On March 6, Governor Michelle Lujan Grisham signed several bills enacted by the 2026 New Mexico Legislature with the goal of transforming New Mexico’s health care system by reforming medical malpractice law, health care affordability, patient billing transparency and hospital funding and more. The governor signed the bills at the soon-to-open Valencia County Hospital, a 15-bed acute care facility owned by Valencia County and operated by Community Hospital Corp. and Lovelace. The new Valencia County Hospital is being partially funded with a $50 million state investment.
The bills the Governor signed are HB 99, HB 4, HB 306 and SB 101, among others. Taken together, the bills represent a historic milestone in the governor’s years-long push to alleviate statewide physician shortages, make health care more affordable and improve the long-term financial security of hospitals across New Mexico. Following is a summation of the legislation signed into law:
MEDICAL MALPRACTICE REFORM BILL
HB 99 is the medical malpractice reform bill. Its goal is to help reduce the cost of medical malpractice insurance and attract more physicians to New Mexico. The bill creates tiered caps on punitive damages. Those caps are $1 million for independent providers, $6 million for locally owned hospitals and $15 million for large systems.
Critics have said the multi-tiered cap on punitive damages in medical malpractice cases will ultimately be subject to court challenge as being unconstitutional. The higher cap would apply to more than 30 hospitals statewide, including five Presbyterian Healthcare Services hospitals and five Lovelace Health System hospitals. It could also apply to the new Valencia County Hospital, a $61 million facility set to open as soon as this fall that will be jointly operated by Lovelace and Community Hospital Corp., its CEO Tammie Chavez said.
HB 99 also raises the evidentiary standard from a “preponderance of evidence” to “clear and convincing,” requiring judicial review before punitive damage claims can proceed. The bill passed the House 66 to 3 and the Senate 40 to 2. Sponsors include Reps. Christine Chandler, Minority Floor Leader Gail Armstrong and House Majority Whip Day Hochman-Vigil.
Supporters of HB 99 said the caps on punitive damages are necessary to reduce doctors’ insurance premiums and lower the cost to practice in the state, which could help New Mexico recruit and retain physicians. A Legislative Finance Committee survey published in January found about two-thirds of New Mexico physicians were considering leaving the state. The most common reason for leaving the state was punitive damages associated with medical malpractice. Opponents argued HB 99 would leave malpractice victims with less of a path to justice without improving the state’s supply of providers.
HB 99 was the result of an “incredible journey” said sponsor Rep. Christine Chandler, D-Los Alamos. The bill stemmed from more than a year of tense legislative discussions, with behind-the-scenes negotiations ramping up in the weeks ahead of the 2026 legislative session. Chandler said this of the final version of HB 99:
[HB 99] is a balanced approach that will improve the climate for our doctors while preserving avenues to justice for our patients who are harmed. … This is a reasonable compromise that brings our laws more in line with what other states do, and it assures our doctors that they are valued. And it will also help bring providers here.”
New Mexico doctors anticipate it will take time to see the effects of the reform. Dr. Robert Underwood, president of the New Mexico Medical Society, said this:
“Physician training is kind of on an annual cycle, and so it’ll be a couple of years as we can attract more and more physicians to the state. … I think it sends a really good signal to physicians and honestly to medical malpractice insurance underwriters, that we are open for business and we’re coming back online, and that’s going to shift the whole culture of health care in the state of New Mexico.”
PROTECTING COVERAGE WHEN CONGRESS WON’T
HB 4 increases revenue to the Health Care Affordability Fund, ensuring coverage stays affordable for working families and small businesses statewide. The FY27 budget approved by New Mexico lawmakers includes $294.4 million for health care affordability programs and for protecting coverage for up to 46,600 New Mexicans and reducing costs for up to 122,000 people statewide.
In 2025, Republicans in Congress eliminated the Affordable Care Act’s enhanced premium tax credits and slashed Medicaid. Without this state investment, tens of thousands of New Mexicans would risk losing medical coverage immediately. HB 4 passed the House 48 to 19 and the Senate 24 to12. Sponsors include House Floor Leader Reena Szczepanski, Rep. Liz Thomson, Rep. Bobby Gonzales, Rep. Joseph Hernandez and Rep. Anita Gonzales.
