By Susan Morée
Some say medical malpractice lawsuits are hurting New Mexico but some patients who’ve been harmed say lawsuits seek justice for a lifetime of wrong. Who’s right?
Deidre Murphy woke up paralyzed 15 years ago after a back surgery. Murphy, 58 at the time, had owned an alpaca ranch in Lamy and had led a full, active life. Back problems led her to seek out a surgeon in Albuquerque. An implant surgery was supposed to help with pain management but in the process, the surgeon hit Murphy’s spinal cord.
“I haven’t been able to walk since,” she told NM Political Report.
Murphy and others, such as husband and wife John and Robin Yaeger, are speaking out, telling their tragic life stories. Murphy and the Yaegers visited the Roundhouse last week to talk to lawmakers. John Yaeger, who had a 25-year career as a well-respected member of the Legislative Council Service, suffered asphyxia and paralysis due to a botched surgery on his brain after suffering a stroke. With Robin at his side to be his voice, the Yaegers and Murphy put a face to a political debate and reminded lawmakers of the real and sometimes heart-wrenching consequences from medical malpractice.
The Yaegers and Murphy are part of an effort to encourage lawmakers to vote against a bill that would limit the cut that lawyers take on medical malpractice lawsuits in New Mexico.
The bill, Medical Malpractice Changes, sponsored by state Sen. Martin Hickey, D-Albuquerque, and state Sen. Pat Woods, R-Broadview, would limit medical malpractice lawyers to a cap of 25% of a settlement and 33% if the case goes to trial. Hickey said the current system fails both patients and providers.
Fred Nathan Jr., executive director of the nonpartisan think tank Think New Mexico, said this scheme follows California’s caps on medical malpractice lawsuits. Nathan, whose group drafted the bill, believes this is part of a solution to the long-festering problem of the physician shortage in New Mexico.
“We start from the ideal that you want to make patients whole, pay lawyers reasonable fees and do it so it doesn’t drive doctors out of the state,” Nathan told NM Political Report.
But Ezra Spitzer, who is also a part of the effort to put a face to the debate, told NM Political Report that placing caps “are in the way of getting to justice.” Spitzer lost a newborn daughter 11 years ago due to medical malpractice.
“We have to make this better,” he said.
The New Mexico Trial Lawyers Association argues that hospitals in New Mexico are increasingly owned by private equity firms, which studies show are often guilty of cutting staff and increasing patient loads to increase profits. Democrats in the Legislature appear geared up around this issue in this legislative session. During interim health committee hearings and press conferences to discuss upcoming bills, Democratic lawmakers have talked at length about the problem of private equity in healthcare.
State Sen. Katy Duhigg, a Democrat from Albuquerque and House Majority Floor Whip Reena Szczepanski, a Democrat from Santa Fe, filed a bill this session that would create transparency around purchases of healthcare facilities. House Reps. Eleanor Chávez, of Las Cruces, and Kathleen Cates, of Rio Rancho, also both Democrats, have filed bills that would address nurse staffing ratios in an effort to improve staffing problems.
Kathleen Love, a personal injury attorney and a New Mexico Trial Lawyers Board officer, told NM Political Report that with private equity firms buying up hospitals in New Mexico and “running them on a dime and creating really bad systems and getting people really bad care,” the threat of a potential medical malpractice lawsuit creates accountability.
“Hospitals learn if they don’t make changes, [a lawsuit] could happen again,” Love said.
But Nathan said it appears that the Trial Lawyers Association is trying to connect two issues that have nothing to do with each other. He called it “a nonsequitur.”
“It’s not impossible to address private equity and do both things. They’re not in competition with each other,” Nathan said.
Patient Compensation Fund
At the heart of the debate is a fund the Legislature created in the 1970s in response to a crisis taking place in that decade in healthcare. The Legislature set the fund up with money the New Mexico Office of the Superintendent of Insurance charges to New Mexico providers. But a 2024 report created by an advisory board to the fund, states the fund has been mismanaged for years. This has led to deficits and questions about the fund’s sustainability.
Insurance Superintendent Alice Kane did not respond to multiple requests for an interview. NM Political Report also reached out to the National Association of Insurance Commissioners, but the organization directed questions to Kane.
The Legislature has provided millions of dollars to the fund in recent years to maintain its solvency. A 2021 bill intended to address medical malpractice allowed patients to receive a lump sum payment from the fund for compensatory damages instead of smaller payouts over the patient’s lifetime.
Nathan said one of the goals of the medical malpractise bill is to make changes to the way the fund works.
He said that, currently, an injured patient can request a lump sum payout from the fund. He said that when a patient takes that option, it enables the law firm who represented the patient to receive its percentage up front.
Nathan said the bill would no longer allow a lump sum payment. Instead, all injured patients would be required to receive payments for the estimated medical expenses as they come up.
Spitzer said he and his wife, who suffered long-term injuries during the botched delivery of their daughter, took the lump sum payment option when they settled their malpractice claim about four years ago. He said it was because they were concerned that the fund could determine which provider they went to for additional care.
“They’re going to adjudicate claims as they come in, as the patient goes through that process over and over. We asked enough questions to recognize that’s not what we wanted. We wanted a flat settlement and release them from future medicals. That ability to make future decisions about our own medicals was better than an eternally open claim with the fund,” Spitzer said.
Lee Hunt, Murphy’s attorney and also a board director of the Trial Lawyer’s Association, told NM Political Report that Murphy agreed to lifetime payments from the fund in her settlement, rather than a lump sum. But Hunt said Murphy has had to fight for things like purchasing a specialized wheelchair and, to do so, has had to go back to court.
