HB0201

HOUSE BILL 201

52nd legislature - STATE OF NEW MEXICO - second session, 2016

INTRODUCED BY

Deborah A. Armstrong

AN ACT

RELATING TO CIVIL ACTIONS; AMENDING, REPEALING AND ENACTING PROVISIONS OF THE MEDICAID FALSE CLAIMS ACT AND THE FRAUD AGAINST TAXPAYERS ACT; INCREASING PENALTIES.

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

SECTION 1. Section 27-14-3 NMSA 1978 (being Laws 2004, Chapter 49, Section 3) is repealed and a new Section 27-14-3 NMSA 1978 is enacted to read:

"27-14-3. [NEW MATERIAL] DEFINITIONS.--As used in the Medicaid False Claims Act:

A. "claim" means any request or demand, whether under a contract or otherwise, for money or property and whether or not the state has title to the money or property, that:

(1) is presented to an officer, employee or agent of the state; or

(2) is made to a contractor, grantee or other recipient, if the money or property is to be spent or used on the government's behalf or to advance a government program or interest, and if the state:

(a) provides or has provided any portion of the money or property requested or demanded; or

(b) will reimburse such contractor, grantee or other recipient for any portion of the money or property that is requested or demanded; and

(3) does not include requests or demands for money or property that the government has paid to an individual as compensation for federal employment or as an income subsidy with no restrictions on that individual's use of the money or property;

B. "department" means the human services department;

C. "document" means the original or any copy of any book, record, report, memorandum, paper, communication, tabulation, chart or other document, or data compilations, in whatever format created or maintained, whether stored in or accessible through computer or other information retrieval systems, together with instructions and all other materials necessary to use or interpret such data compilations;

D. "knowing" or "knowingly" means that a person, with respect to information, has:

(1) actual knowledge of the information;

(2) acts in deliberate ignorance of the truth or falsity of the information; or

(3) acts in reckless disregard of the truth or falsity of the information;

E. "material" means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property;

F. "medicaid" means the federal-state program administered by the human services department pursuant to Title 19 or Title 21 of the federal Social Security Act;

G. "medicaid recipient" means a person who has received, or is eligible to receive, medicaid assistance or services for which a claim has been made;

H. "obligation" means an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee or licensee-licensor relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment;

I. "original source" means a person who either:

(1) prior to a public disclosure under Section 27-14-7 NMSA 1978, has voluntarily disclosed to the government the information on which allegations or transactions in a claim are based; or

(2) has knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions and has voluntarily provided the information to the government before filing an action under Section 27-14-7 NMSA 1978;

J. "public official" means a person elected to an office in an election covered by the Campaign Reporting Act or a person appointed to an office that is subject to an election covered by that act;

K. "qui tam action" means a private civil action brought on behalf of the state pursuant to the Medicaid False Claims Act; and

L. "relator" means a qui tam plaintiff."

SECTION 2. Section 27-14-4 NMSA 1978 (being Laws 2004, Chapter 49, Section 4) is repealed and a new Section 27-14-4 NMSA 1978 is enacted to read:

"27-14-4. [NEW MATERIAL] FALSE CLAIMS AGAINST THE STATE--LIABILITY FOR CERTAIN ACTS.--

A. A person shall not:

(1) knowingly present or cause to be presented:

(a) a false or fraudulent claim for payment by medicaid or for approval for payment by medicaid; or

(b) a claim for payment by medicaid for assistance or services provided to a person who is not eligible, or presumptively eligible, for medicaid;

(2) knowingly make or use, or cause to be made or used, a false record or statement material to a false or fraudulent medicaid claim;

(3) knowingly make or use, or cause to be made or used, a false record or statement material to an obligation to pay, or transmit money or property to, medicaid;

(4) knowingly make, use or cause to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the government, or knowingly conceal or knowingly and improperly avoid or decrease an obligation to pay or transmit money or property to the government;

(5) knowingly apply for and receive a benefit or payment from medicaid on behalf of another person and convert such benefit or payment to the person's own use, except pursuant to a lawful assignment of benefits;

