New Mexico Court Rules Malpractice Law Covers Doctors’ Businesses

Businesses formed by doctors are covered by a state law that caps the damages that victims of medical malpractice can collect from health care providers, New Mexico’s highest court ruled Thursday.

The state Supreme Court said that medical professional corporations and limited liability companies fall under the law’s definition of a health care provider under the state’s medical malpractice law.

At issue was whether the 1976 law applied only to licensed physicians, hospitals, outpatient clinics and certain others such as chiropractors. A corporation established by a group of doctors for tax or business purposes isn’t licensed, however.

The court said that excluding the businesses formed by medical professionals would undermine the purpose of the law, which was to increase the availability of insurance coverage for malpractice claims. The law was enacted after a large private insurer stopped offering malpractice coverage in the state.

The court said that “covering individuals without offering the same benefits to the companies that they form or operate under disturbs the balanced scheme originally set up by the Legislature that was intended to attract enough health care providers to service the needs of patients in New Mexico and, in turn, ensure that the patients were protected when claims for medical malpractice arise.”

The court issued the ruling in deciding three separate malpractice lawsuits.

In 2011, Gov. Susana Martinez vetoed a measure passed by the Democratic-controlled Legislature that would have revised the malpractice law to increase its liability caps and make clear that the business organizations of doctors were covered.