Senate panel rejects malpractice overhaul that would divert most punitive damages to state fund

The Senate Health and Public Affairs Committee on an unspecified date failed to advance Senate Bill 176, a measure from Senators David Hickey and Woods that would change several elements of New Mexico's medical malpractice framework including a proposed split of punitive damages and caps on attorney fees; the committee vote was 4 in favor and 5 opposed, and the bill did not pass out of committee.

The proposal would have required courts, when punitive damages are awarded, to award 25% of the punitive award to the prevailing plaintiff and remit 75% to the state to be deposited in a proposed patient safety improvement fund. Sponsors and health‑care witnesses said the change would help protect long‑term care for injured patients and shore up New Mexico's patient compensation fund as hospitals shift away from participation.

Supporters, including physician witnesses who testified for the sponsors, described the changes as a way to guarantee care for patients whose medical needs can grow over decades. "This bill protects the patient's care fund to be able to pay out for the lifetime of the individual and however the injury may affect the individual through their lifetime," said Senator David Hickey, one of the bill's sponsors. Attorney Christina Fisher of Think New Mexico said similar splits of punitive awards already exist in three states: "There are 3 states, Alaska, Pennsylvania, and Oregon that split that recovery between the state and the patient." Supporters also pointed to limits on attorney fees included in the bill (25% in settlements and 33% at trial) as a way to increase the net recovery to injured patients.

Opponents raised constitutional and policy objections focused on punitive damages and the role of juries. Senator Block said she was "really offended, by the idea of taking 75% of a punitive damage award from an injured party and giving it to a state run fund," and warned the provision could "take away the decision that was made by juries." Other committee members expressed concern that diverting punitive awards to a state fund could reduce the deterrent effect of punitive damages and create federal tax or constitutional complications.

Committee members also debated whether the proposal would reduce malpractice insurance premiums or attract and retain physicians. Witnesses described a complex set of factors: New Mexico's malpractice environment has changed since 2021 reforms, and some witnesses said insurers price to the state's recent loss experience. An insurance official and the state's Office of Superintendent of Insurance provided background on the patient compensation fund, stating the fund pays past and future medicals above providers' underlying coverage and that participants must hold the required baseline coverage before the fund pays beyond that floor.

The committee rejected the bill. A motion for a do‑pass recommendation failed on a roll call that produced more opposing than supporting votes; the clerk announced that "by a vote of 5 in opposition, 4 in favor, Senate Bill 176 failed to pass." The record shows extensive committee questioning and public testimony occurred before the vote, and several senators said they remain concerned about patient protections, jury rights, and private‑equity operation of hospitals.

The bill's sponsors and supporters framed the proposal as a way to preserve long‑term care for malpractice victims and stabilize the patient compensation fund as the state's provider mix changes. Detractors argued the punitive‑damage split and limits on fees would interfere with jury decisions and could disadvantage injured plaintiffs. Because the committee voted it down, the measure will not advance from this committee; further action would require reintroduction or reconsideration at a later date.