RISK SOLUTIONS

Navigating an uneven & unpredictable political landscape

Lawmakers and regulators, through their decisions and priorities, can help or hurt healthcare organizations.

One example of how they help: States are increasingly taking on medical tort reform to give healthcare organizations greater cost certainty over their liability risks and costs. New Mexico, a state that historically struggled to attract specialty care clinicians, recently revamped its tort liability laws.

At the same time, the current presidential administration has closely scrutinized healthcare organizations for fraud, waste, and abuse.

This dichotomy illustrates how healthcare organizations must proactively manage and navigate an uncertain, uneven, and ever-changing political and regulatory landscape.

Tort reform

Few carriers have been willing to sell medical professional liability insurance in New Mexico on account of its historically plaintiff-friendly tort laws and the tendency of juries to award substantial verdicts in medical malpractice lawsuits.

At the same time, New Mexico physician groups struggled to expand their practices, as qualified clinicians, particularly in specialty practices, sought to practice medicine elsewhere, where liability risks were lower.

Earlier this year, however, New Mexico passed sweeping tort reform laws that policymakers hope will reduce the cost of care, lower insurance rates, and attract physicians back to The Land of Enchantment.

New Mexico’s reforms include:

A new definition of occurrences aimed at curbing “claims stacking,” or pursuing separate claims against different providers stemming from a single instance of medical error.

Future medical expenses are now based on actual paid expenses, not what was billed.

Plaintiffs now have to clear a higher burden of evidence to obtain punitive damages.

Punitive damage awards are limited to the amount equal to compensatory damages for independent physicians and independent outpatient facilities.

New Mexico’s measure brings the total number of states that have reformed their tort laws to 29. Most focus on limiting noneconomic damages, commonly referred to as “pain and suffering” damages.

But tort reform doesn’t always cut in healthcare’s favor. Sometimes courts reverse the reforms passed by state legislatures.

The Georgia Supreme Court in June reversed a lower court’s ruling that reduced a $29.5 million wrongful death verdict involving a woman who died from a bowel perforation during a surgical procedure to $350,000 to align with the state’s caps on noneconomic damages.

The lack of a uniform federal law on tort limits leaves healthcare organizations navigating a maze of uneven state-level laws.

As a result, healthcare organizations operating in multiple jurisdictions should work with an experienced broker and get acquainted with local legal counsel in each state where they do business. This helps organizations familiarize themselves with ever-changing federal laws and case law in each state. And it helps build a relationship with counsel ahead of a claim rather than scrambling to do so once something goes amiss.

Healthcare organizations should develop policies and practices for post-event reviews to learn from mistakes that inevitably occur in the delivery of care.

Whistleblower lawsuits (also known as qui tams)

The current presidential administration has taken a particular interest in pursuing cases of fraud, waste, and abuse against the federal government. The government, which has its own vast resources, has received considerable help from whistleblowers.

The Justice Department announced in January that it recovered a record $6.8 billion in judgments and settlements under the False Claims Act (FCA) for the fiscal year 2025, which ended on Sept. 30, 2025.

Of that $6.8 billion, $5.3 billion was attributable to qui tam lawsuits, 1,297 of which were filed in fiscal year 2025. That’s up 32% from the year before.

Healthcare fraud was a leading source of False Claims Act cases in 2025. These cases often involve fraudulent overbilling of Medicare, Medicaid, the Children’s Health Insurance Program, or TRICARE, the healthcare program for U.S. military service members and their families. Further to this point, additional cases have stemmed from alleged prescription drug mispricing.

Whistleblower lawsuits against healthcare organizations can involve employment issues and privacy violations but frequently stem from allegations of fraudulent or misleading billing and coding practices.

Healthcare organizations have trouble obtaining insurance that will cover defense, investigation, and penalty costs associated with FCA claims. Lloyd’s of London has taken an interest in writing new regulatory billing errors and omissions coverage, but it can sometimes take years to bind.

Even so, healthcare organizations should approach carriers to go through the underwriting process for coverage and to determine insurability.

From that, they may learn how to build and maintain well-staffed billing and coding departments that follow clear, consistent procedures. These departments should work closely with auditors and compliance staff to ensure processes can withstand legal scrutiny.