SENATE BILL 645

49th legislature - STATE OF NEW MEXICO - first session, 2009

INTRODUCED BY

Rod Adair

AN ACT

RELATING TO LITIGATION; ENACTING THE VEXATIOUS LITIGATION ACT; OBLIGING THE RISK MANAGEMENT DIVISION OF THE GENERAL SERVICES DEPARTMENT TO PROVIDE SERVICES FOR A VICTIM OF VEXATIOUS LITIGATION; DEFINING "VEXATIOUS LITIGATION".

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. [NEW MATERIAL] SHORT TITLE.--Sections 1 through 5 of this act may be cited as the "Vexatious Litigation Act".

     Section 2. [NEW MATERIAL] DEFINITIONS.--As used in the Vexatious Litigation Act:

          A. "quasi-governmental entity" means a water and sanitation district, a mutual domestic water consumers association or a water users' association; and

          B. "vexatious litigation" means habitual, unreasonable or frivolous litigation brought sequentially or repeatedly against a quasi-governmental entity by the same plaintiff or multiple plaintiffs asserting the same cause or causes of action or causes of action substantially related to each other; provided that "vexatious litigation" is not a cause of action against a person authorized to practice law in New Mexico who is representing a party or parties. "Vexatious litigation" may include, but is not limited to, continuing a lawsuit after discovery of the facts shows it has no merit. A vexatious plaintiff shall not be shielded by the use of multiple legal entities as the named plaintiff to disguise the plaintiff's ongoing role in the litigation.

     Section 3. [NEW MATERIAL] STANDARDS OF PROOF.--Vexatious litigation may be proved by demonstrating that a plaintiff has:

          A. filed twenty-five or more lawsuits in the course of a single year;

          B. brought litigation that has been dismissed for lack of standing or failure to state a claim more than two times in a single year;

          C. caused more than one-half of the judges in a single judicial district to be recused;

          D. filed forty or more lawsuits in a five-year period;

          E. filed seventy-five or more lawsuits over the course of a decade;

          F. filed one hundred twenty-five or more lawsuits in a fifteen-year period;

          G. been found by a court to have filed a lawsuit with the knowledge that it has no legal basis, with a purpose to bother, annoy, embarrass and cause legal expenses to the defendant; or

          H. in the reasonable judgment of the court, pursued habitual or continuous abuse of the legal system.

     Section 4. [NEW MATERIAL] DAMAGES.--A quasi-governmental entity that prevails on a claim for vexatious litigation shall be awarded damages in the amount of double the costs and attorney fees incurred by the entity as a result of the vexatious litigation.

     Section 5. [NEW MATERIAL] LIABILITY COVERAGE FOR A QUASI-GOVERNMENTAL ENTITY THAT IS THE VICTIM OF VEXATIOUS LITIGATION.--The risk management division of the general services department shall cover a quasi-governmental entity, and its elected board of directors, that is a victim of vexatious litigation, whether the directors are sued in their official or personal capacities for acts arising out of their official capacities.

     Section 6. Section 15-7-3 NMSA 1978 (being Laws 1978, Chapter 166, Section 8, as amended) is amended to read:

     "15-7-3. ADDITIONAL POWERS AND DUTIES OF THE RISK MANAGEMENT DIVISION.--

          A. The risk management division of the general services department may:

                (1) enter into contracts;

                (2) procure insurance, reinsurance or employee group benefits; provided that any proposal or contract for the procurement of any group health care benefits shall be subject to the provisions of the Health Care Purchasing Act; and provided further that reinsurance or excess coverage insurance may be placed by private negotiation, notwithstanding the provisions of the Procurement Code, if the insurance or reinsurance has a restricted number of interested carriers, the board determines that the coverage is in the interest of the state and cannot otherwise be procured for a reasonable cost and the director seeks the advice and review of the board in the placement and in designing private negotiation procedures;

                (3) in the manner prescribed by Subsection E of Section 9-17-5 NMSA 1978, after a notice and a public hearing, prescribe by regulation reasonable and objective underwriting and safety standards for governmental entities and reasonable standards for municipal self-insurance pooling agreements covering liability under the Tort Claims Act and adopt such other regulations as may be deemed necessary;

                (4) compromise, adjust, settle and pay claims;

                (5) pay expenses and costs;

                (6) in the manner prescribed by Subsection E of Section 9-17-5 NMSA 1978, prescribe by rule or regulation the rating bases, assessments, penalties and risks to be covered by the public liability fund, the workers' compensation retention fund and the public property reserve fund and the extent such risks are to be covered;