(6) knowingly make a false statement or misrepresentation of material fact concerning the conditions or operations of a health care facility to qualify for medicaid certification or recertification;

(7) knowingly make a claim for a service or a product that was not provided;

(8) have possession, custody or control of medicaid funds or property and knowingly deliver, or cause to be delivered, less than all such funds or property;

(9) make or deliver a document certifying receipt of medicaid property, without verifying receipt of all such property;

(10) knowingly buying, or receiving as a pledge of an obligation or debt, medicaid property from an officer, employee or agent of the state, or from a contractor or grantee of the state or other recipient of state medicaid funds, who does not have lawful authority to sell or pledge such property; or

(11) conspire to commit a violation of this subsection.

B. Proof of specific intent to defraud is not required for a violation of Subsection A of this section.

C. Any person found to have violated any provision of Subsection A of this section shall be liable to the state for:

(1) a civil penalty of not less than five thousand five hundred dollars ($5,500) and not more than eleven thousand dollars ($11,000) for each such violation, which amount shall be adjusted pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990;

(2) three times the amount of damages sustained by the state from each such violation; and

(3) reasonable attorney fees and costs of a civil action brought to recover damages or penalties and the costs of investigation incurred by the state related to such violation."

SECTION 3. Section 27-14-5 NMSA 1978 (being Laws 2004, Chapter 49, Section 5) is amended to read:

"27-14-5. DOCUMENTARY MATERIAL IN POSSESSION OF STATE AGENCY.--

A. The department and the attorney general shall have access to all documentary materials of persons and medicaid recipients to which a state agency has access. Documentary material provided pursuant to this subsection is provided to allow investigation of an alleged unlawful act or for use or potential use in an administrative or judicial proceeding.

B. Except for disclosure to any person under investigation or who is the subject of allegations made pursuant to the Medicaid False [Claim] Claims Act or as ordered by a court for good cause shown, neither the department nor the attorney general shall [not] produce for inspection or copying or otherwise disclose the contents of documentary material obtained pursuant to this section to a person other than:

(1) an authorized employee of the attorney general;

(2) an agency of this state, the United States or another state;

(3) a district attorney, city attorney or county attorney of this state;

(4) the United States attorney general; [or]

(5) a state or federal grand jury; or

(6) a relator."

SECTION 4. Section 27-14-7 NMSA 1978 (being Laws 2004, Chapter 49, Section 7) is amended to read:

"27-14-7. CIVIL ACTION FOR FALSE CLAIMS.--

A. The department or the attorney general shall diligently investigate suspected violations. If the department or the attorney general finds that a person has violated or is violating the provisions of the Medicaid False Claims Act, the department or the attorney general may bring a civil action pursuant to [Subsection F of] this section.

B. A [private civil] qui tam action may be brought by [an affected person] a relator for a violation of the Medicaid False Claims Act on behalf of the [person bringing suit] relator and [for] the state. The action shall be brought in the name of the state. The action may be dismissed only if the court and the [department, pursuant to Subsection F of this section] attorney general give written consent to the dismissal and their reasons for consenting.

C. For [private civil] qui tam actions, a copy of the complaint and written disclosure of substantially all material evidence and information the [person] relator possesses shall be served on the department and the attorney general. The complaint shall be filed [in writing] under seal and [shall] remain under seal for at least sixty days. The complaint shall not be served on the defendant until the expiration of sixty days or any extension approved. [Within sixty days after receiving a copy of the complaint, the department shall conduct an investigation of the factual allegations and legal contentions made in the complaint, shall make a written determination of whether there is substantial evidence that a violation has occurred and shall provide the person against which a complaint has been made with a copy of the determination. If the department determines that there is not substantial evidence that a violation has occurred, the complaint shall be dismissed] While the complaint remains under seal, the attorney general shall, to the extent the attorney general deems appropriate, investigate the legal and factual basis for the claims to determine whether to intervene and prosecute the action.

