SB0449

SENATE BILL 449

57th legislature - STATE OF NEW MEXICO - first session, 2025

INTRODUCED BY

Larry R. Scott and James G. Townsend and Candy Spence Ezzell

AN ACT

RELATING TO LITIGATION; AMENDING REQUIREMENTS FOR VENUE DETERMINATION; PROVIDING REQUIREMENTS FOR DETERMINING VENUE IN CASES INVOLVING MEDICAL MALPRACTICE; AMENDING THE MEDICAL MALPRACTICE ACT; LIMITING RECOVERY FROM THE PATIENT'S COMPENSATION FUND; REQUIRING PAYMENTS FROM THE PATIENT'S COMPENSATION FUND TO BE MADE AS EXPENSES ARE INCURRED; REQUIRING SEVENTY-FIVE PERCENT OF THE PUNITIVE DAMAGES AWARDED IN MEDICAL MALPRACTICE CLAIMS TO BE AWARDED TO THE STATE; LIMITING ATTORNEY FEES IN MALPRACTICE CLAIMS; REQUIRING THE SUPERINTENDENT OF INSURANCE TO APPROVE PROPOSED SETTLEMENTS PAID FROM THE PATIENT'S COMPENSATION FUND; REMOVING A REQUIREMENT FOR SURCHARGES TO BE SET WITH THE INTENT OF BRINGING THE FUND TO SOLVENCY; CREATING THE PATIENT SAFETY IMPROVEMENT FUND; MAKING AN APPROPRIATION.

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

SECTION 1. Section 38-3-1 NMSA 1978 (being Laws 1875-1876, Chapter 2, Section 1, as amended) is amended to read:

"38-3-1. COUNTY IN WHICH CIVIL ACTION IN DISTRICT COURT MAY BE COMMENCED.--All civil actions commenced in the district courts shall be brought and shall be commenced in counties as follows and not otherwise.

A. First, except as provided in Subsection F of this section relating to foreign corporations, all transitory actions shall be brought in the county where either the plaintiff or defendant, or any one of them in case there is more than one of either, resides; or second, in the county where the contract sued on was made or is to be performed or where the cause of action originated or indebtedness sued on was incurred; or third, in any county in which the defendant or either of them may be found in the judicial district where the defendant resides.

B. When the defendant [has rendered himself] is liable to a civil action by any criminal act, suit may be instituted against the defendant in the county in which the offense was committed or in which the defendant may be found or in the county where the plaintiff resides.

C. When suit is brought for the recovery of personal property other than money, it may be brought as provided in this section or in the county where the property may be found.

D. [(1)] When lands or any interest in lands [are] is the object of any suit in whole or in part, the suit shall be brought in the county where the land or any portion of the land is situate; [(2)] provided that [where] if such lands are located in more than one county and are contiguous, [that] the suit may be brought as to all of the lands in any county in which a portion of the lands is situate, with the same force and effect as though the suit had been prosecuted in each county in which any of the lands are situate. In all such cases in which suit is prosecuted in one county as to contiguous lands in more than one county, notice of lis pendens shall be filed pursuant to Sections 38-1-14 and 38-1-15 NMSA 1978 in each county. For purposes of service of process pursuant to Rule [4] 1-004 of the Rules of Civil Procedure for the District Courts, any such suit involving contiguous lands located in more than one county shall be deemed pending in each county in which any portion of the land is located from the date of filing of the lis pendens notice.

E. Suits for trespass on land shall be brought as provided in Subsection A of this section or in the county where the land or any portion of the land is situate.

F. Except as provided in Subsection H of this section, suits may be brought against transient persons or [non-residents] nonresidents in any county of this state, except that suits against foreign corporations admitted to do business and [which] that designate and maintain a statutory agent in this state upon whom service of process may be had shall only be brought in the county where the plaintiff, or any one of them in case there is more than one, resides or in the county where the contract sued on was made or is to be performed or where the cause of action originated or indebtedness sued on was incurred or in the county where the statutory agent designated by the foreign corporation resides.

G. Suits against any state officers as such shall be brought in the court of the county in which their offices are located, at the capital or in the county where a plaintiff, or any one of them in case there is more than one, resides, except that suits against the officers or employees of a state educational institution as defined in Article 12, Section 11 of the constitution of New Mexico, as such, shall be brought in the district court of the county in which the principal office of the state educational institution is located or the district court of the county where the plaintiff resides.

H. In a claim asserted by a personal representative pursuant to Section 41-2-3 NMSA 1978, a conservator, guardian or guardian ad litem appointed pursuant to Chapter 45, Article 5 NMSA 1978 or a third person acting in any representative capacity, the residence of the person bringing the claim shall not be considered in determining venue in any civil action.

I. Subject to the provisions of Subsection H of this section, venue in a claim asserting medical malpractice shall be limited to the county in which the patient received the medical treatment that is the basis for the medical malpractice lawsuit. As used in this subsection:

(1) "medical malpractice lawsuit" means any legal proceeding alleging a cause of action arising in this state against a health care provider for medical treatment, lack of medical treatment or other claim of departure from accepted standards of health care that proximately results in injury to a patient, whether the patient's cause of action sounds in tort or contract, including actions based on battery, wrongful death, unfair trade practices or negligent hiring,

supervision, training, retention or credentialing and excluding a cause of action arising out of nonmedical acts related to the operation, use or maintenance of a vehicular or aircraft ambulance; and

(2) "patient" means a natural person of any age who received or should have received health care from a health care provider."

