1. A. The "patient's compensation fund" is created as a nonreverting fund in the state treasury. The fund consists of money from surcharges, income from investment of the fund and any other money deposited to the credit of the fund. The fund shall be held in trust, deposited in a segregated account in the state treasury and invested by the investment office and shall not become a part of or revert to the general fund or any other fund of the state. Money from the fund shall be expended only for the purposes of and to the extent provided in the Medical Malpractice Act. All approved expenses of collecting, protecting and administering the fund, including purchasing insurance for the fund, shall be paid from the fund.
2. B. The superintendent shall contract for the administration and operation of the fund with a qualified, licensed third-party administrator, selected in consultation with the advisory board, no later than January 1, 2022. The third-party administrator shall provide an annual audit of the fund to the superintendent.
3. C. The superintendent, as custodian of the fund, and the third-party administrator shall be notified by the health care provider or the health care provider's insurer within thirty days of service on the health care provider of a complaint asserting a malpractice claim brought in a court in this state against the health care provider.
4. D. The superintendent shall levy an annual surcharge on all New Mexico health care providers qualifying under Section 41-5-5 NMSA 1978. The surcharge for health care providers shall be based on sound actuarial principles, using data obtained from New Mexico claims and loss experience. The surcharges for independent providers and independent outpatient health care facilities shall be determined by the superintendent with the advice of the advisory board and based on the annual independent actuarial study of the fund. The surcharge for hospitals and outpatient health care facilities shall be no less than the actuary's recommended surcharges based on an expected value basis to fully fund the current and projected claims obligations of the hospitals and outpatient health care facilities. A hospital or outpatient health care facility seeking participation in the fund during the remaining qualifying years shall provide, at a minimum, the hospital's or outpatient health care facility's direct and indirect cost information as reported to the federal centers for medicare and medicaid services for all self-insured malpractice claims, including claims and paid loss detail, and the claims and paid loss detail from any professional liability insurance carriers for each hospital or outpatient health care facility and each employed health care provider for the past eight years to the third-party actuary. The same information shall be available to the advisory board for review, including financial information and data, and excluding individually identifying case information, which information shall not be subject to the Inspection of Public Records Act. The superintendent, the third-party actuary or the advisory board shall not use or disclose the information for any purpose other than to fulfill the duties pursuant to this subsection.
5. E. The surcharge shall be collected on the same basis as premiums by each insurer from the health care provider. The surcharge shall be due and payable within thirty days after the premiums for malpractice liability insurance have been received by the insurer from the health care provider in New Mexico. If the surcharge is collected but not paid timely, the superintendent may suspend the certificate of authority of the insurer until the annual premium surcharge is paid.
6. F. Surcharges shall be set by October 31 of each year for the next calendar year. Beginning in 2021, the surcharges shall be set with the intention of bringing the fund to solvency with no projected deficit by December 31, 2026. All qualified and participating hospitals and outpatient health care facilities shall cure any fund deficit attributable to hospitals and outpatient health care facilities by December 31, 2026.
7. G. If the fund would be exhausted by payment of all claims allowed during a particular calendar year, then the amounts paid to each patient and other parties obtaining judgments shall be prorated, with each such party receiving an amount equal to the percentage the party's own payment schedule bears to the total of payment schedules outstanding and payable by the fund. Any amounts due and unpaid as a result of such proration shall be paid in the following calendar years.

8. H. Upon receipt of one of the proofs of authenticity listed in this subsection, reflecting a judgment for damages rendered pursuant to the Medical Malpractice Act, the superintendent shall issue or have issued warrants in accordance with the payment schedule constructed by the court and made a part of its final judgment. The only claim against the fund shall be a voucher or other appropriate request by the superintendent after the superintendent receives:

   1. (1) until January 1, 2022, a certified copy of a final judgment in excess of two hundred thousand dollars ($200,000) against a health care provider;
   2. (2) until January 1, 2022, a certified copy of a court-approved settlement or certification of settlement made prior to initiating suit, signed by both parties, in excess of two hundred thousand dollars ($200,000) against a health care provider; or
   3. (3) until January 1, 2022, a certified copy of a final judgment less than two hundred thousand dollars ($200,000) and an affidavit of a health care provider or its insurer attesting that payments made pursuant to Subsection B of Section 41-5-7 NMSA 1978, combined with the monetary recovery, exceed two hundred thousand dollars ($200,000).
9. I. On or after January 1, 2022, the amounts specified in Paragraphs (1) through (3) of Subsection H of this section shall be two hundred fifty thousand dollars ($250,000).

History: 1978 Comp., § 41-5-25, enacted by Laws 1992, ch. 33, § 9; 1997, ch. 109, § 1; 2021, ch. 16, § 13; 2026, ch. 44, § 6.

ANNOTATIONS

Repeals and reenactments. — Laws 1990, ch. 111, § 2 repealed former 41-5-25 NMSA 1978, as amended by Laws 1990, ch. 111, § 1, relating to patient's compensation fund, and enacted a new 41-5-25 NMSA 1978, effective July 1, 1991.

Laws 1990, ch. 111, § 3 repealed Laws 1989, ch. 324, § 43 which enacted 41-5-25 NMSA 1978 to become effective on July 1, 1990.

Laws 1991, ch. 264, § 9 repealed former 41-5-25 NMSA 1978, as amended by Laws 1991, ch. 264, § 8, and enacted a new 41-5-25 NMSA 1978, effective July 1, 1992.

Laws 1991, ch. 264, § 10 repealed former 41-5-25 NMSA 1978, as enacted by Laws 1991, ch. 264, § 9, and enacted a new 41-5-25 NMSA 1978, effective July 1, 1993.