D. The [department] state may, for good cause shown, move the court for extensions of time during which the complaint remains under seal. Any such motion may be supported by affidavits or other submissions in camera. The defendant shall not be required to respond to a complaint filed pursuant to this section until twenty days after the complaint is unsealed and served [to] upon the defendant. [The complaint shall be deemed unsealed at the expiration of the sixty-day period in the absence of a court-approved extension.]

E. Before the expiration of the sixty-day period or any extensions obtained, the [department, pursuant to Subsection F of this section] attorney general or the department shall:

(1) proceed with the action, in which case the action shall be conducted by the [department] state; or

(2) notify the court and the [person who brought the action] relator that it declines to take over the action, in which case the [person bringing the action] relator shall have the right to conduct the action [if the department determined that there is substantial evidence that a violation of the Medicaid False Claims Act has occurred].

F. The department shall notify the attorney general prior to filing a civil action pursuant to the Medicaid False Claims Act and shall not proceed with the action except with the written approval of the attorney general. The attorney general shall, within [twenty] sixty working days from the notification by the department, notify the department whether it may proceed with the civil action. [Failure by the attorney general to notify the department of its determination within the specified time period shall be construed as consent to proceed.] The department shall, after filing the civil action, notify the attorney general of any proposed dismissal or settlement, and the department shall not proceed with the dismissal or settlement except with the written approval of the attorney general.

G. The attorney general is authorized to prosecute a civil action for violation of the Medicaid False Claims Act.

H. When a person brings an action under this section, no person other than the government may intervene or bring a related action based on the facts underlying the pending action."

SECTION 5. Section 27-14-8 NMSA 1978 (being Laws 2004, Chapter 49, Section 8) is repealed and a new Section 27-14-8 NMSA 1978 is enacted to read:

"27-14-8. [NEW MATERIAL] RIGHTS OF QUI TAM PARTIES.--

A. If the department or the attorney general proceeds with a qui tam action:

(1) the state shall have the primary responsibility for prosecuting the action;

(2) the relator shall have the right to continue as a party to the action, subject to limitations set forth in this section; and

(3) the court may limit the relator's participation in the proceedings if, upon motion of the state, it finds that the relator's participation interferes with or unduly delays the state's prosecution of the case.

B. Notwithstanding an objection on the part of the relator, the state may dismiss or settle a qui tam action brought pursuant to the Medicaid False Claims Act, whether prosecuted jointly or separately by the state or the relator; provided that the state has served notice upon the relator of the state's intent to dismiss or settle and the relator is afforded an opportunity for a hearing.

C. A hearing on the settlement may be held in camera for good cause shown. The settlement shall be approved by the court if it finds that the proposed settlement is fair, adequate and reasonable under all of the circumstances.

D. If the state elects not to intervene, the relator shall have the right to prosecute the qui tam action. If the department or the attorney general requests, the state shall be served with copies of pleadings and all deposition transcripts at the state's expense.

E. Upon a showing of good cause, the court may allow the state to intervene in the qui tam action at a later date, without limiting the status and rights of the relator.

F. Upon a showing by the state, which shall take place in camera, that certain discovery on the part of the relator will interfere with the state's own investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay such discovery by the relator for a period not to exceed sixty days. The court may extend the stay upon a further showing that the state has pursued a criminal or civil investigation or proceedings with reasonable diligence and that certain discovery by the relator will interfere with ongoing proceedings conducted by the state.

G. Upon a showing by the state that unrestricted participation of the relator would interfere with or unduly delay the state's prosecution of the qui tam action, or would be repetitious, irrelevant or for purposes of harassment, the court may limit:

(1) the number of witnesses the relator may call;

(2) the length of a relator's examination of a witness;

(3) the cross-examination of a witness by a relator; or

(4) the relator's participation in the qui tam action in any other respect.