ENDING SURPRISE BILLS FOR ROUTINE CARE
HB 306 prohibits hospitals and health systems from charging facility fees directly to patients for preventive outpatient care, outpatient vaccinations and telehealth services and is intended to curb surprise charges for routine care. The bill preserves facility fees for inpatient and emergency care and protects rural hospitals. It also strengthens patient notice requirements and standardizes billing so families understand what they may owe before care is delivered. HB 306 passed both chambers unanimously. Sponsors include House Floor Leader Reena Szczepanski and Sen. Liz Stefanics.
PROTECTING HOSPITALS THAT SERVE MEDICAID PATIENTS
SB 101 repeals the sunset clause in the Health Care Delivery and Access Act ensuring continued financial support for eligible hospitals that care for Medicaid members. The Act, signed in 2024, was created to support urban and rural hospitals using a funding structure that leverages federal dollars. Federal changes enacted in July 2025 reduced funding levels for hospital programs like this one nationwide, and the program is expected to shrink to about one-third of its current size. SB 101 helps protect the program from future federal changes that could put it at risk of termination. The bill passed both chambers unanimously. Sponsors include Sen. Liz Stefanics, House Floor Leader Reena Szczepanski, Rep. Liz Thomson, Sen. Linda Lopez and Sen. Nicole Tobiassen.
OTHER LEGISLATION SIGNED
The governor also signed the following health care bills:
HB 38: Wheelchair Insurance Coverage
HB 34: School Nurse Licensure Provisions
HB 156: Repeal Special Session Vaccination Laws
SB 20: Prior Authorization & Prescription Drugs
SB 21: Medicare Supplement Open Enrollment
SB 30: Repeal existing requirement to report all induced abortions statewide.
GOVERNOR’S STATEMENT
Governor Lujan Grisham said this of the legislation she signed into law:
“New Mexico is 5,000 doctors short, and that’s before we deal with 7,000, it depends on the number, 9,000 nurses short, and a number of other healthcare practitioners. … New Mexico families deserve a health care system that works for them — one where doctors are available, bills are fair and coverage doesn’t disappear because of bad decisions made in Washington. The bills I signed today are a direct response to the barriers that have stood between New Mexicans and the health care they need and deserve. … I want to thank every member of the New Mexico Legislature who voted for these bills, and especially the sponsors for their hard work in making sure they got to my desk. All New Mexicans will benefit as a result.”
OTHER BILLS REMAINING TO BE SIGNED
With the governor facing a March 11 deadline to act on legislation approved during this year’s session, some high-profile measures still remain to be singed into law. Those include a $11.1 billion budget bill for the coming fiscal year and a tax package that includes a $10,000 personal income tax credit for physicians who practice in New Mexico on a full-time basis. In all, Lujan Grisham has signed 49 of the 74 bills approved by the Legislature. She has not yet vetoed any measures that have reached her desk this year.
COMMENTARY AND ANALYSIS
House Bill 99 was the most closely watched and most contentious measure of the 30-day legislative session. Gov. Michelle Lujan Grisham, who supported the proposal, insisted she would call a special session if the Legislature failed to pass a substantial overhaul to the malpractice law.
All the enacted legislation signed by the Governor can be considered a major milestone for the state as it struggles with recruiting health care professionals. As is the case with any legislation as complicated and as contentious as the major changes to Medical Malpractice Act were, it will likely be years before its full impact can be gaged. No doubt future litigation will occur and the constitutionality of the caps will be challenged by the trial attorneys.
Success will be measured if insurance premiums in fact go down and if the physicians stop leaving the state. The blunt reality is that the unintended consequences just may wind up being that victims of medical malpractice will in no way be adequately compensated for their life changing injuries and medical malpractice will not be adequately addressed, in which case the legislature will be revisiting and wind up repealing what they have enacted and the state will be back to square one.
Links to quoted or relied upon news sources are here:
https://www.kob.com/new-mexico/governor-signs-bill-for-medical-malpractice-reform/
https://www.kunm.org/kunm-news-update/2026-03-06/new-mexico-governor-signs-malpractice-reform
Governor signs medical malpractice reform, other health care bills into law