SB 173

                                1  SENATE BILL 173
                                2      57TH LEGISLATURE - STATE OF NEW MEXICO - SECOND SESSION, 2026
                                3  INTRODUCED BY
                                4  Rex Wilson
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                                10  AN ACT
                                11   RELATING TO INSURANCE; EXPANDING THE TYPES OF MEDICAL
                                12   MALPRACTICE LIABILITY INSURANCE THAT HEALTH CARE PROVIDERS CAN
                                13   OBTAIN TO QUALIFY WITHIN THE MEDICAL MALPRACTICE ACT.
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                                15   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
                                16        SECTION 1.     Section 41-5-5 NMSA 1978 (being Laws 1992,
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                                17   Chapter 33, Section 2, as amended) is amended to read:
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                                18        "41-5-5.     QUALIFICATIONS.--
                                19  A.   Unless otherwise provided in this section, to be
                                20   qualified under the provisions of the Medical Malpractice Act,
                                21   a health care provider [except an independent outpatient health
                                22   care facility] shall:
                                23  (1)   establish its financial responsibility by
                                24   filing proof with the superintendent that the health care
                                25   provider is insured by a policy of malpractice liability
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                                1    insurance issued by an authorized insurer in the amount of at
                                2    least two hundred fifty thousand dollars ($250,000) per
                                3    [occurrence] malpractice claim or by having continuously on
                                4    deposit the sum of seven hundred fifty thousand dollars
                                5    ($750,000) in cash with the superintendent or such other like
                                6    deposit as the superintendent may allow by rule; provided that
                                7    [hospitals and hospital-controlled outpatient health care
                                8    facilities that establish financial responsibility through a
                                9    policy of malpractice liability insurance may use any form of
                                10   malpractice insurance; and provided further that] for
                                11   independent providers, in the absence of an additional deposit
                                12   or policy as required by this subsection, the deposit or policy
                                13   shall provide coverage for not more than three separate
                                14   [occurrences] malpractice claims; and
                                15  (2)   pay the surcharge assessed on health care
                                16   providers by the superintendent pursuant to Section 41-5-25
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                                17   NMSA 1978.
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                                18  B.   To be qualified under the provisions of the
                                19   Medical Malpractice Act, an independent outpatient health care
                                20   facility shall:
                                21  (1)   establish its financial responsibility by
                                22   filing proof with the superintendent that the health care
                                23   provider is insured by a policy of malpractice liability
                                24   insurance issued by an authorized insurer in the amount of at
                                25   least five hundred thousand dollars ($500,000) per [occurrence]
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                                1    malpractice claim or by having continuously on deposit the sum
                                2    of one million five hundred thousand dollars ($1,500,000) in
                                3    cash with the superintendent or other like deposit as the
                                4    superintendent may allow by rule; provided that for independent
                                5    outpatient health care facilities, in the absence of an
                                6    additional deposit or policy as required by this subsection,
                                7    the deposit or policy shall provide coverage for not more than
                                8    three separate [occurrences] malpractice claims; and
                                9  (2)   pay the surcharge assessed on independent
                                10   outpatient health care facilities by the superintendent
                                11   pursuant to Section 41-5-25 NMSA 1978.
                                12  C.   For hospitals or hospital-controlled outpatient
                                13   health care facilities electing to be covered under the Medical
                                14   Malpractice Act, the superintendent shall determine, based on a
                                15   risk assessment of each hospital or hospital-controlled
                                16   outpatient health care facility, each hospital's or hospital-
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                                17   controlled outpatient health care facility's base coverage or
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                                18   deposit and additional charges for the fund.    The
                                19   superintendent shall arrange for an actuarial study before
                                20   determining base coverage or deposit and surcharges.
                                21  D.   A health care provider that establishes
                                22   financial responsibility through a policy of malpractice
                                23   liability insurance may use claims-made or occurrence-based
                                24   malpractice insurance; provided that a health care provider
                                25   covered by claims-made malpractice insurance shall obtain tail
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                                1    coverage whenever the claims-made malpractice insurance policy
                                2    is terminated.
                                3  [D.] E.     A health care provider not qualifying under
                                4    this section shall not have the benefit of any of the
                                5    provisions of the Medical Malpractice Act in the event of a
                                6    malpractice claim against it; provided that beginning July 1,
                                7    2021, hospitals and hospital-controlled outpatient health care
                                8    facilities shall not participate in the medical review process,
                                9    and beginning January 1, 2027, hospitals and hospital-
                                10   controlled outpatient health care facilities shall have the
                                11   benefits of the other provisions of the Medical Malpractice Act
                                12   except participation in the fund.
                                13  F.   For the purposes of this section:
                                14  (1)    "claims-made malpractice insurance" means
                                15   a medical malpractice liability insurance policy that provides
                                16   coverage only if the policy is active both when the alleged
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                                17   malpractice occurred and when the malpractice claim is filed;
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                                18  (2)    "occurrence-based malpractice insurance"
                                19   means a medical malpractice liability insurance policy that
                                20   provides coverage for any alleged malpractice that occurred
                                21   while the policy was active, regardless of when a malpractice
                                22   claim is filed; and
                                23  (3)    "tail coverage" means a medical
                                24   malpractice liability insurance policy that is purchased by a
                                25   health care provider when a claims-made malpractice insurance
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                                1    policy is terminated to provide coverage for future malpractice
                                2    claims arising from alleged malpractice that occurred while the
                                3    claims-made malpractice insurance policy was active."
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