NOTE: As provided in LFC policy, this report is
intended only for use by the standing finance committees of the
legislature. The Legislative Finance Committee does not assume
responsibility for the accuracy of the information in this report when used for
other purposes.
The most recent FIR
version (in HTML & Adobe PDF formats) is available on the Legislative
Website. The Adobe PDF version includes
all attachments, whereas the HTML version does not. Previously issued FIRs and attachments may be
obtained from the LFC in
|
SPONSOR: |
|
DATE TYPED: |
|
HB |
900 |
||
|
SHORT TITLE: |
Medical Tort Claims Maximum Liability |
SB |
|
||||
|
|
ANALYST: |
Chavez |
|||||
APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY03 |
FY04 |
FY03 |
FY04 |
|
|
|
NFI |
NFI |
|
$5,400.0 |
Recurring |
Public
Liability Fund |
|
|
|
|
$7,000.0
in FY05 |
Recurring |
General
Fund & Others |
(Parenthesis
( ) Indicate Expenditure Decreases)
Attorney
General (AG)
Administrative
Office of the Courts (AOC)
New
Mexico Corrections Department (NMCD)
Risk
Management Division, (GSD)
LFC
Files
SUMMARY
Synopsis
of Bill
House Bill 900 amends
Section 41-4-19 NMSA 1978 by eliminating the $300,000 cap presently
contained in the Tort Claims Act for damages against a governmental entity or
public employee while acting within the scope of his duties for all past and
future medical and medically related expenses arising out of a single
occurrence.
Significant
Issues
The bill has a significant impact to the state by exposing the state to unlimited liability for past and future medical and medically related expenses arising out of a single occurrence. Its applicability is to both medical malpractice claims against state health institutions and/or public employee health care workers and to situations in which a person is injured and the state is liable under the Tort Claims Act.
According to General Services Division (GSD),
premiums for state agencies are set 15 months ahead due to the budgeting process. Removing the maximum settlement limit would
increase costs to the Risk Management Division (RMD) by an estimated $5.4
million a year. The increased expenses
that accrue from removing this cap will not be reflected in the premiums until
well after it takes affect, which could place the Public Liability Fund in
jeopardy. Premium increases to agencies
for FY 05 are estimated to be at least $7 million, most of which would be paid
by general fund.
It was further stated by GSD that the Public
Liability Fund could be depleted and the premiums for excess insurance would
escalate.
Additionally, according to the Attorney General
(AG), the bill contradicts the policy behind the procedural and monetary
limitations the Tort Claims Act imposes on liability for governmental entities
and public employees acting within the scope of their duties, which is to
prevent a drain on the state’s monetary resources.
FISCAL IMPLICATIONS
According to GSD, based on an analysis of claim payment history, and using the most conservative
forecasting methodology available, implementation of HB 900 would likely result
in an additional $5.4 million average annual claim cost. Historically, in each 5-year period there is
a high claim cost period, which is estimated to increase by approximately $9.2
million in any 5-year period (to cover catastrophic loss, like the shuttle bus
accident with school children near Santa Fe a few years ago). According to GSD, the increase in claims
cost would result in charging higher premiums, estimated to be at least $7
million a year, most of which would be paid by agencies supported by general
fund.
ADMINISTRATIVE IMPLICATIONS
House Bill 900 would go into effect in June of
this year, but premium increases would not be included in agency budgets until
FY05. According to GSD, the lag time between implementation of the
law and the ability for agencies to budget the increase premiums could
jeopardize the stability of the Public Liability Fund.
GSD suggests that in order to control costs, future medical
expenses may need to require on-going documentation as a condition of
settlement. According to GSD, this would
mean a significant increase in file-handling time to monitor and audit incurred
medical expense. Thus risk management division may need to hire staff or contract for
medical cost containment assistance.
The elimination of the
cap placed on past and future medical and medically related expenses could
increase the potential for additional lawsuits and can effect the number of
claims settled.
TECHNICAL ISSUES
OTHER SUBSTANTIVE ISSUES
Currently, there are
caps on liability in the private sector for example in the Medical Malpractice
Act, Section 41-5-1 NMSA 1978. The
Medical Malpractice Act provides that except for punitive damages and 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 $600,000.
Although the Medical Malpractice Act does not subject the value of the accrued
medical care and related benefits and awards (Section 41-5-6 NMSA 1978) and future
medical care and related benefits (Section 41-5-7 NMSA 1978) to the $600,000
limitation, the implications of this bill are much broader as the potential
liability could extend beyond medical malpractice. Thus it may appear
inconsistent to remove the caps from the public sector.
The implications of
this bill are that where a governmental entity or a public employee found to be
acting within the scope of his or her duties and where the actions of that
employee fit into one of the waivers of immunity designated in the Tort Claims
Act, Section 41-4-1, there will be no damages cap on past and
future medical and medically related expenses for the injured plaintiff.
It was suggested by
the AGO that an alternative to eliminating the cap on past and future medical
and medically related expenses, the cap could be raised above the present
cap. However, this suggestion will also
have a great impact on the state.
FC/yr