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AN ACT

RELATING TO CIVIL ACTIONS; ENACTING THE FRAUD AGAINST

TAXPAYERS ACT; CREATING A PRIVATE CIVIL ACTION ON BEHALF OF

THE STATE AGAINST A PERSON WHO MAKES A FALSE CLAIM FOR PAYMENT

BY THE STATE; PROVIDING FOR INTERVENTION BY THE ATTORNEY

GENERAL; PROVIDING FOR A CIVIL ACTION BY THE STATE; PROVIDING

FOR QUI TAM AWARDS; PROHIBITING RETALIATION BY EMPLOYERS;

PROVIDING PENALTIES.

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

Section 1. SHORT TITLE.--This act may be cited as the

"Fraud Against Taxpayers Act".

Section 2. DEFINITIONS.--As used in the Fraud Against

Taxpayers Act:

A. "claim" means a request or demand for money,

property or services when all or a portion of the money,

property or services requested or demanded issues from or is

provided or reimbursed by the state;

B. "employer" includes an individual, corporation,

firm, association, business, partnership, organization, trust

and the state and any of its agencies, institutions or

political subdivisions;

C. "knowingly" means that a person, with respect

to information, acts:

(1) with actual knowledge of the truth or

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falsity of the information;

(2) in deliberate ignorance of the truth or

falsity of the information; or

(3) in reckless disregard of the truth or

falsity of the information;

D. "person" means an individual, corporation,

firm, association, organization, trust, business, partnership,

limited liability company, joint venture or any legal or

commercial entity; and

E. "state" means the state of New Mexico or any of

its branches, agencies, departments, boards, commissions,

officers, institutions or instrumentalities, including the New

Mexico finance authority, the New Mexico mortgage finance

authority and the New Mexico lottery authority.

Section 3. FALSE CLAIMS--LIABILITY--PENALTIES--

EXCEPTION.--

A. A person shall not:

(1) knowingly present, or cause to be

presented, to an employee, officer or agent of the state or to

a contractor, grantee or other recipient of state funds a

false or fraudulent claim for payment or approval;

(2) knowingly make or use, or cause to be

made or used, a false, misleading or fraudulent record or

statement to obtain or support the approval of or the payment

on a false or fraudulent claim;

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(3) conspire to defraud the state by

obtaining approval or payment on a false or fraudulent claim;

(4) conspire to make, use or cause to be

made or used, a false, misleading or fraudulent record or

statement to conceal, avoid or decrease an obligation to pay

or transmit money or property to the state;

(5) when in possession, custody or control

of property or money used or to be used by the state,

knowingly deliver or cause to be delivered less property or

money than the amount indicated on a certificate or receipt;

(6) when authorized to make or deliver a

document certifying receipt of property used or to be used by

the state, knowingly make or deliver a receipt that falsely

represents a material characteristic of the property;

(7) knowingly buy, or receive as a pledge of

an obligation or debt, public property from any person that

may not lawfully sell or pledge the property;

(8) knowingly make or use, or cause to be

made or used, a false, misleading or fraudulent record or

statement to conceal, avoid or decrease an obligation to pay

or transmit money or property to the state; or

(9) as a beneficiary of an inadvertent

submission of a false claim and having subsequently discovered

the falsity of the claim, fail to disclose the false claim to

the state within a reasonable time after discovery.

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B. Proof of specific intent to defraud is not

required for a violation of Subsection A of this section.

C. A person who violates Subsection A of this

section shall be liable for:

(1) three times the amount of damages

sustained by the state because of the violation;

(2) a civil penalty of not less than five

thousand dollars ($5,000) and not more than ten thousand

dollars ($10,000) for each violation;

(3) the costs of a civil action brought to

recover damages or penalties; and

(4) reasonable attorney fees, including the

fees of the attorney general or state agency counsel.

D. A court may assess not less than two times the

amount of damages sustained by the state if the court finds

all of the following:

(1) the person committing the violation

furnished the attorney general with all information known to

that person about the violation within thirty days after the

date on which the person first obtained the information;

(2) at the time that the person furnished

the attorney general with information about the violation, a

criminal prosecution, civil action or administrative action

had not been commenced with respect to the violation, and the

person did not have actual knowledge of the existence of an

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investigation into the violation; and

(3) the person fully cooperated with any

investigation by the attorney general.

E. This section does not apply to claims, records

or statements made pursuant to the provisions of Chapter 7

NMSA 1978.

