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Court rules doctor groups covered by liability cap

ALBUQUERQUE, N.M. — Ruling says it’s the intent of Legislature

Professional corporations formed by doctors are included under a $600,000 cap limiting the amount that can be awarded in medical malpractice cases, the New Mexico Supreme Court ruled this week.

The ruling, which expands the definition of “health care provider,” said even if the Court of Appeals found that professional corporations don’t literally meet the definition of providers in the Medical Malpractice Act, the Legislature meant it to apply to them.

“A strict adherence to the plain language of the definition would conflict with legislative intent,” said the opinion by Justice Barbara Vigil.

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The medical community had sought similar protection in a 2011 compromise bill between doctors and lawyers that cleared the Legislature but was vetoed by the governor. The bill ensured that the businesses created by doctors would be covered by the liability caps and other aspects of the medical malpractice law, but in return the caps would have been raised to $1 million per occurrence and would have included a cost-of-living provision of 3 percent.

The $600,000 maximum per occurrence in the act has been in place since 1992.

The New Mexico Medical Society and the American Medical Association had urged Gov. Susana Martinez to sign the bill to protect access to health care and preserve New Mexico’s “stable liability climate for both patients and physicians.”

Martinez said she vetoed the legislation because the increase in liability caps would drive up costs and lead to frivolous lawsuits.

The high court decision came in three consolidated cases from the 1st, 2nd and 4th Judicial Districts – Santa Fe, Albuquerque and San Miguel County – involving medical malpractice claims against doctors and the business corporations under which they operated.

Bryanna Baker sued in the San Miguel County case, claiming doctors failed to disclose a medical condition that could be dangerous to both mother and child. She became pregnant, suffered a heart attack that went undiagnosed for two days, miscarried and sustained permanent heart damage.

Lorrice Gordon sued in the Albuquerque court, alleging a negligently performed appendectomy caused a small bowel obstruction that required additional surgery.

Paul Campos, personal representative of the estate of Cheri Wilson, filed suit in Albuquerque against Wilson’s primary care physician and surgeon after an undiagnosed bile duct leak during gall bladder surgery allegedly caused her death.

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The Court of Appeals granted pre-trial appeals on questions of law in all three cases and consolidated them because they raised similar issues.

The appeals court held that the Legislature intended to include the doctors and their professional corporations – Southwest Perinatology, Family Practice Associates P.C., San Miguel Hospital Corp., University of New Mexico Health and Sciences Center, and ABQ Health Partners – under the definition of health care provider and give them protection under the malpractice law.

Plaintiffs asked for Supreme Court review, which reached the same conclusion as the intermediate court by way of a different legal approach.

The Medical Malpractice Act was enacted in 1976 based on a perceived insurance crisis in the state after the insurance company that underwrote liability for 90 percent of the medical practitioners and health care institutions withdrew.

The act made professional liability insurance available only to qualified health care providers as described in the act and said they had to establish financial responsibilities with the superintendent of insurance.

And it required permission from a medical review board before someone could file a medical malpractice suit, according to the history described in the opinion.

Plaintiffs argued that the language in the act defining a “health care provider” expressly excludes practice group corporations. The language lists six categories of individuals who may be licensed as providers, as well as two organizational entities similarly licensed as a “hospital or outpatient facility.”

The high court said that by providing benefits and imposing burdens, the Legislature created a system “that inspires widespread participation” designed to promote the health and welfare of New Mexicans.

“In light of the act’s purpose, we can discern no reason why the Legislature would intend to cover individual medical professionals under the act while excluding the business organizations that they operate,” the Vigil opinion said.

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