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Lawmakers Press Insurance Office on Medical-malpractice Costs and Patient Compensation Fund
Summary
Lawmakers questioned the superintendent of insurance about why malpractice premiums remain high despite reported high loss ratios and the upcoming departure of hospitals from the patient compensation fund; the superintendent described coverage layers and differences in caps among neighboring states but offered no immediate remedy or vote.
Lawmakers on the Legislative Health & Human Services committee pressed the superintendent of insurance over rising medical-malpractice costs and the mechanics of the state's Patient Compensation Fund (PCF).
Representative Ferrari asked whether doctors would face higher liabilities if hospitals leave the PCF, noting hospitals’ planned exit from the fund and the potential for shifted costs. Representative Kates asked: "If there's a malpractice loss ratio for every dollar of premiums, a dollar 92 is paid off, why do we still have five carriers?" The superintendent answered that New Mexico's primary layer covers $250,000 and a separate PCF surcharge brings total coverage in the chart discussed to roughly $900,000, and explained that neighboring states use different caps or approaches: Arizona has no cap, Colorado's cap rises toward higher amounts, and Texas has a cap at $250,000.
The superintendent also clarified that punitive damages are not covered by primary carriers or by the PCF and therefore remain the individual provider's responsibility. Committee members raised timing questions about hospitals' planned departure from the PCF (noted in testimony as scheduled to conclude payments in late 2026) and whether actuarial forecasts should predict a premium decline once hospitals stop accruing new liabilities; the superintendent cautioned that claims that arise between the hospitals' exit and the end of liability windows (discussed as through 2031) remain uncertain.
Why this matters: malpractice premium settings and the PCF's structure affect physicians' cost of practice, insurer participation and access to care; committee members linked the issue to doctor recruitment and asked whether differences in state caps and settlement timelines explain New Mexico's higher premiums.
Committee outcome and next steps: the exchange was informational. No formal motion, vote or policy change occurred during the hearing; the committee moved on to its next presentation.