Laws 1992, ch. 33, § 7 repealed former 41-5-25 NMSA 1978, as amended by Laws 1991, ch. 264, § 8, and as enacted by Laws 1991, ch. 264, § 10, and enacted a new section, effective April 1, 1992.

Laws 1992, ch. 33, § 8 repealed former 41-5-25 NMSA 1978, as enacted by Laws 1992, ch. 33, § 7, and enacted a new section, effective April 1, 1993.

Laws 1992, ch. 33, § 9 repealed former 41-5-25 NMSA 1978, as enacted by Laws 1992, ch. 33, § 8, and enacted a new section, effective April 1, 1994.

The 2026 amendment, effective May 20, 2026, clarified how the patient compensation fund surcharges are to be calculated; in Subsection D, after "The surcharge" deleted "shall be determined by the superintendent with the advice of the advisory board and based on the annual independent actuarial study of the fund. The surcharges for health care providers, including hospitals and outpatient health care facilities whose qualifications for the fund end on January 1, 2027, shall be based on sound actuarial principles, using data obtained from New Mexico claims and loss experience" and added the remainder of the subsection.

Applicability. — Laws 2026, ch. 44, § 8 provided that the provisions of Laws 2026, ch. 44 apply to all claims for medical malpractice that arise on or after May 20, 2026.

Severability. — Laws 2026, ch. 44, § 7 provided that if a provision of Laws 2026, ch. 44 or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of Laws 2026, ch. 44 that can be given effect without the invalid provision or application, and to this end the provisions of Laws 2026, ch. 44 are severable.

The 2021 amendment, effective July 1, 2021, provided the means of funding the patient's compensation fund, required the superintendent of insurance to contract for the administration and operation of the fund with a qualified, licensed third-party administrator, required the third-party administrator to provide an annual audit of the fund to the superintendent of insurance, revised the procedures for determining the annual surcharge on qualifying New Mexico health care providers, provided that annual surcharges shall be set by October 31 of each year for the next calendar year, and provided that, after January 1, 2022, the superintendent of insurance must approve any settlement of a claim for more than two hundred fifty thousand dollars, up from two hundred thousand dollars prior to January 1, 2022; in the section heading, after "Patient's compensation fund", added "third-party administrator; actuarial studies; surcharges; claims; proration; proofs of authenticity"; in Subsection A, after "'patient's compensation fund'", deleted "to be collected and received by the superintendent for exclusive use for the purpose stated in the Medical Malpractice Act" and added "is created as a nonreverting fund in the state treasury. The fund consists of money from surcharges, income from investment of the fund and any other money deposited to the credit of the fund", after "invested", deleted "and reinvested by the superintendent with the prior approval of the state board of finance" and added "by the state investment office", and after "Medical Malpractice Act", deleted "The superintendent shall have the authority to use fund money to purchase insurance for the fund and its obligations" and added the remainder of the subsection; added a new Subsection B and redesignated former Subsection B as Subsection D; in Subsection C, after "fund", added "and the third-party administrator"; in Subsection D, after "The surcharge shall be determined by the superintendent", deleted "based upon sound actuarial principles, using data obtained from New Mexico experience if available" and added the remainder of the subsection; deleted former Subsection E; added a new Subsection F and redesignated former Subsections F and G as Subsections G and H, respectively; in Subsection H, Paragraphs H(1) through H(3), added "until January 1, 2022, and deleted former Subsection H, which related to the superintendent contracting for an independent actuarial study of the patient's compensation fund; and added Subsection I.

The 1997 amendment, effective June 20, 1997, added the third sentence in Subsection A.

District court did not abuse its discretion in dismissing declaratory judgment and upholding administrative decision. — Where Plaintiffs filed a complaint for declaratory judgment asking the district court to construe NMSA 1978, § 41-5-25 of the Medical Malpractice Act (Act) to require that the Office of the Superintendent of Insurance (OSI) accept a late-tendered surcharge and recognize Plaintiffs’ insured as a qualified health care provider during a six-month period in 2017, and where the request for declaratory judgment was combined with an appeal from a decision by the OSI which encompassed the same issues, and where the district court first dismissed the declaratory judgment claim with prejudice, and then upheld OSI’s decision on appeal, the district court did not abuse its discretion in dismissing Plaintiffs’ declaratory judgment claim, because the purpose of Plaintiffs’ declaratory judgment was to obtain de novo review of the Act, without deference to the OSI’s interpretation and implementation of the Act. This approach circumvented the typical administrative process, a tactic which New Mexico courts have looked at with disfavor. Beecher Carlson Ins. Serv. v. Catechis, 2023-NMCA-038.

The superintendent of insurance has the authority to object to the terms in a settlement based on the Medical Malpractice Act (decided prior to 2021 amendment to the Medical Malpractice Act). — Where plaintiff and defendant settled a medical malpractice case, but where the superintendent of insurance declined to disburse the agreed amount from the patient's compensation fund because, in their view, the payment for lump sum future medical expenses, a term of the settlement, violated the Medical Malpractice Act (MMA), 41-5-1 NMSA 1978 to 41-5-29 NMSA 1978, the superintended of insurance had the authority to object to the terms in the settlement based on the MMA, because the plain language of the MMA requires the superintendent to hold available monies in trust and protect the patient's compensation fund and authorizes only the superintendent to expend funds from the patient's compensation fund and only for the purposes of and to the extent provided in the MMA. Murphy v. Pediatrix Cardiology of N.M., P.C., 2026-NMCA-001, cert. granted.

Law reviews. — For article, "Medical Malpractice Legislation in New Mexico," see 7 N.M.L. Rev. 5 (1976-77).