HOUSE BILL 847
49th legislature - STATE OF NEW MEXICO - first session, 2009
INTRODUCED BY
Joseph Cervantes
AN ACT
RELATING TO CIVIL ACTIONS; AMENDING THE FRAUD AGAINST TAXPAYERS ACT; APPROPRIATING CERTAIN ATTORNEY FEES AND COSTS; SPECIFYING SOURCE OF INFORMATION; PROVIDING FOR CIVIL INVESTIGATIVE DEMANDS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
Section 1. Section 44-9-1 NMSA 1978 (being Laws 2007, Chapter 40, Section 1) is amended to read:
"44-9-1. SHORT TITLE.--[This act] Chapter 44, Article 9 NMSA 1978 may be cited as the "Fraud Against Taxpayers Act"."
Section 2. Section 44-9-7 NMSA 1978 (being Laws 2007, Chapter 40, Section 7) is amended to read:
"44-9-7. 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 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 Section [3 of the Fraud Against Taxpayers Act] 44-9-3 NMSA 1978 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] 44-9-3 NMSA 1978 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 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 unless the attorney fees and costs were provided by the office of the attorney general, in which case the attorney fees and costs shall be paid to the office of the attorney general;
(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 office of the attorney general to provide staffing for cases arising pursuant to the Fraud Against Taxpayers Act in furtherance of the obligations imposed upon that office by [the Fraud Against Taxpayers] that act; and
(b) one-half into the general fund."
Section 3. Section 44-9-9 NMSA 1978 (being Laws 2007, Chapter 40, Section 9) is amended to read:
"44-9-9. CERTAIN ACTIONS BARRED--INFORMATION SOURCE.--
A. No court shall have jurisdiction over an action brought pursuant to Section [5 of the Fraud Against Taxpayers Act] 44-9-5 NMSA 1978 by a present or former employee of the state unless the 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] 44-9-5 NMSA 1978 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] 44-9-5 NMSA 1978 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] 44-9-5 NMSA 1978 if the elements of the alleged false or fraudulent claim have been publicly disclosed [in] by an allegation or transaction in a criminal, civil or administrative proceeding; in a congressional, administrative or government accounting office report, hearing, audit or investigation; or from the news media or in a publicly disseminated governmental report at the time the complaint is filed.
E. Unless an action is brought by the attorney general, the person bringing the action must be an original source of the information on which the action is based. As used in this subsection, "original source" means an individual who has direct and independent knowledge of the information on which the allegations are based."
Section 4. A new section of the Fraud Against Taxpayers Act is enacted to read:
"[NEW MATERIAL] CIVIL INVESTIGATIVE DEMAND.--
A. Whenever the attorney general has reason to believe that any person may be in possession, custody or control of an original or copy of any book, record, report, memorandum, paper, communication, tabulation, map, chart, photograph, mechanical transcription or other tangible document or recording that the attorney general believes to be relevant to the subject matter of an investigation of a probable violation of the Fraud Against Taxpayers Act, the attorney general may, prior to the institution of a civil proceeding, execute in writing and cause to be served upon the person a civil investigative demand requiring that person to produce documentary material and permit the inspection and copying of the material. The demand of the attorney general shall not be a matter of public record and shall not be published by the attorney general except by court order.
B. A civil investigative demand shall:
(1) state the general subject matter of the investigation;
(2) describe with reasonable certainty the classes of documentary material to be produced;
(3) prescribe the return date within which the documentary material is to be produced, which in no case shall be less then ten days after the date of service; and
(4) identify the members of the attorney general's staff to whom such documentary material is to be made available for inspection and copying.
C. A demand shall not:
(1) contain any requirement that would be unreasonable or improper if contained in a subpoena duces tecum issued by a court of this state;
(2) require the disclosure of any documentary material that would be privileged or for any other reason would not be required by a subpoena duces tecum issued by a court of this state; or
(3) require the removal of any documentary material from the custody of the person upon whom the demand is served except in accordance with the provisions of Subsection E of this section.
D. Service of a civil investigative demand may be made by:
(1) delivering a duly executed copy of the demand to the person to be served, or if the person is not a natural person, to the statutory agent for the person or an officer of the person to be served;
(2) delivering a duly executed copy of the demand to the principal place of business in this state of the person to be served; or
(3) mailing by registered or certified mail a duly executed copy of the demand addressed to the person to be served at the person's principal place of business in this state, or, if the person has no place of business in this state, to the person's principal office or place of business.
E. Documentary material demanded pursuant to this section shall be produced for inspection and copying during normal business hours at the principal office or place of business of the person served or may be inspected and copied at such other times and places as may be agreed upon by the person served and the attorney general.
F. Unless otherwise ordered by the district court in the county in which the person resides or has a principal place of business for good cause shown, no documentary material produced pursuant to a civil investigative demand, or copies of that material, shall be produced for inspection or copying by anyone other than an authorized employee of the attorney general, nor shall the contents thereof be disclosed to anyone other than an authorized employee of the attorney general, or in court in an action relating to a violation of the Fraud Against Taxpayers Act.
G. At any time before the return date of a civil investigative demand, a petition to set aside or modify the demand or extend the return date set forth in the demand may be filed in the district court in the county in which the person resides or has a principal place of business, and the court upon a showing of good cause may set aside or modify the demand or extend the return date of the demand.
H. After service of the investigative demand upon a person, if that person neglects or refuses to comply with the demand, the attorney general may invoke the aid of the court in the enforcement of the demand. In appropriate cases, the court shall issue its order requiring the person to appear and produce the documentary material required in the demand and may, upon failure of the person to comply with the order, punish the person for contempt."
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