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Tort reform challenge threatens medical liability premiums

An appellate court examines the New Mexico law’s constitutionality and its $600,000 damages cap, but physicians are fighting back, fearing changes will drive up costs.

By Tanya Albert Henry — Posted June 10, 2013

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New Mexico’s tort reform, which has been on the books since the mid-1970s, is facing legal challenges on the law’s constitutionality and how to define the word “occurrence” when applying the damages cap.

Physician advocates say upholding the law and making sure it is enforced the way it has been in the previous decades is key to keeping medical liability insurance companies in the state and maintaining premiums at a level that physicians can afford.

“It is a very important case for us,” said Randy Marshall, executive director of the New Mexico Medical Society. “We have a very good medical malpractice act.”

Plaintiffs in the case, Baker v. Hedstrom, are asking the New Mexico Court of Appeals to decide whether the Legislature constitutionally has the right to set a limit on awards that can be collected. They argue, among other things, that the law interferes with the right to a jury trial.

Physician defendants in the lawsuit are asking the Court of Appeals in Albuquerque to decide whether an “occurrence” to which the damage cap applies refers to the patient’s injury or to each act of medical negligence that led to the injury. Traditionally, the court has limited a plaintiff to $600,000 per injury plus the value of past and future medical care.

In Baker, the jury found three physicians liable in treatment related to a heart attack and awarded the plaintiff more than $3.1 million from one physician, $900,000 from another physician and nearly $4.3 million from a third physician.

A female patient went to three hospitals complaining of chest pain. The first two did not perform an electrocardiogram. An ECG at the third hospital showed that she was having a heart attack. The woman was six weeks pregnant and lost the pregnancy. She also had heart damage.

The trial court rejected the patient’s argument that reducing the jury’s award of more than $8 million by any amount was unconstitutional. The trial court also rejected the physicians’ request to limit the jury’s award to a total of $600,000 plus past and future medical costs. Instead, the court ordered each physician to pay $600,000 and for the three physicians to share medical costs based on their portion of fault.

Brief says premiums would rise

The Litigation Center of the American Medical Association and the State Medical Societies and NMMS filed a friend-of-the-court brief in the occurrence appeal. The brief notes that if the lower court decision stands, medical liability insurance carriers would raise premiums, because they would not be able to predict “how many specific acts of negligence a creative attorney might be able to extract from a course of treatment.” In turn, that would lead to increased health care costs and the risk that physicians go without insurance or adequate insurance, or move out of state, the brief said.

Alice T. Lorenz, an Albuquerque, N.M., appellate attorney and attorney for the brief by the AMA Litigation Center and NMMS, said the state’s patient compensation fund would face similar increased uncertainty.

“It expands the liability of the fund,” she said. “If that kind of money starts coming out of the patient compensation fund, the surcharge [that health care professionals pay] will go up to be able to pay the claims.”

The Litigation Center and NMMS plan to file an amicus brief in the case challenging the constitutionality of the law. An attorney for the plaintiff did not return calls by this article’s deadline.

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External links

Bryanna Pearl Baker v. Stephanie Hedstrom, MD, et al., friend-of-the-court brief filed by the Litigation Center of the American Medical Association and the State Medical Societies and the New Mexico Medical Society (link)

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