Section 4. INVESTIGATION BY THE ATTORNEY GENERAL--

DELEGATION--CIVIL ACTION.--

A. The attorney general shall diligently

investigate suspected violations of Section 3 of the Fraud

Against Taxpayers Act, and if the attorney general finds that

a person has violated or is violating that section, the

attorney general may bring a civil action against that person

pursuant to the Fraud Against Taxpayers Act.

B. The attorney general may in appropriate cases

delegate the authority to investigate or to bring a civil

action to the state agency to which a false claim was made,

and when this occurs, the state agency shall have every power

conferred upon the attorney general pursuant to the Fraud

Against Taxpayers Act.

Section 5. CIVIL ACTION BY QUI TAM PLAINTIFF--STATE MAY

INTERVENE.--

A. A person may bring a civil action for a

violation of Section 3 of the Fraud Against Taxpayers Act on

behalf of the person and the state. The action shall be

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brought in the name of the state. The person bringing the

action shall be referred to as the qui tam plaintiff. Once

filed, the action may be dismissed only with the written

consent of the court, taking into account the best interest of

the parties involved and the public purposes behind the Fraud

Against Taxpayers Act.

B. A complaint filed by a qui tam plaintiff shall

be filed in camera in district court and shall remain under

seal for at least sixty days. No service shall be made on a

defendant and no response is required from a defendant until

the seal has been lifted and the complaint served pursuant to

the rules of civil procedure.

C. On the same day as the complaint is filed, the

qui tam plaintiff shall serve the attorney general with a copy

of the complaint and written disclosure of substantially all

material evidence and information the qui tam plaintiff

possesses. The attorney general on behalf of the state may

intervene and proceed with the action within sixty days after

receiving the complaint and the material evidence and

information. Upon a showing of good cause and reasonable

diligence in the state's investigation, the state may move the

court for an extension of time during which the complaint

shall remain under seal.

D. Before the expiration of the sixty-day period

or any extensions of time granted by the court, the attorney

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general shall notify the court that the state:

(1) intends to intervene and proceed with

the action; in which case, the seal shall be lifted and the

action shall be conducted by the attorney general on behalf of

the state; or

(2) declines to take over the action; in

which case, the seal shall be lifted and the qui tam plaintiff

may proceed with the action.

E. When a person brings an action pursuant to this

section, no person other than the attorney general on behalf

of the state may intervene or bring a related action based on

the facts underlying the pending action.

Section 6. RIGHTS OF THE QUI TAM PLAINTIFF AND THE

STATE.--

A. If the state proceeds with the action, it shall

have the primary responsibility of prosecuting the action and

shall not be bound by an act of the qui tam plaintiff. The

qui tam plaintiff shall have the right to continue as a party

to the action, subject to the limitations of this section.

B. The state may seek to dismiss the action for

good cause notwithstanding the objections of the qui tam

plaintiff if the qui tam plaintiff has been notified of the

filing of the motion and the court has provided the qui tam

plaintiff with an opportunity to oppose the motion and to

present evidence at a hearing.

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C. The state may settle the action with the

defendant notwithstanding any objection by the qui tam

plaintiff if the court determines, after a hearing providing

the qui tam plaintiff an opportunity to present evidence, that

the proposed settlement is fair, adequate and reasonable under

all of the circumstances.

D. Upon a showing by the state that unrestricted

participation during the course of the litigation by the qui

tam plaintiff would interfere with or unduly delay the state's

prosecution of the case, or would be repetitious, irrelevant

or for the purpose of harassment, the court may, in its

discretion, impose limitations on the qui tam plaintiff's

participation, such as:

(1) limiting the number of witnesses the qui

tam plaintiff may call;

(2) limiting the length of testimony of such

witnesses;

(3) limiting the qui tam plaintiff's cross

examination of witnesses; or

(4) otherwise limiting the qui tam

plaintiff's participation in the litigation.

E. Upon a showing by a defendant that unrestricted

participation during the course of litigation by the qui tam

plaintiff would be for purposes of harassment or would cause

the defendant undue burden or unnecessary expense, the court

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may limit the participation by the qui tam plaintiff in the

litigation.

F. If the state elects not to proceed with the

action, the qui tam plaintiff shall have the right to conduct

the action. If the attorney general so requests, the qui tam

plaintiff shall serve the attorney general with copies of all

pleadings filed in the action and all deposition transcripts

in the case, at the state's expense. When the qui tam

plaintiff proceeds with the action, the court, without

limiting the status and rights of the qui tam plaintiff, may

permit the attorney general to intervene at a later date upon

a showing of good cause.