                (7) issue certificates of coverage in accordance with Paragraph (6) of this subsection:

                     (a) to any governmental entity for any tort liability risk covered by the public liability fund;

                     (b) to any governmental entity for any personal injury liability risk or for the defense of any errors or act or omission or neglect or breach of duty, including the risks set forth in Paragraph (2) of Subsection B and Paragraph (2) of Subsection D of Section 41-4-4 NMSA 1978; and

                     (c) to any governmental entity for any part of risk covered by the workers' compensation retention fund, the surety bond fund or the public property reserve fund;

                (8) study the risks of all governmental entities;

                (9) initiate the establishment of safety programs and adopt regulations to carry out such programs in the manner prescribed by Subsection E of Section 9-17-5 NMSA 1978;

                (10) hire a safety program director who shall coordinate all safety programs of all state agencies;

                (11) consult with and advise local public bodies on their risk management problems; and

                (12) employ full-time legal counsel who shall be under the exclusive control and supervision of the director and the secretary of general services.

          B. The risk management division of the general services department shall provide liability coverage for the following risks:

                (1) a claim made pursuant to the provisions of 42 USC Section 1983 against a nonprofit corporation, members of its board of directors or its employees when the claim is based upon action taken pursuant to the provisions of a contract between the corporation and the department of health under which the corporation provides developmental disability services to clients of the department and the claim is made by or on behalf of a client; [and]

                (2) a claim made pursuant to the provisions of 42 USC Section 1983 against a nonprofit corporation, members of its board of directors or its employees when the corporation operates a facility licensed by the department of health as an intermediate care facility for the mentally retarded and the claim is based upon action taken pursuant to the provisions of the license and is made by or on behalf of a resident of the licensed facility; and

                (3) a claim made pursuant to the Vexatious Litigation Act by a quasi-governmental entity that has been the victim of vexatious litigation, including prosecution of the quasi-governmental entity's claim for vexatious litigation.

          C. The director shall report [his] findings and recommendations, if any, for the consideration of each legislature. The report shall include the amount and name of any person receiving payment from the public liability fund of any claim paid during the previous fiscal year exceeding one thousand dollars ($1,000). The report shall be made available to the legislature on or before December 15 preceding each regular legislative session."

     Section 7. Section 41-4-3 NMSA 1978 (being Laws 1976, Chapter 58, Section 3, as amended) is amended to read:

     "41-4-3. DEFINITIONS.--As used in the Tort Claims Act:

          A. "board" means the risk management advisory board;

          B. "governmental entity" means the state or any local public body as defined in Subsections C and H of this section;

          C. "local public body" means all political subdivisions of the state and their agencies, instrumentalities and institutions and all water and natural gas associations organized pursuant to Chapter 3, Article 28 NMSA 1978;

          D. "law enforcement officer" means a full-time salaried public employee of a governmental entity whose principal duties under law are to hold in custody any person accused of a criminal offense, to maintain public order or to make arrests for crimes, or members of the national guard when called to active duty by the governor;

          E. "maintenance" does not include:

                (1) conduct involved in the issuance of a permit, driver's license or other official authorization to use the roads or highways of the state in a particular manner; or

                (2) an activity or event relating to a public building or public housing project that was not foreseeable;

          F. "public employee" means an officer, employee or servant of a governmental entity, excluding independent contractors except for individuals defined in Paragraphs (7), (8), (10) and (14) of this subsection, or of a corporation organized pursuant to the Educational Assistance Act, the Small Business Investment Act or the Mortgage Finance Authority Act or a licensed health care provider, who has no medical liability insurance, providing voluntary services as defined in Paragraph (16) of this subsection and including:

                (1) elected or appointed officials;

                (2) law enforcement officers;

                (3) persons acting on behalf or in service of a governmental entity in any official capacity, whether with or without compensation;

                (4) licensed foster parents providing care for children in the custody of the human services department, corrections department or department of health, but not including foster parents certified by a licensed child placement agency;

                (5) members of state or local selection panels established pursuant to the Adult Community Corrections Act;

                (6) members of state or local selection panels established pursuant to the Juvenile Community Corrections Act;

                (7) licensed medical, psychological or dental arts practitioners providing services to the corrections department pursuant to contract;

                (8) members of the board of directors of the New Mexico medical insurance pool;