SECTION 2. 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, corporation, organization, facility or institution licensed or certified by this state to provide health care or professional services as a doctor of medicine, hospital, outpatient health care facility, doctor of osteopathy, chiropractor, [podiatrist] podiatric physician, nurse anesthetist, physician's assistant, certified nurse practitioner, 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 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 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 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, urgent care facility or 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 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 outpatient health care facility. "Independent provider" does not mean a person or 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 as an outpatient facility;

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

(2) a business entity that is not a hospital or 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 [injuries to a patient caused by health care providers' successive acts or omissions that combined concurrently to create a malpractice claim] claims for damages from all persons arising from harm to a single patient, no matter how many health care providers, errors or omissions contributed to the harm;

L. "outpatient health care facility" means an entity that is hospital-controlled and is licensed pursuant to the Public Health Act 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."

SECTION 3. Section 41-5-4 NMSA 1978 (being Laws 1976, Chapter 2, Section 4, as amended) is amended to read:

"41-5-4. AD DAMNUM CLAUSE--VENUE.--

A. A patient or [his] a patient's representative having a malpractice claim for bodily injury or death may file a complaint and demand right of trial by jury in [any] a court of law having requisite jurisdiction and [demand right of trial by jury] where venue is proper.

B. Venue in a malpractice claim shall be proper when the claim is filed in the county in which the patient received the medical treatment that is the basis for the malpractice claim.

C. No dollar amount or figure shall be included in the demand in [any] a complaint asserting a malpractice claim and filed after the effective date of this section, but the request shall be for such damages as are reasonable. This section shall not prevent a patient or [his] the patient's representative from alleging a requisite jurisdictional amount in a malpractice claim filed in a court requiring such an allegation."

SECTION 4. 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] on the first day of each calendar year, the per occurrence limit on recovery shall be adjusted [annually] by the prior three-year average consumer price index for all urban consumers; and provided further that an adjustment shall not result in a percentage increase in the per occurrence limit on recovery greater than three percent.

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; provided that an adjustment shall not result in a percentage increase in the per occurrence limit on recovery greater than three percent.

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 prior three-year average consumer price index for all urban consumers, per occurrence; provided that an adjustment shall not result in a percentage increase in the per occurrence limit on recovery greater than three percent.

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, 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, 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.]

L. As used in this section, "consumer price index" means the consumer price index for all urban consumers, United States city average, as published by the United States department of labor, between the end of December of the penultimate calendar year and the end of December of the immediately preceding calendar year."

SECTION 5. 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. Awards of past or future medical care and related benefits shall not be paid from the fund unless the amount of the award was actually paid by or on behalf of an injured person and accepted by a health care provider as payment for services rendered.

D. Awards of future medical care and related benefits shall only be paid from the fund as the expenses are incurred. Payments from the fund for future medical care and related benefits shall not be paid in a lump-sum payment.

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

[D.] F. 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.

G. In a malpractice claim in which punitive damages are awarded, the court shall divide the punitive damage award and enter judgment as follows:

(1) twenty-five percent of the punitive damage award shall be awarded to the prevailing party; and

(2) seventy-five percent of the punitive damage award shall be awarded to the state. All amounts awarded to the state shall be remitted to the state treasurer to be deposited into the patient safety improvement fund.

[E.] H. A judgment of punitive damages against a health care provider shall be the personal liability of the health care provider. Punitive damages may only be awarded if the prevailing party provides clear and convincing evidence demonstrating that the acts of the health care provider were made with deliberate disregard for the rights or safety of others. 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.

I. A punitive damage award shall not exceed an amount greater than three times the compensatory damage award."

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, as custodian of the fund, or the superintendent's designee, shall evaluate and approve a proposed settlement if any amount of the proposed settlement is to be paid from the fund.

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

SECTION 7. A new section of the Medical Malpractice Act

is enacted to read:

"[NEW MATERIAL] LIMITING ATTORNEY FEES.--An attorney shall not contract for or collect a contingency fee for representing a person seeking damages in a malpractice claim in an amount that exceeds:

A. twenty-five percent of the dollar amount recovered, if the recovery is pursuant to a settlement agreement and release of all claims executed by all parties prior to the start of a trial or an arbitration proceeding; or

B. thirty-three percent of the dollar amount recovered, if the recovery is pursuant to settlement, arbitration or judgment that occurs after a trial or arbitration proceeding begins."

SECTION 8. A new section of the Medical Malpractice Act is enacted to read:

"[NEW MATERIAL] PATIENT SAFETY IMPROVEMENT FUND--CREATED.--

A. The "patient safety improvement fund" is created

in the state treasury and shall be administered by the department of health. The patient safety improvement fund consists of distributions, appropriations, gifts, grants, donations and receipts of punitive damage awards from medical malpractice claims. Money in the patient safety improvement fund shall be invested by the state treasurer, and income from investment of the patient safety improvement fund shall be credited to the patient safety improvement fund. Money in the patient safety improvement fund shall be expended only as provided in this section.

B. Money in the patient safety improvement fund is subject to appropriation by the legislature to the department of health for the purposes of improving patient safety and health care outcomes. All payments made from the patient safety improvement fund shall be made by warrant of the secretary of finance and administration pursuant to vouchers signed by the secretary of health or the secretary's authorized representative. Any unexpended or unencumbered balance remaining in the patient safety improvement fund at the end of a fiscal year shall not revert but shall remain to the credit of the patient safety improvement fund."

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