means an
entity that is hospital-controlled and is licensed pursuant to
the [Public Health Act] Health Care Code as an outpatient
facility, including ambulatory surgical centers, free-standing
emergency rooms, urgent care clinics, acute care centers and
intermediate care facilities and includes a facility's
employees, locum tenens providers and agency nurses providing
services at the facility. "Outpatient health care facility"
does not include:

(1) independent providers;

(2) independent outpatient health care
facilities; or

(3) individuals or entities protected pursuant
to the Tort Claims Act or the Federal Tort Claims Act;

M. "patient" means a natural person who received or
should have received health care from a health care provider,
under a contract, express or implied; [and]

N. "superintendent" means the superintendent of
insurance; and

O. "value of accrued medical care and related
benefits" means the actual amount paid or owed by a patient, or
a third party on behalf of a patient, for medical care and
related benefits. "Value of accrued medical care and related
benefits" does not include any costs waived, written off or
lowered by a health care provider."

SECTION 2. Section 41-5-5 NMSA 1978 (being Laws 1992,
Chapter 33, Section 2, as amended) is amended to read:

"41-5-5. QUALIFICATIONS.--

A. To be qualified under the provisions of the
Medical Malpractice Act, a health care provider, except an
independent outpatient health care facility, shall:

(1) establish its financial responsibility by
filing proof with the superintendent that the health care
provider is insured by a policy of malpractice liability
insurance issued by an authorized insurer in the amount of at
least two hundred fifty thousand dollars ($250,000) per
occurrence or by having continuously on deposit the sum of
seven hundred fifty thousand dollars ($750,000) in cash with
the superintendent or such other like deposit as the
superintendent may allow by rule; provided that hospitals and
hospital-controlled outpatient health care facilities that
establish financial responsibility through a policy of
malpractice liability insurance may use any form of malpractice
insurance; and provided further that for independent providers,
in the absence of an additional deposit or policy as required
by this subsection, the deposit or policy shall provide
coverage for not more than three separate occurrences; and

(2) pay the surcharge assessed on health care
providers by the superintendent pursuant to Section 41-5-25
NMSA 1978.

B. To be qualified under the provisions of the
Medical Malpractice Act, an independent outpatient health care
facility shall:

(1) establish its financial responsibility by
filing proof with the superintendent that the health care
provider is insured by a policy of malpractice liability
insurance issued by an authorized insurer in the amount of at
least five hundred thousand dollars ($500,000) per occurrence
or by having continuously on deposit the sum of one million
five hundred thousand dollars ($1,500,000) in cash with the
superintendent or other like deposit as the superintendent may
allow by rule; provided that for independent outpatient health
care facilities, in the absence of an additional deposit or
policy as required by this subsection, the deposit or policy
shall provide coverage for not more than three separate
occurrences; and

(2) pay the surcharge assessed on independent
outpatient health care facilities by the superintendent
pursuant to Section 41-5-25 NMSA 1978.

C. For hospitals or hospital-controlled outpatient
health care facilities electing to be covered under the Medical
Malpractice Act, the superintendent shall determine, based on a
risk assessment of each hospital or hospital-controlled
outpatient health care facility, each hospital's or hospital-controlled outpatient health care facility's base coverage or
deposit and additional charges for the fund. The
superintendent shall arrange for an actuarial study before
determining base coverage or deposit and surcharges.

D. A health care provider not qualifying under this
section shall not have the benefit of any of the provisions of
the Medical Malpractice Act in the event of a malpractice claim
against it; provided that beginning:

(1) July 1, 2021, hospitals and hospital-controlled outpatient health care facilities shall not
participate in the medical review process; [and beginning]

(2) January 1, [2027] 2030, hospitals and
hospital-controlled outpatient health care facilities shall
have the benefits of the other provisions of the Medical
Malpractice Act except participation in the fund; and

(3) January 1, 2030, the qualification
requirements under Subsection A of this section shall no longer
apply to hospitals and hospital-controlled outpatient health
care facilities."

