Worker's Compensation System in New Mexico

The 1990 law greatly expanded the responsibilities of the Workers' Compensation Administration and separated it from the New Mexico Department of Workforce Solutions  so that the Director reports directly to the Governor. Many powers and responsibilities were concentrated in the person of the Director, so that politics were removed from major decision making. The following includes the strategies of the New Mexico workers' compensation law and the regulations and programs of the administration.

Worker Incentives to Frivolous Claims Are Cut Back
The New Mexico law does not recognize "stress" claims. Compensability for "mental impairment" is limited to strictly defined circumstances with a clear causal connection to severe trauma in the work place.

A major shift in incentive is a prohibition of lump sum settlements in most cases. Instead of settling claims, payers are required to continue making periodic benefit payments and paying medical providers directly. This affects workers in two ways. It cuts down the "lottery mentality" of workers who might be encouraged to sue for a quick settlement, and it ensures that workers do not spend money they may need for future medical payments. Lump sum settlements are permitted when the worker has been back to work for at least six months, earning at least 80 percent of his or her former wages; partial lump sum settlements are permitted in some cases for the specific purpose of paying debts.

Reliance on Lawyers and Litigation to Settle Cases is Limited
An ombudsman program has been established within the Workers' Compensation Administration to help claimants understand their rights and responsibilities, and to resolve some disputes, so that lawyers are usually not necessary. An injured worker does not have to go to a lawyer for basic information. The method of determining benefits has been made relatively objective. When benefits are determined according to an objective formula, there is less for lawyers to argue about. When an injured worker does file a complaint, a mediation session is mandatory before access to the court system is permitted. The Workers' Compensation Administration maintains a staff of professional mediators. The worker does not need a lawyer at mediation.

Legal fees for both sides are capped at $12,500. The injured worker is generally required to pay half of their own legal fees, and payment of the fees must be approved by a workers' compensation judge. The prohibition on lump sum settlements is also a disincentive to lawyers to take cases where their services are not really needed, since there is no lump sum out of which the worker's share of attorney fees can be paid off. As a result of this combination of attorney disincentives, fewer attorneys are actively seeking workers' compensation cases. The records of the Workers' Compensation Administration have been made confidential, except those that are public court records. As a result, attorneys no longer develop mailing lists of injured workers to solicit business. This same provision also prevents solicitation by health care providers and indexing or blacklisting of injured workers.

Medical Costs Are Contained
Workers' Compensation is no longer a blank check to the doctor. The medical cost containment provisions address the two fundamental components of excessive medical costs; whether a medical procedure is reasonable and necessary, and whether it is fairly priced.

A schedule of maximum allowable payments to medical providers is in place. The burden is on the payers to review the doctors' bills and make sure they are not paying too much. To ensure that bills are not inflated by excessive treatment, utilization review is being conducted as a state contracted activity in some cases and by payers in some other cases. Hospital stays require pre authorization by the state's utilization review contractor.

The rules of the Workers' Compensation Administration strictly prohibit doctors from billing the patients for services provided under Workers' Compensation. The doctor may not bill the patient for the balance that the Workers' Compensation payer refused to pay, nor may the the doctor bill the patient while the claim is in dispute. While this is a regulation imposed on doctors, it actually belongs under the heading of methods to reduce litigation because it protects the worker from being drawn into payment disputes. Only if a claim is determined to be non-compensable does the worker have any obligation to pay the doctor.

The rules encourage medical providers to compete for business by offering packages of services at competitive rates.