Expert told lawmakers New Mexico damage cap and compensation fund are largely ineffective; urged insurance‑based alternative

Professor Bernard Black, a law and health‑policy scholar at Northwestern University, told the Legislative Health & Human Services Committee that New Mexico’s physician damage cap and patient compensation fund (PCF) are largely irrelevant in practice and can harm patient safety.

Black framed three common reasons lawmakers adopt damage caps — to lower health care spending by reducing defensive medicine, to attract more physicians, and to leave patient safety unchanged — and said his multisource review and empirical work shows they fail on all three for independent physicians. “Damage caps will not reduce health care costs, might increase them,” he said, and added that caps “will not bring more physicians to your state, and they do reduce deterrence.”

Why it matters: Members seeking reforms to medical‑malpractice law were presented with national evidence and policy options. Black’s testimony undercut two common reform rationales (cost reduction and physician recruitment) and raised the risk that limits on liability can reduce hospitals’ and providers’ investments in safety over time.

What Black said and cited: He described an analytic approach that adjusts claims and payouts for inflation, population and physician counts; used data from the National Practitioner Data Bank, the American Medical Association physician counts and Medical Liability Monitor premia; and analyzed comparative experiences across states (notably Texas with strict caps and Arizona without caps). He said New Mexico shows no extraordinary long‑term rise in paid claims per physician but does have a higher count of large paid claims compared with neighboring states; he suggested the PCF might be a contributing factor.

On safety, Black referenced Agency for Healthcare Research and Quality patient safety indicators and summarized findings from a subset of states: “We find a slow but real increase in adverse events in hospitals… the overall effect is 15 to 30 percent more events” in event time after cap adoption. He said the mechanism is gradual underinvestment in safety practices, training and equipment where liability weakens.

On who pays what, Black noted that common physician policy limits (he cited $1,000,000 and $3,000,000 aggregate examples) act as de‑facto caps: insurers’ coverage limits often determine what claimants can realistically collect. He used Texas data to show physician out‑of‑pocket payments are rare when reasonable policy limits are carried.

Policy recommendations: Black recommended eliminating the physician damage cap and the PCF for independent physicians and replacing them with a system in which independent physicians who buy a qualifying policy are not personally liable above the policy limits. He proposed a qualifying‑policy floor (he suggested $2,000,000), indexed for inflation, and argued such an approach could simplify litigation and reduce parallel litigation against insurers and the PCF.

Committee reaction and data requests: Lawmakers pressed Black about New Mexico‑specific trends and more recent data since 2021. Several members — including Senator Hickey and others — said local physician counts and premiums feel worse than the national data suggest; Black acknowledged data gaps for New Mexico and urged the state to collect paid‑claim and premium detail from insurers (he pointed to states that collect richer claim reports). Black also said paid claims are not purely random: physicians with a paid claim in the prior five years were about four times more likely to have another (12.4% vs. 3.3% in his cited comparison).

What’s next: Black offered to share sources and methods and recommended the legislature consider creating or expanding claim‑reporting requirements for insurers so researchers and policymakers can track outcomes more precisely. The committee did not take formal action during the hearing; members asked for follow‑up data and citations.