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F I S C A L I M P A C T R E P O R T

SPONSOR Barela

ORIGINAL DATE

LAST UPDATED

02/15/07

2/20/07 HM 25/a HJC

SHORT TITLE

Study Revision of Medical Malpractice Act

SB

ANALYST Hanika Ortiz

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$0.1 see

narrative

Recurring General

fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB 1063

SOURCES OF INFORMATION

LFC Files

Responses Received From

Public Regulation Commission (PRC)

SUMMARY

Synopsis of HJC Amendment

The House Judiciary Committee Amendment removes the Insurance Division of the Public

Regulation Commission from the title of the bill and the requirement that the Department include

the study in the next planned actuarial study of the patient’s compensation fund scheduled during

2007. The memorial requests a liaison committee consisting of three members of the NM

medical society, three members of the NM trial lawyers association, the superintendent of

insurance and a House of Representatives member conduct the study and removes a time line for

completion. The memorial further requests that the liaison committee’s report of its findings and

recommendations be presented to the legislative courts, corrections and justice committee as well

as others as defined in the memorial.

Significant Issues

Under the proposed HJC Amendment, there is no required completion date by which the liaison

committee is expected to report its findings and recommendations. In addition, it is assumed that

the “House of Representatives member" will be excluded from the professions of law and

medicine and be counted as a member of the public.

House Memorial 25/a HJC – Page

2

Synopsis of Original Bill

House Memorial 25 asks the Insurance Division of the PRC to study the merits and impact of

revising the cap on malpractice claims against physicians and other health care providers who are

covered under the Medical Malpractice Act.

FISCAL IMPLICATIONS

PRC reports the current cap of $600,000 applying to all economic and non-economic damages

other than medical bills has not been revised since 1995.

SIGNIFICANT ISSUES

The memorial provides for the following:

•

The Medical Malpractice Act, in order to promote the health and welfare of the people of

New Mexico by making available professional liability insurance for health care providers in

New Mexico, provides for a limitation of the recovery available to persons that have been

harmed by the negligence of health care providers qualifying under that act;

•

The limitation of recovery has not been revised since 1995;

•

The purchasing power of the limitation of recovery has steadily declined since 1995;

•

The existence, size and structure of the limitation of recovery have an effect on medically

injured patients and on health care providers covered under the Medical Malpractice Act;

•

New Mexico needs to balance the goal of providing full and fair compensation to medically

injured patients with the goal of attracting and retaining skilled health care providers in New

Mexico;

•

Improvements in the safe delivery of health care to New Mexicans is of paramount

importance;

•

The superintendent of insurance is required by the Medical Malpractice Act to periodically

perform an actuarial study of the patient's compensation fund, the next such study is due to be

performed during 2007, and the scope of such study may be expanded to include review and

analysis of various scenarios with regard to adjustment to the limitation of recovery under the

Medical Malpractice Act.

PERFORMANCE IMPLICATIONS

The PRC is directed to report its findings and recommendations by November 1, 2007 to the

Legislative Health and Human Services Committee, the Legislative Finance Committee, the

Department of Health and the Office of the Governor.

ADMINISTRATIVE IMPLICATIONS

The Insurance Division will need to expand the scope of its upcoming scheduled actuarial study

to address the issue of revising the cap. The PRC is also encouraged to include the advice of any

parties that may be affected by or be knowledgeable of the consequences of a revision.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

HB 1063; doubles the cap on malpractice claims.

House Memorial 25/a HJC – Page

3

OTHER SUBSTANTIVE ISSUES

PRC recommends that among other issues, the study should estimate the increases in Patient’s

Compensation Fund surcharges under various caps and compare the resulting total malpractice

premiums for physicians currently in the Fund with the other marketplace options in order to

determine which cap levels might cause a critical exodus of physicians from the Fund.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

PRC reports the effective compensation of medically injured patients will continue to erode over

time.

AHO/mt