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 Hickey/Woods/Sanchez/Gonzales/Block
LAST UPDATED
ORIGINAL DATE 3/2/2025
SHORT TITLE Medical Malpractice Changes
BILL
NUMBER Senate Bill 176
ANALYST Esquibel
REVENUE*
(dollars in thousands)
Type FY25 FY26 FY27 FY28 FY29
Recurring or
Nonrecurring
Fund
Affected
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
Recurring
Patient’s
Compensation
Fund
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
See Fiscal
Implications
Recurring
Patient Safety
Improvement
Fund
Parentheses ( ) indicate revenue decreases.
*Amounts reflect most recent analysis of this legislation.
Relates to Senate Bill 449 and House Bills 374, 378, and 379
Sources of Information
LFC Files
Agency Analysis Received From
Administrative Office of the Courts (AOC) Attorney General’s Office (NMAG) Department of Health (DOH) Health Care Authority (HCA) New Mexico Hospital Association (NMHA) New Mexico Medical Board (NMMB) New Mexico Medical Society (NMMS) Office of Superintendent of Insurance (OSI)
SUMMARY
Synopsis of Senate Bill 176
Senate Bill 176 (SB176) proposes ending medical malpractice lump-sum payouts from the
patient’s compensation fund and instead require payments be made as treatment expenses are
incurred. The bill would cap attorney fees in medical malpractice lawsuits at 25 percent of the
money awarded if a case is settled and 33 percent if the case goes to trial. A patient safety
improvement fund would be created which would receive 75 percent of any punitive damages Senate Bill 176 – Page 2
awarded in medical malpractice cases. The bill would set limits on the recoverable amounts in
malpractice claims, adjusted by the consumer price index.
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
SB176 would create the patient safety improvement fund administered by the Department of
Health. The patient safety improvement fund would include distributions, appropriations, gifts,
grants, donations, and receipts from punitive damage awards in medical malpractice claims.
Money in the patient safety improvement fund would be subject to appropriation by the
Legislature to improve patient safety and healthcare outcomes. Any unexpended or
unencumbered balance remaining in the patient safety improvement fund at the end of a fiscal
year would not revert and would accrue to the patient safety improvement fund.
The New Mexico Medical Society notes the provisions of the bill removing lump sum payments
could help the solvency of the patients compensation fund, which is funded through surcharges
paid by participating medical providers.
The Office of Superintendent of Insurance (OSI) suggests clarifying payments made from the
patients compensation fund should be equal to the amounts expended on a patient’s care after
adjustments for all discounts and negotiated rates. Amounts paid from the patient’s
compensation fund should reflect actual healthcare treatment amounts paid or incurred, not
initial billed amounts.
SIGNIFICANT ISSUES
OSI notes while the bill limits attorneys’ fees collected from a judgment to 33 percent of the
amount recovered, the bill does not address how those fees are to be paid from an award of
punitive damages apportioned between the state and the plaintiff.
OSI questions whether an injured patient would be required to pay income taxes on the total
amount of the judgment, despite not receiving the majority of the punitive damages awarded.
ADMINISTRATIVE IMPLICATIONS
The bill’s elimination of lump sum payments would require OSI to process medical expenses and
related benefits as they are incurred.
CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP
Senate Bill 176 relates to Senate Bill 449, Medical Malpractice Changes; House Bill 374,
Medical Malpractice “Occurrence” Definition; House Bill 378, Medical Malpractice Changes;
and House Bill 379, Punitive Damages in Medical Malpractice Claim.
TECHNICAL ISSUES
Senate Bill 176 – Page 3
NMAG notes section 1, subsection H, proposes amending Section 41-5-6(H) to read: “Except as
provided in Section 41-5-7 NMSA 1978, the value of accrued medical care and related benefits
shall not be subject to any limitation.” It may be advisable to substitute “accrued” with
“received” as the meaning of “accrued” could be disputed. NMAG also raises questions
regarding the state taking a substantial portion of a punitive damages award and limiting
contingent attorney fees.
OTHER SUBSTANT IVE ISSUES
The New Mexico Medical Society notes New Mexico has some of the highest amounts of
medical malpractice lawsuits in the country and medical malpractice premiums are significantly
higher in New Mexico compared with other states.
The New Mexico Hospital Association notes hospitals across the state have seen increases in
malpractice plan premiums in the past four years and punitive damages have grown, potentially
affecting fiscal solvency for smaller hospitals.
DOH notes many states have changed their medical malpractice laws to reduce the cost of
malpractice insurance. Malpractice insurance rate increases and lack of access to medical
malpractice insurance may disproportionately impact smaller, independent medical providers
who often serve rural, underserved communities.
RAE/SL2