Hospitals should not be part of malpractice fund

House Bill 75, which recently passed the N.M. House of Representatives, will eliminate hospitals from the list of providers eligible to obtain coverage under the Medical Malpractice Act. Normally, this issue would find New Mexico’s independent physicians joined with the hospitals in opposing the bill. No longer.

The MMA was passed in 1976 when malpractice insurers departed from the state, leaving New Mexico physicians without coverage. The MMA created the Patient’s Compensation Fund to pay the major part of all malpractice liabilities incurred by physicians and seven other types of providers, including hospitals. In order to avoid swamping the fund with the malpractice claims of any single provider, the Legislature imposed a three-occurrence limit on the number of times any provider could use the fund to pay for their yearly malpractice liabilities. Hospitals rarely used the act because the malpractice occurrences in any year for most hospitals numbered in the “hundreds.”

In 2009, the Office of the Superintendent of Insurance changed all of that by secretly cutting Christus St. Vincent a sweet deal giving it coverage under the act for an unlimited number of occurrences of malpractice each year. By 2016 and 2017, 99 other hospitals and outpatient care facilities wanted in. The superintendent secretly gave it to them. The deal also allowed the hospitals to essentially set their own premiums for the use of the fund based on their own cherry-picked data. The hospitals receiving the superintendent’s deal were not small, struggling community hospitals but rather the progeny of large multimillion dollar corporations, most located out of state.

The result is the fund, which was running a positive balance in 2009, had developed a $36 million deficit by 2017. After the New Mexico Medical Society discovered the superintendent’s deal with the hospitals in 2017, I and three other past presidents of the medical society filed suit to require the superintendent to follow the requirements of the MMA, one of the most important of which was to require hospitals to comply with the act’s three-occurrence limit. Our suit since then has been basically “stuck in the judicial mud.”

Meanwhile, the fund’s deficit has climbed from $36 million in 2017 to $56 million in 2020. New Mexico’s physicians have accordingly seen a 49% increase in their malpractice premiums over the past five years. New Mexico physicians’ malpractice premiums are now significantly higher than virtually all of the surrounding states. Nevertheless, the fund, which New Mexico’s independent physicians and their patients depend on for the payment of malpractice liabilities, will sooner or later become insolvent.

Consequently, I wholeheartedly endorse HB 75 to take hospitals out of the MMA. If the hospitals will not follow the MMA, the Legislature should take them out of the MMA. The MMA itself states that any provider not following its terms is not entitled to its benefits in the event of any claims against it. HB 75 only ensures this result. I encourage the New Mexico Senate to hear and vote on this bill in a timely manner.

Thus instead of spending my time this session defending the hospitals’ alleged entitlement to coverage under the act, I will attempt to convince our Legislature to nudge our Supreme Court to directly and immediately decide if the superintendent must follow the three-occurrence limit in the MMA with respect to all health care providers, or if he is free to ignore it with respect to hospitals.

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