SECTION 3. Section 41-5-6 NMSA 1978 (being Laws 1992,
Chapter 33, Section 4, as amended) is amended to read:

"41-5-6. LIMITATION OF RECOVERY.--

A. Except for punitive damages and past and future
medical care and related benefits, the aggregate dollar amount
recoverable by all persons for or arising from any injury or
death to a patient as a result of malpractice shall not exceed
six hundred thousand dollars ($600,000) per occurrence for
malpractice claims brought against health care providers if the
injury or death occurred prior to January 1, 2022. In jury
cases, the jury shall not be given any instructions dealing
with this limitation.

B. Except for punitive damages and past and future
medical care and related benefits, the aggregate dollar amount
recoverable by all persons for or arising from any injury or
death to a patient as a result of malpractice shall not exceed
seven hundred fifty thousand dollars ($750,000) per occurrence
for malpractice claims against independent providers; provided
that, beginning January 1, 2023, the per occurrence limit on
recovery shall be adjusted annually by the consumer price index
for all urban consumers.

C. The aggregate dollar amount recoverable by all
persons for or arising from any injury or death to a patient as
a result of malpractice, except for punitive damages and past
and future medical care and related benefits, shall not exceed
seven hundred fifty thousand dollars ($750,000) for claims
brought against an independent outpatient health care facility;
for an injury or death that occurred in calendar years 2022 and
2023.

D. In calendar year 2024 and subsequent years, the
aggregate dollar amount recoverable by all persons for or
arising from an injury or death to a patient as a result of
malpractice, except for punitive damages and past and future
medical care and related benefits, shall not exceed the
following amounts for claims brought against an independent
outpatient health care facility:

(1) for an injury or death that occurred in
calendar year 2024, one million dollars ($1,000,000) per
occurrence; and

(2) for an injury or death that occurred in
calendar year 2025 and thereafter, the amount provided in
Paragraph (1) of this subsection, adjusted annually by the
prior three-year average consumer price index for all urban
consumers, per occurrence.

E. In calendar year 2022 and subsequent calendar
years, the aggregate dollar amount recoverable by all persons
for or arising from any injury or death to a patient as a
result of malpractice, except for punitive damages and past and
future medical care and related benefits, shall not exceed the
following amounts for claims brought against a hospital or a
hospital-controlled outpatient health care facility:

(1) for an injury or death that occurred in
calendar year 2022, four million dollars ($4,000,000) per
occurrence;

(2) for an injury or death that occurred in
calendar year 2023, four million five hundred thousand dollars
($4,500,000) per occurrence;

(3) for an injury or death that occurred in
calendar year 2024, five million dollars ($5,000,000) per
occurrence;

(4) for an injury or death that occurred in
calendar year 2025, five million five hundred thousand dollars
($5,500,000) per occurrence;

(5) for an injury or death that occurred in
calendar year 2026, six million dollars ($6,000,000) per
occurrence; and

(6) for an injury or death that occurred in
calendar year 2027 and each calendar year thereafter, the
amount provided in Paragraph (5) of this subsection, adjusted
annually by the consumer price index for all urban consumers,
per occurrence.

F. The aggregate dollar amounts provided in
Subsections B through E of this section include payment to any
person for any number of loss of consortium claims or other
claims per occurrence that arise solely because of the injuries
or death of the patient.

G. In jury cases, the jury shall not be given any
instructions dealing with the limitations provided in this
section.

H. The value of accrued medical care and related
benefits shall not be subject to any limitation.

I. Except for an independent outpatient health care
facility, a health care provider's personal liability is
limited to two hundred fifty thousand dollars ($250,000) for
monetary damages and medical care and related benefits as
provided in Section 41-5-7 NMSA 1978. Any amount due from a
judgment or settlement in excess of two hundred fifty thousand
dollars ($250,000) shall be paid from the fund, except as
provided in Subsections J and K of this section.

J. An independent outpatient health care facility's
personal liability is limited to five hundred thousand dollars
($500,000) for monetary damages and medical care and related
benefits as provided in Section 41-5-7 NMSA 1978. Any amount
due from a judgment or settlement in excess of five hundred
thousand dollars ($500,000) shall be paid from the fund.

