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 Muñoz
LAST UPDATED
ORIGINAL DATE 02/04/2025
SHORT TITLE
Patient Compensation Fund Liabilit
y
BILL
NUMBER Senate Bill 121
ANALYST Chilton
ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT*
(dollars in thousands)
Agency/Program
FY25 FY26 FY27
3 Year
Total Cost
Recurring or
Nonrecurring
Fund
Affected
OSI
No fiscal
impact
No fiscal
impact
No fiscal
impact
Parentheses ( ) indicate expenditure decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to Senate Bill 176
Sources of Information
LFC Files
Agency Analysis Received From
New Mexico Attorney General (NMAG) Department of Health (DOH) Office of the Superintendent of Insurance (OSI) New Mexico Medical Board (NMMB)
SUMMARY
Synopsis of Senate Bill 121
Senate Bill 121 (SB121) makes a single change in the Medical Malpractice Act, Section 41-5-25
NMSA 1978, which deals with the patient’s compensation fund and a third-party administrator
of that fund. The change exempts the third-party administrator, like the superintendent of
insurance, from liability regarding actions related to the Medical Malpractice Act. The Office of
the Superintendent of Insurance (OSI) is required to engage the services of a third-party
administrator to operate the patient’s compensation fund.
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
There is no appropriation in SB121 and no apparent fiscal impact.
Senate Bill 121 – Page 2
SIGNIFICANT ISSUES
OSI has had to assure potential applicants for the third-party administrator position that the third-
party administrator would be covered for any judgments made against it as administrator of this
fund. OSI notes that the agency will have to renew or replace the current third-party
administrator when its contract with OSI expires on December 31 of this year.
The Department of Health points out that ensuring the viability of the patient’s compensation
fund is essential to keeping malpractice insurance costs down; New Mexico’s malpractice
insurance costs are already the second highest of any state in the country. The Office of the
Attorney General (NMAG) indicates that it is unclear whether lawsuits against the current third-
party administrator, Integrion, have been brought to court.
NMAG gives a comprehensive discussion of sovereign immunity as it may apply to the patient’s
compensation fund. NMAG concludes that, “To avoid the reach of Seibert, SB121 may need to
clarify that the Legislature has not waived sovereign immunity regarding the administration and
operation of the patient’s compensation fund and that it is a state fund, if it wishes to afford
derivative governmental immunity to the third-party administrator.”
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Related to Senate Bill 176, Medical Malpractice Changes. That bill does not address the issue of
the third-party administrator.
WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
OSI might not be able to renew or replace the holder of the third-party administrator position
without agreeing to reimburse the third-party administrator for liability judgments, having to pay
them out of the patient’s compensation fund and depleting that fund.
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