“Some of the reforms turn the state into an insurance company. It’s not set up to do that,” Hunt said.
New Mexico is not alone
New Mexico is not alone in its provider shortage crisis. The New England Journal reported this month that an urgent healthcare crisis looms for the U.S. and says long-standing physician deficits were not addressed prior to the COVID-19 pandemic, which exacerbated the problem. The issues include a variety of sources, from graduate medical training to a “silver tsunami” as both a significant number of providers retire at the same time as the very large Baby Boomer generation requires more healthcare needs as it ages over the next couple of decades. And despite a federal incentive program designed to attract more physicians to areas designated as severe shortage areas for healthcare professionals, one study showed that this 50-year program has had no significant effect on improving mortality or physician density.
New Mexico has four severe physician shortage areas. Most of the rest of the state also qualifies as a physician shortage area, but is less acute.
Think New Mexico says the state has the second highest rate of medical malpractice lawsuits in the U.S. and that part of the necessary reform is to put some limits on punitive damages. Nathan said New Mexico allows a low standard to set punitive damages, which are not the same as compensatory damages. A harmed patient can sue for both. Lawyers argue that preparing for a medical malpractice lawsuit is expensive and can take years of work during which they are not paid. They also take on risk because if a law firm loses a suit, it does not earn anything. If lawyers are limited to what they can earn from a lawsuit, it could be harder for a harmed patient to find one to take a case.
But Nathan argues that very large punitive awards “don’t make us any safer.” Think New Mexico is advocating for 75% of punitive damages to go to a state fund managed by the Department of Health that could then be used as a grant for medical facilities to reduce medical malpractice. He said it could be used to reduce staffing ratios or increase training.
“Some states don’t just shower punitive damages as a windfall for attorneys but use it for public purpose,” Nathan said.
At the same time the legislature is considering caps on medical malpractice, they have limited practitioners’ ability to seek compensation from former patients who are stiffing them with unpaid bills. Collection agencies are dropping health care accounts because of the limitations New Mexico laws place on us in our efforts to get paid by former patients who shirk their financial responsibility. They know there is little we as health care providers can do about it. And people wonder why there is a healthcare shortage in New Mexico.
There are fallacies to the arguments made by the lawyers for maintaining their high percentage of the malpractice judgments. One is how much work they have to put into the litigation. The three cases used as examples in the article were slam dunks; clear malpractice with compelling evidence for the jury to see, if it ever got that far. I am sure the lawyers hourly earnings were ludicrous in those cases. The concerns about not bringing justice for smaller cases cuts both ways. If lawyers received a lower percentage of the judgment it would reduce the filing of marginal cases, as lawyers would be less likely to gamble their time for a potential settlement of a case with dubious merit. The premise that private equity would improve the quality of care due to high malpractice settlements is also spurious. Are there data to show that hospital staffing is directly related to the state’s malpractice rate? If so New Mexico should have the best staffing ratio in the country. Private equity would just raise their rates in response to increased malpractice losses. The solution to the problem is to have malpractice lawyers charge by the hour, like doctors and like lawyers in many other areas of law practice. They would make a nice living and their motives for high malpractice rewards would be less self-serving.
Right now malpractice insurers lose $189 for every $100 they take in in premiums in NM. And the NM premiums are twice as high as adjoining states. Soon there will be no insurance–and hence no providers. This came about due to the 2021 tort bill, which allows lawyers to file in any county (not usually the one where the alleged incident occurred–rather a place with plaintiff friendly jury pools), allows lump sum payments and sets a very low standard for punitive damages. There was a recent 40 million dollar award, when malpractice insurance covers only $1 million per occurrence. No one in their right mind would want to practice medicine here.
Thank the governor, the legislature and the plaintiff’s bar the next time you cant find anyone to take care of you when you are sick.
Thank you for the information.
I don’t think anyone will argue that someone who is harmed in the medical care process should be compensated, but there should be some kind of reasonable limit. This is yet another example of New Mexico being unable to stay out of its own way. We seem to have no grasp of the concept of unintended consequences.
Sen. Duhigg’s bill addressing private equity firms buying up NM hospitals and practices is laudable and needed. Yet the plan is to run enforcement and operations through the NM Office of the Superintendent of Insurance. To read that the Office has mismanaged funds for years does not engender any confidence, and without additional funding to take on this additional task, this bill becomes an unfunded mandate if passed. I agree that the issue of malpractice insurance and private equity is apples and oranges and the attempt to link them is laughable. While I welcome this article, I have yet to read anything that does a thorough, detailed, and fair accounting of how the NM system for capping malpractice, various patient funds, etc., all work in conjunction. Little to no data is ever cited. It is all anecdotal and from the standpoint of what worked or did not for individuals, whether those individuals are malpractice victims, doctors, or trial lawyers.
Part of the problem is the fact that NM’s legislature is stacked with attorneys who have a self-interest in the laws and policies that they create. So naturally the medical malpractice issue is going to favor more cases, larger claims, fewer caps on legal fees and jury awards, and so on. Medical malpractice and personal injury attorneys are a dime a dozen here, yet when you need a lawyer to handle other types of cases, like civil rights, employment or consumer law, they are suddenly hard to come by and less interested in helping represent you.
Dr Davis’s comment that “The three cases used as examples in the article were slam dunks; clear malpractice with compelling evidence for the jury to see, if it ever got that far” doesn’t match the facts. Few insurers settle early. Caps don’t stop marginal cases. Caps limit valid cases with significant damages. Every large punitive award verdict reflects terrible conduct by the provider. Why don’t insurers settle those?