G. Whether or not the state proceeds with the

action, upon a showing by the attorney general on behalf of

the state that certain actions of discovery by the qui tam

plaintiff would interfere with the state's investigation or

prosecution of a criminal or civil matter arising out of the

same facts, the court may stay such discovery for a period of

not more than sixty days. The showing by the state shall be

conducted in camera. The court may extend the sixty-day

period upon a further showing in camera that the state has

pursued the criminal or civil investigation or proceeding with

reasonable diligence and any proposed discovery in the civil

action will interfere with the ongoing criminal or civil

investigation or proceeding.

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H. Notwithstanding the provisions of Section 5 of

the Fraud Against Taxpayers Act, the attorney general may

elect to pursue the state's claim through any alternate remedy

available to the state, including an administrative proceeding

to determine a civil money penalty. If an alternate remedy is

pursued, the qui tam plaintiff shall have the same rights in

such a proceeding as the qui tam plaintiff would have had if

the action had continued pursuant to this section. A finding

of fact or conclusion of law made in the other proceeding that

has become final shall be conclusive on all parties to an

action under the Fraud Against Taxpayers Act. For purposes of

this subsection, a finding or conclusion is final if it has

been finally determined on appeal to the appropriate court, if

all time for filing an appeal with respect to the finding or

conclusion has expired or if the finding or conclusion is not

subject to judicial review.

Section 7. AWARDS TO QUI TAM PLAINTIFF AND THE STATE.--

A. Except as otherwise provided in this section,

if the state proceeds with an action brought by a qui tam

plaintiff and the state prevails in the action, the qui tam

plaintiff shall receive:

(1) at least fifteen percent but not more

than twenty-five percent of the proceeds of the action or

settlement, depending upon the extent to which the qui tam

plaintiff substantially contributed to the prosecution of the

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action; or

(2) no more than ten percent of the proceeds

of the action or settlement if the court finds that the action

was based primarily on disclosures of specific information,

not provided by the qui tam plaintiff, relating to allegations

or transactions in a criminal, civil, administrative or

legislative hearing, proceeding, report, audit or

investigation or from the news media, taking into account the

significance of the information and the role of the qui tam

plaintiff in advancing the case to litigation. However, if

the attorney general determines and certifies in writing that

the qui tam plaintiff provided a significant contribution in

advancing the case, then the qui tam plaintiff shall receive

the share of proceeds set forth in Paragraph (1) of this

subsection.

B. If the state does not proceed with an action

brought by a qui tam plaintiff and the state prevails in the

action, the qui tam plaintiff shall receive an amount that is

not less than twenty-five percent or more than thirty percent

of the proceeds of the action or settlement, as the court

deems reasonable for collecting the civil penalty and damages.

C. Whether or not the state proceeds with an

action brought by a qui tam plaintiff:

(1) if the court finds that the action was

brought by a person that planned or initiated the violation of

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Section 3 of the Fraud Against Taxpayers Act upon which the

action was based, the court may reduce the share of the

proceeds that the person would otherwise receive under

Subsection A or B of this section, taking into account the

role of the person as the qui tam plaintiff in advancing the

case to litigation and any relevant circumstances pertaining

to the violation; or

(2) if the person bringing the action is

convicted of criminal conduct arising from that person's role

in the violation of Section 3 of the Fraud Against Taxpayers

Act upon which the action was based, that person shall be

dismissed from the civil action and shall not receive a share

of the proceeds. The dismissal shall not prejudice the right

of the state to continue the action.

D. Any award to a qui tam plaintiff shall be paid

out of the proceeds of the action or settlement, if any. The

qui tam plaintiff shall also receive an amount for reasonable

expenses incurred in the action plus reasonable attorney fees

that shall be paid by the defendant.

E. The state is entitled to all proceeds collected

in an action or settlement not awarded to a qui tam plaintiff.

The state is also entitled to reasonable expenses incurred in

the action plus reasonable attorney fees, including the fees

of the attorney general or state agency counsel that shall be

paid by the defendant. Proceeds and penalties collected by

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the state shall be deposited as follows:

(1) proceeds in the amount of the false

claim paid and attorney fees and costs shall be returned to

the fund or funds from which the money, property or services

came;

(2) civil penalties shall be deposited in

the current school fund pursuant to Article 12, Section 4 of

the constitution of New Mexico; and

(3) all remaining proceeds shall be

deposited as follows:

(a) one-half into a fund for the use of

the attorney general in furtherance of the obligations imposed

upon that office by the Fraud Against Taxpayers Act; and

(b) one-half into the general fund.

Section 8. AWARD OF ATTORNEY FEES AND COSTS TO

DEFENDANT.--If the state does not proceed with the action and

the qui tam plaintiff conducts the action, the court may award

a defendant reasonable attorney fees and costs if the

defendant prevails and the court finds the action clearly

frivolous, clearly vexatious or brought primarily for the

purpose of harassment.

