A bill, House Bill 75, which recently passed the New Mexico House of Representatives, would eliminate hospitals from the list of providers eligible to obtain coverage under the Medical Malpractice Act. Normally, this issue would find New Mexico’s independent physicians joined with the hospitals in opposing the bill. No longer.
The malpractice act was passed in 1976 when malpractice insurers departed from the state, leaving New Mexico physicians without coverage. It created the Patient’s Compensation Fund to pay the major part of all malpractice liabilities incurred by physicians and seven other types of providers, including hospitals. To avoid swamping the fund with the malpractice claims of any single provider, the Legislature imposed a three-occurrence limit on the number of times any provider could use the fund to pay for their yearly malpractice liabilities. Hospitals rarely used the act because the malpractice occurrences in any year for most hospitals numbered in the “hundreds.”
In 2009, the superintendent of insurance changed that by secretly cutting Christus St. Vincent Regional Medical Center a sweet deal, giving it coverage under the malpractice act for an unlimited number of occurrences of malpractice each year. By 2016 and 2017, 99 other hospitals and outpatient care facilities wanted in on the superintendent’s sweet deal. The superintendent secretly gave it to them.
The deal also allowed the hospitals to essentially set their own premiums for the use of the fund based on their own cherry-picked data. The hospitals receiving the superintendent’s deal were not small, struggling community hospitals but rather the progeny of large multimillion-dollar corporations — most located out of state.
The result is the fund, which was running a positive balance in 2009, had developed a $36 million deficit by 2017. After the New Mexico Medical Society discovered the deal with the hospitals in 2017, I filed suit against the superintendent along with three other past presidents of the New Mexico Medical Society. We filed suit to require the superintendent to follow the requirements of the Medical Malpractice Act, one of the most important of which was to require hospitals to comply with the act’s three-occurrence limit. Our suit since then has been basically stuck in judicial mud.
While our suit has remained stuck in the mud, the fund’s deficit has climbed from $36 million in 2017 to $56 million in 2020. New Mexico’s physicians have accordingly seen a 49 percent increase in their malpractice premiums over the past five years. New Mexico physicians’ malpractice premiums are now significantly higher than virtually all of the surrounding states. Nevertheless, the fund, on which independent physicians and their patients depend for the payment of malpractice liabilities, will sooner or later become insolvent.
Consequently, I wholeheartedly endorse House Bill 75 to eliminate hospitals from the Medical Malpractice Act. If the hospitals will not follow the act’s three-occurrence limit, the Legislature should remove hospitals from it. The act itself states that any provider not following its terms is not entitled to its benefits in the event of claims against it. HB 75 only ensures this result. I encourage the New Mexico Senate to hear and vote on this bill in a timely manner.
Additionally, I will attempt to convince our Legislature to nudge the Supreme Court to directly and immediately decide whether the superintendent must follow the three-occurrence limit in the Medical Malpractice Act with respect to all health care providers, or if he is free to ignore it with respect to hospitals.