H. Notwithstanding Subsection B of Section 27-14-7 NMSA 1978, the government may elect to pursue its claim through any alternate remedy available to the government, including any administrative proceeding to determine a civil monetary penalty. If any such alternate remedy is pursued in another proceeding, the person initiating the action shall have the same rights in such proceeding as such person would have had if the action had continued under Section 27-14-7 NMSA 1978. Any finding of fact or conclusion of law made in such proceeding that has become final shall be conclusive on all parties to an action under Section 27-14-7 NMSA 1978. For purposes of the preceding sentence, a finding or conclusion is final if it has been finally determined on appeal to the appropriate court, if all time for filing such an appeal with respect to the finding or conclusion has expired or if the finding or conclusion is not subject to judicial review."

SECTION 6. Section 27-14-9 NMSA 1978 (being Laws 2004, Chapter 49, Section 9) is repealed and a new Section 27-14-9 NMSA 1978 is enacted to read:

"27-14-9. [NEW MATERIAL] AWARD TO RELATOR.--

A. If the state proceeds with a qui tam action pursuant to the Medicaid False Claims Act, the relator shall receive at least fifteen percent but not more than twenty-five percent of the proceeds of the final judgment or settlement of the action, depending upon the extent to which the relator substantially contributed to the prosecution of the action. Where the action is one that the court finds to be based primarily on disclosures of specific information, other than information provided by the person bringing the action, relating to allegations or transactions in a criminal, civil or administrative hearing, in a legislative, administrative or other state report, hearing, audit or investigation, or from news media, the court may award such sums as it considers appropriate, but in no case more than ten percent of the proceeds, taking into account the significance of the information and the role of the person bringing the action in advancing the case to litigation. Any payment to a person pursuant to this subsection shall be made from the proceeds. Any such person shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorney fees and costs. All such expenses, fees and costs shall be awarded against the defendant.

B. If the state does not proceed with an action under this section, the relator bringing the action or settling the claim shall receive an amount that the court decides is reasonable for collecting the civil penalty and damages. The amount shall be not less than twenty-five percent and not more than thirty percent of the proceeds of the action or settlement and shall be paid out of such proceeds. The relator shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorney fees and costs. All such expenses, fees and costs shall be awarded against the defendant.

C. Whether or not the state proceeds with the action, if the court finds that the action was brought by a relator who planned and initiated the violation of Section 27-14-4 NMSA 1978 upon which the action was brought, then the court may, to the extent the court considers appropriate, reduce the share of the proceeds of the action that the relator would otherwise receive under Subsection A or B of this section, taking into account the role of the relator in advancing the case to litigation and any relevant circumstances pertaining to the violation. If a relator bringing the action is convicted of criminal conduct arising from the relator's role in the violation of Section 27-14-4 NMSA 1978, such relator shall be dismissed from the civil action and shall not receive any share of the proceeds of the action. Such dismissal shall not prejudice the right of the state to continue the action, represented by the attorney general.

D. If the state does not proceed with the action and the relator bringing the action conducts the action, the court may award to the defendant its reasonable attorney fees and expenses if the defendant prevails in the action and the court finds that the claim of the relator bringing the action was clearly frivolous, clearly vexatious or brought primarily for purposes of harassment."

SECTION 7. Section 27-14-10 NMSA 1978 (being Laws 2004, Chapter 49, Section 10) is repealed and a new Section 27-14-10 NMSA 1978 is enacted to read:

"27-14-10. [NEW MATERIAL] CERTAIN ACTIONS BARRED.--

A. A court shall not have jurisdiction over an action brought pursuant to the Medicaid False Claims Act against a member of the legislature, a member of the judiciary or a public official if the action is substantially based on evidence or information known to the state when the action was brought.

B. A person shall not bring an action pursuant to the Medicaid False Claims Act that is substantially based upon allegations or transactions that are, or have been, the subject of a civil suit or administrative civil money penalty proceeding to which the state is, or was, a party.

C. Unless the action is brought by the state or the person bringing the action is an original source of the information, the court shall dismiss an action or claim under this section, unless opposed by the state, if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed:

(1) in a state criminal, civil or administrative proceeding to which the state or its agent is or was a party;

(2) in a legislative, administrative or other state report, hearing, audit or investigation; or

(3) in the news media."