Section 9. CERTAIN ACTIONS BARRED.--

A. No court shall have jurisdiction over an action

brought pursuant to Section 5 of the Fraud Against Taxpayers

Act by a present or former employee of the state unless the

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employee, during employment with the state and in good faith,

exhausted existing internal procedures for reporting false

claims and the state failed to act on the information provided

within a reasonable period of time.

B. No court shall have jurisdiction over an action

brought pursuant to Section 5 of the Fraud Against Taxpayers

Act against an elected or appointed state official, a member

of the state legislature or a member of the judiciary if the

action is based on evidence or information known to the state

agency to which the false claim was made or to the attorney

general when the action was filed.

C. Unless the attorney general determines and

certifies in writing that the action is in the interest of the

state, no court shall have jurisdiction over an action brought

pursuant to Section 5 of the Fraud Against Taxpayers Act when

that action is based on allegations or transactions that are

the subject of a criminal, civil or administrative proceeding

in which the state is a party.

D. Upon motion of the attorney general, a court

may, in its discretion, dismiss an action brought pursuant to

Section 5 of the Fraud Against Taxpayers Act if the elements

of the alleged false or fraudulent claim have been publicly

disclosed in the news media or in a publicly disseminated

governmental report at the time the complaint is filed.

Section 10. STATE NOT LIABLE.--The state shall not be

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liable for expenses or fees that a qui tam plaintiff may incur

in investigating or bringing an action pursuant to the Fraud

Against Taxpayers Act.

Section 11. EMPLOYER INTERFERENCE WITH EMPLOYEE

DISCLOSURE--PRIVATE ACTION FOR RETALIATION.--

A. An employer shall not make, adopt or enforce a

rule, regulation or policy preventing an employee from

disclosing information to a government or law enforcement

agency or from acting in furtherance of a fraud against

taxpayers action, including investigating, initiating,

testifying or assisting in an action filed or to be filed

pursuant to the Fraud Against Taxpayers Act.

B. An employer shall not discharge, demote,

suspend, threaten, harass, deny promotion to or in any other

manner discriminate against an employee in the terms and

conditions of employment because of the lawful acts of the

employee on behalf of the employee or others in disclosing

information to a government or law enforcement agency or in

furthering a fraud against taxpayers action, including

investigating, initiating, testifying or assisting in an

action filed or to be filed pursuant to the Fraud Against

Taxpayers Act.

C. An employer that violates Subsection B of this

section shall be liable to the employee for all relief

necessary to make the employee whole, including reinstatement

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with the same seniority status that the employee would have

had but for the violation, two times the amount of back pay

with interest on the back pay, compensation for any special

damage sustained as a result of the violation and, if

appropriate, punitive damages. In addition, an employer shall

be required to pay the litigation costs and reasonable

attorney fees of the employee. An employee may bring an

action pursuant to this section in any court of competent

jurisdiction.

Section 12. LIMITATION OF ACTIONS--ESTOPPEL--STANDARD

OF PROOF.--

A. A civil action pursuant to the Fraud Against

Taxpayers Act may be brought at any time. A civil action

pursuant to the Fraud Against Taxpayers Act may be brought for

conduct that occurred prior to the effective date of that act,

but not for conduct that occurred prior to July 1, 1987.

B. Notwithstanding any other provision of law, a

final judgment rendered in a criminal proceeding charging

fraud or false statement, whether upon a guilty verdict after

trial or upon a plea of guilty or nolo contendere, shall estop

the defendant from denying the essential elements of a fraud

against taxpayers action where the criminal proceeding

concerns the same transaction that is the subject of the fraud

against taxpayers action.

C. In an action brought pursuant to the Fraud

Against Taxpayers Act, the state or the qui tam plaintiff

shall be required to prove all essential elements of the cause

of action, including damages, by a preponderance of the

evidence.

Section 13. JOINT AND SEVERAL LIABILITY.--Liability

shall be joint and several for any act committed by two or

more persons in violation of the Fraud Against Taxpayers Act.

Section 14. REMEDY NOT EXCLUSIVE.--The remedies

provided for in the Fraud Against Taxpayers Act are not

exclusive and shall be in addition to any other remedies

provided for in any other law or available under common law.

Section 15. SEVERABILITY.--If any part or application

of this act is held invalid, the remainder of the act and its

application to other persons or situations shall not be

affected.

Section 16. EFFECTIVE DATE.--The effective date of the

provisions of this act is July 1, 2007.

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