When Your Insurer Shortchanges a Catastrophic Injury Claim, the Gringo Is on Your Side

Under § 59A-16-20, certain listed practices with respect to claims, by an insurer or other person, knowingly committed or performed with such frequency as to indicate a general business practice, are defined as unfair and deceptive practices and are prohibited. In New Mexico, a state law lists specific claim conduct that is prohibited.

What Bad Faith Means When Insurance Fails After a Catastrophic Injury

Bad faith applies when an insurer treats a claim unfairly toward its policyholder or an injured claimant. The question is whether the handling crossed the lines New Mexico law draws.

After a catastrophic injury, the stakes are high. Treatment can last for years. Future surgery, equipment, therapy, and home care may be needed. Lost ability to earn a living can change a family’s finances. An insurer’s answer that ignores these facts can leave an injured person with bills and no clear path forward.

This page is for injured people and for family members, such as a spouse or adult child, who handle a claim. It also helps readers who received a denial and aren’t sure whether it’s final.

Bad faith is a separate question from who caused the accident. A driver can be at fault, and an insurer can still mishandle a claim. Both questions can matter.

Insurer Conduct That Is Examined in These Claims

Insurer conduct is judged against a list of prohibited practices. Those practices count only when they are done knowingly or often enough to show a general business practice.

Under § 59A-16-20, claims practices that are knowingly committed, or performed with such frequency as to indicate a general business practice, are defined as unfair and deceptive and prohibited. Examples include:

• failing to act reasonably promptly on a claim communication from an insured
• failing to adopt reasonable standards for prompt investigation and processing of claims
• not trying in good faith to settle a claim when liability has become reasonably clear
• failing to promptly explain the policy basis for a denial or a compromise offer
• compelling insureds to institute litigation to recover amounts due under the policy by offering substantially less than the amount later recovered in court, when the claim was reasonably similar

In practice, reviewers ask several questions. Was the same records request repeated without explanation? Did the insurer weigh the treating doctors’ findings and future care plans? Does the offer match documented medical bills and future needs? Was a deadline pressed on someone still in treatment?

One slow letter is not automatically a statutory violation. Each pattern turns on its own facts. This page describes what courts and regulators look at, not a conclusion about any insurer.

Claim Types, Remedies, and What Damages Can Include

A first-party claim is against your own insurer. A third-party claim is against the at-fault driver’s insurer. The two follow different rules.

Uninsured motorist coverage applies when the at-fault driver has no insurance. Underinsured motorist coverage applies when that driver’s limits are too low.

Timing matters for third-party claims.

If a violation of Article 16 by an insurer or agent is proven, § 59A-16-30 lets any person covered by Chapter 59A, Article 16 who has suffered damages sue in district court for actual damages. Costs go to the prevailing party unless the court directs otherwise. The court may award attorneys’ fees to the prevailing party if the claim was knowingly groundless or the insurer willfully violated the law.

Punitive damages are a separate question. A jury may consider them only after finding compensatory or nominal damages, and finding the conduct was malicious, willful, reckless, wanton, fraudulent, or in bad faith (UJI 13-1827 NMRA); where the conduct is that of an agent or employee, it must have been within the scope of employment and the agent or employee must have had sufficient discretionary or policy-making authority to speak and act for the principal or employer with regard to the conduct at issue, independently of higher authority. For judgments based on bad faith, § 56-8-4 sets interest at 15 percent per year.

Whether attorney fees can be recovered depends on the facts and the claim type. For background, read our catastrophic injury overview.

How a Bad Faith Claim Typically Unfolds

A bad faith claim usually moves through a few stages, starting with records and ending in court only if needed. The pace changes with the claim type and the insurer’s response.

1. Gather the file. Collect denial letters, the policy, the insurer’s correspondence, and medical and billing records.
2. Build a timeline. Note what the insurer knew, when it knew it, and how it responded.
3. Document the injury. Record current damages, future care needs, and lost earning ability.
4. Send a demand or dispute letter. Give the insurer a fair chance to respond. Under Rule 11-408 NMRA, settlement offers and negotiations are generally not admissible to prove the validity or amount of a disputed claim.
5. Litigate if needed. Discovery, depositions, and medical or economic witnesses are common stages.

If an employer or workers’ compensation issue is also involved, see this related guide.

Fees, Costs, and What to Expect in the Written Agreement

The written fee agreement sets how fees are calculated and when they are paid. Read it before you sign anything.

Our initial consultation is free, confidential, and without obligation to continue.

The firm may advance court costs and litigation expenses, to be repaid only from a recovery, if the written agreement provides for it. If you could owe court costs or litigation expenses without a recovery, the written agreement says so.

Questions to ask before signing:

• How is the fee calculated, and what does it cover?
• Who pays court costs and litigation expenses, and when?
• What happens to costs if the claim does not recover money?
• How are settlement funds paid out, and what deductions apply?

Why Work With El Gringo Law on a Bad Faith Insurance Claim

El Gringo Law represents injured people in New Mexico. Josh Wood is the responsible lawyer for this page.

Josh Wood is licensed in New Mexico and Arizona. Our lawyers and staff work on each matter as the case requires.

Our practice areas that relate to these claims include:

• catastrophic injuries and spinal cord injuries
• amputations and burn injuries
• car accidents and trucking accidents
• wrongful death

Our team documents the claim, keeps the timeline clear, and keeps you informed at each stage. We serve clients in Santa Fe, Rio Rancho, Las Cruces, Bernalillo County, Sandoval County, Taos, and Farmington.

Frequently Asked Questions About Bad Faith Insurance Claims in New Mexico

Short answers to common questions appear below.

Talk With Our Team About Your Insurance Claim

If an insurer’s answer leaves you unsure what comes next, you don’t have to work through it alone. Maybe you’re waiting on payment after a serious crash, reading a denial for the first time, or comparing an offer with mounting bills and future care needs.

Our team can talk with you about your own claim. Use our contact page to send a message, start a chat, or request a call. Josh Wood is the responsible lawyer for this page, and you can reach him and our team through that page.