K. Until January 1, [2027] 2030, amounts due from a
judgment or settlement against a hospital or hospital-controlled outpatient health care facility in excess of seven
hundred fifty thousand dollars ($750,000), excluding past and
future medical expenses, shall be paid by the hospital or
hospital-controlled outpatient health care facility and not by
the fund. Beginning January 1, [2027] 2030, amounts due from a
judgment or settlement against a hospital or hospital-controlled outpatient health care facility shall not be paid
from the fund.

[L. The term "occurrence" shall not be construed in
such a way as to limit recovery to only one maximum statutory
payment if separate acts or omissions cause additional or
enhanced injury or harm as a result of the separate acts or
omissions. A patient who suffers two or more distinct injuries
as a result of two or more different acts or omissions that
occur at different times by one or more health care providers
is entitled to up to the maximum statutory recovery for each
injury.]"

SECTION 4. Section 41-5-7 NMSA 1978 (being Laws 1992,
Chapter 33, Section 5, as amended) is amended to read:

"41-5-7. MEDICAL EXPENSES [AND PUNITIVE DAMAGES].--

A. Awards of past and future medical care and
related benefits shall not be subject to the limitations of
recovery imposed in Section 41-5-6 NMSA 1978.

B. The health care provider shall be liable for all
medical care and related benefit payments until the total
payments made by or on behalf of it for monetary damages and
medical care and related benefits combined equals the health
care provider's personal liability limit as provided in
[Subsection I of] Section 41-5-6 NMSA 1978, after which the
payments shall be made by the fund.

C. Payments made from the fund for the cost of
medical care and related benefits shall be made as expenses are
incurred.

[C.] D. Beginning January 1, [2027] 2030, any
amounts due from a judgment or settlement against a hospital or
hospital-controlled outpatient health care facility shall not
be paid from the fund if the injury or death occurred after
December 31, 2026.

[D. This section shall not be construed to prevent
a patient and a health care provider from entering into a
settlement agreement whereby medical care and related benefits
shall be provided for a limited period of time only or to a
limited degree.

E. A judgment of punitive damages against a health
care provider shall be the personal liability of the health
care provider. Punitive damages shall not be paid from the
fund or from the proceeds of the health care provider's
insurance contract unless the contract expressly provides
coverage. Nothing in Section 41-5-6 NMSA 1978 precludes the
award of punitive damages to a patient. Nothing in this
subsection authorizes the imposition of liability for punitive
damages where that imposition would not be otherwise authorized
by law.]"

SECTION 5. A new section of the Medical Malpractice Act,
Section 41-5-7.1 NMSA 1978, is enacted to read:

"41-5-7.1. [NEW MATERIAL] PUNITIVE DAMAGES.--

A. Punitive damages may only be awarded in a
malpractice claim if the prevailing party provides clear and
convincing evidence demonstrating that the acts of the health
care provider were malicious, willful, wanton, reckless,
fraudulent or in bad faith.

B. A judgment of punitive damages against a health
care provider shall:

(1) not be in an amount greater than the
applicable limitation on monetary damages provided in Section
41-5-6 NMSA 1978; and

(2) not be paid from the fund.

C. The initial claim for relief in a malpractice
claim shall not include punitive damages. A claim for punitive
damages may be asserted by amendment to the pleadings only
after the court has determined that discovery has been
substantially completed and the plaintiff has established prima
facie proof of a triable issue. If the court allows amendment
to the complaint pursuant to this subsection, the court, in its
discretion, may permit additional discovery on the question of
punitive damages."

SECTION 6. Section 41-5-25 NMSA 1978 (being Laws 1992,
Chapter 33, Section 9, as amended) is amended to read:

"41-5-25. PATIENT'S COMPENSATION FUND--THIRD-PARTY
ADMINISTRATOR--ACTUARIAL STUDIES--SURCHARGES--CLAIMS--PRORATION--PROOFS OF AUTHENTICITY.--

A. The "patient's compensation fund" is created as
a nonreverting fund in the state treasury. The fund consists
of money from surcharges, income from investment of the fund
and any other money deposited to the credit of the fund. The
fund shall be held in trust, deposited in a segregated account
in the state treasury and invested by the [state] investment
office and shall not become a part of or revert to the general
fund or any other fund of the state. Money from the fund shall
be expended only for the purposes of and to the extent provided
in the Medical Malpractice Act. All approved expenses of
collecting, protecting and administering the fund, including
purchasing insurance for the fund, shall be paid from the fund.