SECTION 8. Section 27-14-11 NMSA 1978 (being Laws 2004, Chapter 49, Section 11) is amended to read:

"27-14-11. [DEPARTMENT] STATE NOT LIABLE FOR CERTAIN EXPENSES.--The [department] state shall not be liable for expenses that a [person] relator incurs in bringing [an] a qui tam action pursuant to the Medicaid False Claims Act."

SECTION 9. Section 27-14-12 NMSA 1978 (being Laws 2004, Chapter 49, Section 12) is repealed and a new Section 27-14-12 NMSA 1978 is enacted to read:

"27-14-12. [NEW MATERIAL] WHISTLEBLOWER PROTECTION.--

A. An employee, contractor or agent shall be entitled to all relief necessary to make that person whole if such person is discharged, demoted, suspended, threatened, harassed or in any manner discriminated against in the terms and conditions of employment because of lawful acts done by the employee, contractor, agent or associated others in furtherance of an action brought pursuant to the Medicaid False Claims Act, or other efforts to stop one or more violations of the Medicaid False Claims Act.

B. Relief under Subsection A of this section shall include:

(1) reinstatement with the same seniority status that such person would have had but for the retaliation or discrimination;

(2) two times the amount of back pay;

(3) interest on the amount of back pay;

(4) compensation for any special damages sustained as a result of the retaliation or discrimination; and

(5) reasonable attorney fees and costs.

C. An action brought under this section shall not be brought more than three years after the date on which the retaliation or discrimination occurred."

SECTION 10. Section 27-14-13 NMSA 1978 (being Laws 2004, Chapter 49, Section 13) is repealed and a new Section 27-14-13 NMSA 1978 is enacted to read:

"27-14-13. [NEW MATERIAL] FALSE CLAIMS AND REPORTING PROCEDURE.--

A. A civil action pursuant to the Medicaid False Claims Act may not be brought:

(1) more than six years after the date on which the violation of the Medicaid False Claims Act occurred; or

(2) more than three years after the date on which the state official charged with responsibility to act in the circumstances knew or reasonably should have known facts material to its right of action, but in no event more than ten years after the date on which the violation was committed, whichever occurs last.

B. If the state intervenes in a qui tam action pursuant to the Medicaid False Claims Act, the state may file its own complaint or amend the relator's complaint, including adding additional claims for relief. Any such state pleading shall relate back to the filing date of the relator's original complaint, to the extent the state's pleading arises out of the conduct, transactions or occurrences set forth in the relator's original complaint.

C. In any action brought pursuant to the Medicaid False Claims Act, the state shall be required to prove all essential elements of the cause of action, including damages, by a preponderance of the evidence.

D. Notwithstanding any rule or other provision of law, a final judgment entered in favor of the state in any criminal proceeding charging fraud or false statements, whether upon a verdict after trial or upon a plea of guilty or nolo contendere, shall estop the defendant from denying the essential elements of the offense in any action brought pursuant to the Medicaid False Claims Act that involves the same transaction as in the criminal proceeding."

SECTION 11. Section 27-14-15 NMSA 1978 (being Laws 2004, Chapter 49, Section 15) is amended to read:

"27-14-15. USE OF FUNDS.--

A. Damages collected pursuant to the Medicaid False Claims Act on behalf of the state shall be remitted to the state treasurer for deposit in the general fund to be used for the state's medicaid program.

B. Penalties [legal fees or costs of investigation] recovered pursuant to the Medicaid False Claims Act on behalf of the state shall be remitted to the state treasurer for deposit in the general fund to be used for the state's medicaid program.

C. [Pursuant to Subsection C of Section 30-44-8 NMSA 1978, penalties recovered pursuant to the Medicaid False Claims Act on behalf of the state may be claimed by the attorney general pursuant to procedures established by the department and the attorney general] Attorney fees and costs, and costs of investigation incurred by the department, shall be paid to the department. Attorney fees and costs, and costs of investigation incurred by the attorney general, shall be paid to the office of the attorney general."