                (9) individuals who are members of medical review boards, committees or panels established by the educational retirement board or the retirement board of the public employees retirement association;

                (10) licensed medical, psychological or dental arts practitioners providing services to the children, youth and families department pursuant to contract;

                (11) members of the board of directors of the New Mexico educational assistance foundation;

                (12) members of the board of directors of the New Mexico student loan guarantee corporation;

                (13) members of the New Mexico mortgage finance authority;

                (14) volunteers, employees and board members of court-appointed special advocate programs;

                (15) members of the board of directors of the small business investment corporation; [and]

                (16) health care providers licensed in New Mexico who render voluntary health care services without compensation in accordance with rules promulgated by the secretary of health. The rules shall include requirements for the types of locations at which the services are rendered, the allowed scope of practice and measures to ensure quality of care; and

                (17) quasi-government entities that have prevailed in a claim for vexatious litigation;

          G. "scope of duty" means performing any duties that a public employee is requested, required or authorized to perform by the governmental entity, regardless of the time and place of performance; and

          H. "state" or "state agency" means the state of New Mexico or any of its branches, agencies, departments, boards, instrumentalities or institutions."

     Section 8. Section 41-4-23 NMSA 1978 (being Laws 1977, Chapter 386, Section 17, as amended) is amended to read:

     "41-4-23. PUBLIC LIABILITY FUND CREATED--PURPOSES.--

          A. There is created the "public liability fund". The fund and any income from the fund shall be held in trust, deposited in a segregated account and invested by the general services department with the prior approval of the state board of finance.

          B. Money deposited in the public liability fund may be expended by the risk management division of the general services department:

                (1) to purchase tort liability insurance for state agencies and their employees and for any local public body participating in the public liability fund and its employees;

                (2) to contract with one or more consulting or claims adjusting firms pursuant to the provisions of Section 41-4-24 NMSA 1978;

                (3) to defend, save harmless and indemnify any state agency or employee of a state agency or a local public body or an employee of such local public body for any claim or liability covered by a valid and current certificate of coverage to the limits of such certificate of coverage;

                (4) to pay claims and judgments covered by a certificate of coverage;

                (5) to contract with one or more attorneys or law firms on a per-hour basis, or with the attorney general, to defend tort liability claims against governmental entities and public employees acting within the scope of their duties;

                (6) to pay costs and expenses incurred in carrying out the provisions of this section;

                (7) to create a retention fund for any risk covered by a certificate of coverage;

                (8) to insure or provide certificates of coverage to school bus contractors and their employees, notwithstanding the provisions of Subsection F of Section 41-4-3 NMSA 1978, for any comparable risk for which immunity has been waived for public employees pursuant to Section 41-4-5 NMSA 1978, if the coverage is commercially unavailable; except that coverage for exposure created by Sections 41-4-9, 41-4-10 and 41-4-12 NMSA 1978 shall be provided to its member public school districts and participating other educational entities of the public school insurance authority, by the authority, and except that coverage shall be provided to a contractor and [his] the contractor's employees only through the public school insurance authority or its successor, unless the district to which the contractor provides services has been granted a waiver by the authority or the authority is not offering the coverage for the fiscal year for which the division offers its coverage. A local school district to which the division may provide coverage may provide for marketing and servicing to be done by licensed insurance agents who shall receive reasonable compensation for their services; [and]

                (9) to insure or provide certificates of coverage for any ancillary coverage typically found in commercially available liability policies provided to governmental entities, if the coverage is commercially unavailable; and

                (10) to insure or provide certificates of coverage for a quasi-governmental entity that has a claim for vexatious litigation.

          C. No settlement of any claim covered by the public liability fund in excess of twenty-five thousand dollars ($25,000) shall be made unless the settlement has first been approved in writing by the director of the risk management division of the general services department. This subsection shall not be construed to limit the authority of an insurance carrier, covering any liability under the Tort Claims Act, to compromise, adjust and settle claims against governmental entities or their public employees.

          D. Claims against the public liability fund shall be made in accordance with rules or regulations of the director of the risk management division of the general services department. If the director of the risk management division has reason to believe that the fund would be exhausted by payment of all claims allowed during a particular state fiscal year, pursuant to regulations of the risk management division, the amounts paid to each claimant and other parties obtaining judgments shall be prorated, with each party receiving an mount equal to the percentage [his] the party's own payment bears to the total of claims or judgments outstanding and payable from the fund. Any amounts due and unpaid as a result of such proration shall be paid in the following fiscal years."

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