B. The superintendent shall contract for the
administration and operation of the fund with a qualified,
licensed third-party administrator, selected in consultation
with the advisory board, no later than January 1, 2022. The
third-party administrator shall provide an annual audit of the
fund to the superintendent.

C. The superintendent, as custodian of the fund,
and the third-party administrator shall be notified by the
health care provider or the health care provider's insurer
within thirty days of service on the health care provider of a
complaint asserting a malpractice claim brought in a court in
this state against the health care provider.

D. The superintendent shall levy an annual
surcharge on all New Mexico health care providers qualifying
under Section 41-5-5 NMSA 1978. The surcharge shall be
determined by the superintendent with the advice of the
advisory board and based on the annual independent actuarial
study of the fund. The surcharges for health care providers,
including hospitals and outpatient health care facilities whose
qualifications for the fund end on January 1, [2027] 2030,
shall be based on sound actuarial principles, using data
obtained from New Mexico claims and loss experience. A
hospital or outpatient health care facility seeking
participation in the fund during the remaining qualifying years
shall provide, at a minimum, the hospital's or outpatient
health care facility's direct and indirect cost information as
reported to the federal centers for medicare and medicaid
services for all self-insured malpractice claims, including
claims and paid loss detail, and the claims and paid loss
detail from any professional liability insurance carriers for
each hospital or outpatient health care facility and each
employed health care provider for the past eight years to the
third-party actuary. The same information shall be available
to the advisory board for review, including financial
information and data, and excluding individually identifying
case information, which information shall not be subject to the
Inspection of Public Records Act. The superintendent, the
third-party actuary or the advisory board shall not use or
disclose the information for any purpose other than to fulfill
the duties pursuant to this subsection.

E. The surcharge shall be collected on the same
basis as premiums by each insurer from the health care
provider. The surcharge shall be due and payable within thirty
days after the premiums for malpractice liability insurance
have been received by the insurer from the health care provider
in New Mexico. If the surcharge is collected but not paid
timely, the superintendent may suspend the certificate of
authority of the insurer until the annual premium surcharge is
paid.

F. Surcharges shall be set by October 31 of each
year for the next calendar year. Beginning in 2021, the
surcharges shall be set with the intention of bringing the fund
to solvency with no projected deficit by December 31, 2026.
All qualified and participating hospitals and outpatient health
care facilities shall cure any fund deficit attributable to
hospitals and outpatient health care facilities by December 31,
2026.

G. If the fund would be exhausted by payment of all
claims allowed during a particular calendar year, then the
amounts paid to each patient and other parties obtaining
judgments shall be prorated, with each such party receiving an
amount equal to the percentage the party's own payment schedule
bears to the total of payment schedules outstanding and payable
by the fund. Any amounts due and unpaid as a result of such
proration shall be paid in the following calendar years.

H. Upon receipt of one of the proofs of
authenticity listed in this subsection, reflecting a judgment
for damages rendered pursuant to the Medical Malpractice Act,
the superintendent shall issue or have issued warrants in
accordance with the payment schedule constructed by the court
and made a part of its final judgment. The only claim against
the fund shall be a voucher or other appropriate request by the
superintendent after the superintendent receives:

(1) until January 1, 2022, a certified copy of
a final judgment in excess of two hundred thousand dollars
($200,000) against a health care provider;

(2) until January 1, 2022, a certified copy of
a court-approved settlement or certification of settlement made
prior to initiating suit, signed by both parties, in excess of
two hundred thousand dollars ($200,000) against a health care
provider; or

(3) until January 1, 2022, a certified copy of
a final judgment less than two hundred thousand dollars
($200,000) and an affidavit of a health care provider or its
insurer attesting that payments made pursuant to Subsection B
of Section 41-5-7 NMSA 1978, combined with the monetary
recovery, exceed two hundred thousand dollars ($200,000).

I. On or after January 1, 2022, the amounts
specified in Paragraphs (1) through (3) of Subsection H of this
section shall be two hundred fifty thousand dollars
($250,000)."

SECTION 7. APPLICABILITY.--The provisions of this act
apply to all claims for medical malpractice that arise on or
after the effective date of this act.

- 20 -