SECTION 12. A new section of the Medicaid False Claims Act is enacted to read:

"[NEW MATERIAL] CIVIL INVESTIGATIVE DEMAND.--

A. Whenever the attorney general has reason to believe that any person may have information, or be in possession, custody or control of any document or tangible thing that the attorney general believes to be relevant to a false claims investigation, the attorney general may, prior to filing a civil proceeding alleging violations of the Medicaid False Claims Act or intervening in a qui tam proceeding under that act, execute in writing and cause to be served upon such person a civil investigative demand requiring such person to:

(1) produce documents or tangible things for inspection, or copying;

(2) give written answers to written interrogatories; or

(3) give oral testimony.

B. The civil investigative demand shall not be a matter of public record and shall not be disclosed or published by the attorney general except by court order.

C. A civil investigative demand shall:

(1) state the nature of the conduct constituting the alleged Medicaid False Claims Act violation that is under investigation and the applicable provision of law alleged to have been violated;

(2) if the demand is for the production of documents or tangible things:

(a) describe the documents or tangible things with reasonable particularity;

(b) specify the date, time and place on which the documents or tangible things are to be produced, which shall not be less than ten days after service of the demand; and

(3) if the demand is for answers to written interrogatories, specify the date, time and place on which answers shall be served upon the attorney general; and

(4) if the demand is for the giving of oral testimony:

(a) specify the name of each person to be examined, if known, or name an organization or governmental agency as the witness and describe with reasonable particularity the matters on which the examination is requested, and the organization or agency shall designate one or more persons to testify on its behalf as to such matters;

(b) specify the date, time and place on which the examination shall take place, which shall not be less than seven days after service of the demand, unless the attorney general determines that exceptional circumstances are present that warrant the commencement of such testimony in a lesser period of time; and

(c) state that attendance and testimony are necessary to the investigation and provide notice of the right to be accompanied by counsel.

D. A civil investigative demand shall not:

(1) be issued more than once to the same person for oral testimony unless the person requests otherwise or the attorney general, after investigation, notifies the person in writing that an additional demand for oral testimony is necessary;

(2) contain any requirement that would be unreasonable or improper if contained in a subpoena or subpoena duces tecum issued by a court of this state;

(3) require the disclosure of privileged matters or matters otherwise protected from disclosure under standards applicable to a subpoena or subpoena duces tecum issued by a court of this state; or

(4) require the removal of any documents from the custody of the person upon whom the demand is served, except in accordance with Subsection E of this section.

E. Requested documents and tangible things shall be produced for inspection and copying during normal business hours at the principal place of business of the person served with the demand, or at such other place and time as may be agreed upon by such person and the attorney general.

F. Except as provided by Subsection G of this section, the attorney general shall not disclose the product of discovery received pursuant to a civil investigative demand to anyone.

G. The attorney general may disclose the product of discovery received pursuant to a civil investigative demand to:

(1) an attorney general of another state, law enforcement authorities of this or another state or federal law enforcement authorities for purposes of investigating:

(a) allegations of one or more violations of the Medicaid False Claims Act that form the basis of the civil investigative demand; or

(b) other violations of state or federal law arising from matters disclosed pursuant to the civil investigative demand; and

(2) a relator and the relator's counsel; provided that the product of discovery relates to the relator's qui tam action.

H. Service of a duly executed copy of the civil investigative demand shall be made by:

(1) delivering a copy of the demand to the person to whom the demand is addressed, wherever such person may be found, or by leaving the demand with a person over fifteen years old residing at the usual place of abode of the addressee or at the addressee's principal office or place of business;

(2) if the addressee is not a natural person, delivering a copy of the demand to an officer, managing or general agent or to any other agent authorized by appointment or by law to receive service of process; or

(3) registered or certified mail addressed to the person at the person's principal office or place of business, whether in this state or elsewhere.

I. At any time before the return date of the civil investigative demand, a person receiving the demand may file a complaint under seal seeking an order to set aside or modify the demand in the district court of the New Mexico county in which the person resides or has a principal office or place of business or in the district court of Santa Fe county if the person does not reside or have a principal office or place of business in New Mexico. Upon a showing of good cause, the court may set aside or modify the demand or extend the time for discovery requested in the demand."

