Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance
committees of the Legislature. LFC does not assume responsibility for the accuracy of these reports if they
are used for other purposes.
F I S C A L I M P A C T R E P O R T
SPONSOR Herndon
LAST UPDATED
ORIGINAL DATE 1/25/25
SHORT TITLE Workers’ Compensation Changes
BILL
NUMBER House Bill 66
ANALYST Mercer-Garcia
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
WCA (UEF)
No fiscal
impact
$5.0 $5.0 $10.0 Recurring
Other state
funds
GSD Risk
Management
No fiscal
impact
At least $56.0 At least $56.0
At least
$112.0
Recurring General Fund
Total
No fiscal
impact
At least $61.0 At least $61.0
At least
$122.0
Recurring General Fund
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Sources of Information
LFC Files
House Memorial 83 Taskforce Reports
Agency Analysis Received From Workers’ Compensation Administration (WCA) General Services Department (GSD)
Agency Declined to Respond
State Personnel Office (SPO)
Office of the Superintendent of Insurance (OSI)
SUMMARY
Synopsis of House Bill 66
House Bill 66 (HB66) amends Section 52-1-54 NMSA 1978 to increase the size of attorney fees
that can be collected in workers’ compensation cases and increase the amount of money that can
be advanced by employers for discovery costs.
Statute currently requires the employer advance the cost of paying for discovery in workers’
compensation cases in which a claimant requests discovery, currently capping these costs at
$3,000. The bill would increase discovery cost advances to $6,000.
In addition, current statute caps all attorney fees, including paralegal costs, legal clerk services,
and all related legal services on behalf of a claimant for a single accidental injury claim, at
$22,500. HB66 would increase this cap to $30,000 in calendar year 2025. After 2025, the
maximum allowable attorney fees will be adjusted annually by the consumer price index. House Bill 66 – Page 2
This bill does not contain an effective date and, as a result, would go into effect 90 days after the
Legislature adjourns if enacted, or June 20, 2025.
FISCAL IMPLICATIONS
General Services Department- Risk Management
The General Services Department (GSD) notes House Bill 66 would likely substantially increase
costs associated with workers’ compensation claims by doubling the limit on up-front discovery
costs and by raising the cap on workers’ compensation attorney fees. GSD notes the realities of
workers’ compensation legal practice may justify raising attorney fee caps but that doubling the
up-front discovery costs would likely be costly and provide only marginal benefits to affected
employees. In analysis submitted for a similar bill filed in previous years, GSD noted the Risk
Management Division paid $183 thousand in attorney fees and discovery costs in FY22.
However, GSD did not provide an analysis of the expected increase in attorney fees resulting
from HB66. For the purpose of estimating the potential fiscal impact to GSD, LFC analysis
assumes GSD expenditures for attorney fees and legal costs may increase at least 33 percent over
FY22 levels, as the bill proposes increasing the attorney fee cap by 33 percent.
Workers’ Compensation Administration
The uninsured employers fund was created in statute to pay benefits to injured workers whose
employers lack required workers’ compensation insurance. In addition to paying indemnity and
medical benefits, the uninsured employers fund can be required to pay the uninsured employer’s
statutory one-half share of the attorney fees owed to the workers’ attorney. In some cases, the
uninsured employers fund pays all the worker’s attorney fees. The uninsured employers fund
attempts to recover all sums from it pays out from the uninsured employer and has historically
recovered roughly 25 percent of what it pays out.
If the attorney fee cap was raised, the Workers’ Compensation Administration (WCA) reports
annual payments for attorney fees from the uninsured employers fund will likely increase. WCA
estimates the total impact to the fund would be $5,000 annually.
At the end of FY24, the uninsured employers fund carried a balance of roughly $8.2 million,
while the department spent roughly $1 million from the fund. An increase in expenditures from
the fund could, over time, result in a depleted fund balance and the need to raise the assessment
established in statute. However, at the level projected above, the fiscal impact of House Bill 66
would not likely significantly affect the balance of the fund.
While the State of New Mexico would not be responsible for these costs, analysis submitted by
the Office of the Superintendent of Insurance (OSI) for a similar bill introduced during the 2023
legislative session noted that, to the extent the costs of the advance for discovery and increases in
attorney fees may be covered by workers’ compensation insurance, the increased limits would
contribute to higher losses incurred for insurers, which would translate into higher workers’
compensation insurance rates.
SIGNIFICANT ISSUES
In New Mexico, indemnity benefits awarded to injured workers are proportional to the workers’ House Bill 66 – Page 3
weekly wages, generally two-thirds. Medical benefits injured workers receive are directly tied to
the healthcare needs of the injured worker and those which the worker has accessed at the time
the case is settled and decided.
Passed during the 2023 legislative session, House Memorial 83 asked WCA to study workers
compensation attorney caps; WCA convened a taskforce to study this issue. The taskforce
analyzed WCA claims and noted the majority (93 percent) did not reach the fee cap and that
roughly 458 claims exceeded the fee cap between 2013 and 2022, or roughly 46 claims per year.
The report noted the more legal complexities a case has, the more likely it is to reach the fee cap
The taskforce issued a report and recommended raising the attorney fee cap from $22,500 to
$30,000, and the discovery-cost-advance from $3,000 to $3,500. The taskforce recommended
these changes be made to both the Workers’ Compensation and Occupational Disease Acts. The
taskforce did not recommend further adjustments or an inflation adjustment but instead
recommended the Legislature more frequently revisit attorney fee caps.
The taskforce report noted concerns with raising fee caps, including the potential for a larger
portion of worker’s compensation awards being allocated to legal fees rather than aiding in
recovery and compensation for lost wages among workers’ compensation claimants, stating “the
increase could reduce the net compensation available to injured workers.” Conversely, the report
also noted if the fees are set too low, they can discourage skilled and experienced attorneys from
practice within the workers’ compensation field, hindering access to effective legal
representation among injured workers. The report noted the critical nature of balancing the need
for fair legal representation with ensuring injured workers receive a substantial share of their
compensation. According to the taskforce, the Legislature last increased the fee cap in 2013.
OTHER SUBSTANT IVE ISSUES
WCA noted the bill requires an annual consumer price index adjustment, but the bill does not
explain who is responsible for calculating the adjustment, how precisely the calculation will be
performed, or if it will be published online.
WCA noted the bill does not amend the $22,500 cap in the New Mexico Occupational Disease
Disablement Law (Section 52-3-47 NMSA 1978), and the failure to address both caps could
produce litigation predicated on equal protection considerations.
RGM/rl/SL2