New Mexico’s malpractice gold rush | Searchlight New Mexico
The state is a rich landscape for attorneys who cash in big on medical liability lawsuits. The soaring cost of insurance against such claims is pushing some hospitals to the brink.
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But those costs surged even higher after the legislature’s 2021 regular session, with passage of a bill that dramatically raised the caps on malpractice liability from $600,000 to $6 million over a five-year period — among the highest in the country. That figure can be applied to different defendants in a single case, so, for example, if a suit is brought over a surgery that involved an obstetrician, an anesthesiologist, and a hematologist, a plaintiff can ask for $18 million — a figure that doesn’t include punitive damages, which can drive the payout much higher.
New Mexico’s high caps on liability are only part of the equation, says Fred Nathan, Executive Director of Think New Mexico, a Santa Fe-based nonprofit that focuses on public policy.
“The state doesn’t cap attorney’s fees or punitive damages, and it allows lawyers to file multiple lawsuits over a single incident of alleged malpractice,” Nathan says. Plaintiffs in a successful suit can get paid in one lump sum, and because there are no caps on attorney’s fees, lawyers can keep as much of that money as they can negotiate with clients. “These sorts of factors have resulted in some extremely large verdicts against hospitals,” Nathan adds.
Several recent cases illustrate the financial stakes. In May 2023, a jury awarded a patient nearly $23 million after a botched prostate surgery that caused complications requiring at least 17 follow-up operations. A year later, a suit filed in response to a problematic hernia operation at Rehoboth McKinley Medical Center in Gallup resulted in a $68 million judgment, an amount that pushed the hospital to the brink of bankruptcy. And last month, jurors in Albuquerque awarded a patient more than $412 million for unnecessary erectile dysfunction shots administered by a clinic called NuMale Medical Center, setting a national record for these payouts.
New Mexico has the second-highest rate of malpractice suits per capita in the country, behind only Pennsylvania, according to data from the U.S. Department of Health and Human Services. The vast majority of those cases — about 80 percent — were filed by out-of-state firms, says Troy Clark, President and CEO of the New Mexico Hospital Association. “They hire a New Mexico attorney and get a New Mexico license, but all their operations are outside,” says Clark, with most of the lawyers who file suits in New Mexico coming from firms based in Texas, Missouri and Illinois.
“We are an attraction for law firms to come in and do business in New Mexico,” he says.
Searchlight could not independently verify the numbers of malpractice cases filed by out-of-state firms, because most law offices are registered as local businesses with the New Mexico Secretary of State.
Still, it’s clear that the number of cases is substantial: During a two-year period beginning in July 2022, New Mexico courts received applications to file 233 malpractice suits, according to data compiled by the New Mexico Medical Review Board, a state commission that analyzes malpractice cases.
This flood of litigation has meant that malpractice insurance companies have consistently lost money in New Mexico. For every $100 insurers receive in premiums in this state, they pay more than $183 in claims, according to a report by Think New Mexico — by far the highest “loss ratio” in the country, and more than double the national average.
New Mexico has lost physicians at an unparalleled rate over the past five years, a change that experts attribute at least partially to malpractice exposure. According to a study by the Physicians Advocacy Institute, a nonprofit research and policy group, the state lost a total of 248 practicing physicians between 2019 and 2024 — the only state in the country to experience a net loss of doctors during that span of time.
The shortage has stressed hospital systems across New Mexico, sometimes in unexpected ways. One prominent example occurred this year at Santa Fe’s largest hospital, Christus St. Vincent Regional Medical Center. In April, administrators there outsourced its labor and delivery unit to a venture capital-backed staffing firm called OB Hospitalist Group, a company that brings in doctors from a wide geographic area to work temporary shifts.
One of that group’s first orders of business was to slash midwife salaries by 30 percent, according to employees who spoke to Searchlight. Many midwives and obstetricians left as a result, scrambling patients’ birth plans and leaving a substantial gap in services. This fall, staffing problems had become so severe that the hospital had no OB-GYN on-site for a 24-hour period — a problem the hospital attributed to staffing “hiccups,” the Santa Fe New Mexican reported.
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