SECTION 13. 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 49, Article 9 NMSA 1978 may be cited as the "Fraud Against Taxpayers Act"."

SECTION 14. Section 44-9-2 NMSA 1978 (being Laws 2007, Chapter 40, Section 2, as amended) is amended to read:

"44-9-2. 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 or a political subdivision;

B. "document" means the original or any copy of any book, record, report, memorandum, paper, communication, tabulation, chart or other document, or data compilations, in whatever format created or maintained, whether stored in or accessible through computer or other information retrieval systems, together with instructions and all other materials necessary to use or interpret such data compilations;

[B.] C. "employer" includes an individual, corporation, firm, association, business, partnership, organization, trust, charter school and the state and any of its agencies, institutions or political subdivisions;

[C.] D. "knowing" or "knowingly" means that a person, with respect to information, acts:

(1) with actual knowledge of the truth or 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.] E. "person" means an individual, corporation, firm, association, organization, trust, business, partnership, limited liability company, joint venture or any legal or commercial entity;

[E.] F. "political subdivision" means a political subdivision of the state or a charter school; [and]

G. "qui tam action" means a private civil action brought on behalf of the state or political subdivision pursuant to the Fraud Against Taxpayers Act;

H. "relator" means a qui tam plaintiff; and

[F.] I. "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 15. Section 44-9-4 NMSA 1978 (being Laws 2007, Chapter 40, Section 4, as amended) is amended to read:

"44-9-4. INVESTIGATION BY THE ATTORNEY GENERAL--DELEGATION--CIVIL ACTION.--

A. To the extent the attorney general deems appropriate, the attorney general shall diligently investigate suspected violations of Section 44-9-3 NMSA 1978, 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 or political subdivision to which a false claim was made, and when this occurs, the state agency or political subdivision shall have every power conferred upon the attorney general pursuant to the Fraud Against Taxpayers Act. If the attorney general has delegated authority to a state agency or political subdivision, all references to the attorney general in the Fraud Against Taxpayers Act shall apply to the delegee."

SECTION 16. Section 44-9-5 NMSA 1978 (being Laws 2007, Chapter 40, Section 5, as amended) is amended to read:

"44-9-5. [CIVIL] QUI TAM ACTION BY [QUI TAM PLAINTIFF] RELATOR--STATE OR POLITICAL SUBDIVISION MAY INTERVENE.--

A. A person may bring a [civil] qui tam action for a violation of Section 44-9-3 NMSA 1978 on behalf of the person and the state or political subdivision. The action shall be brought in the name of the state or political subdivision. The person bringing the action shall be referred to as the [qui tam plaintiff] relator. 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] relator shall be filed [in camera] under seal in district court and shall remain under seal for at least sixty days, and shall remain under seal until lifted by order of the court. 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] relator shall serve the attorney general, and the political subdivision, if applicable, with a copy of the complaint and written disclosure of substantially all material evidence and information the [qui tam plaintiff] relator possesses. The attorney general on behalf of the state or of the political subdivision [or the political subdivision on its own behalf] 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 or political subdivision's] attorney general's investigation, the [state or political subdivision] attorney general 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 general [or political subdivision] shall notify the court that the state or the political subdivision:

(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 the political subdivision [or the political subdivision shall conduct the action on its own behalf]; or

(2) declines to take over the action; in which case the seal shall be lifted and the [qui tam plaintiff] relator 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 or a political subdivision [or a political subdivision on its own behalf] may intervene or bring a related action based on the facts underlying the pending action."

SECTION 17. Section 44-9-6 NMSA 1978 (being Laws 2007, Chapter 40, Section 6, as amended) is repealed and a new Section 44-9-6 NMSA 1978 is enacted to read:

"44-9-6. [NEW MATERIAL] RIGHTS OF QUI TAM PARTIES.--

A. If the attorney general intervenes in a qui tam action:

(1) the state or political subdivision shall have the primary responsibility for prosecuting the action;

(2) the relator shall have the right to continue as a party to the action, subject to limitations set forth in this section; and

B. Notwithstanding an objection on the part of the relator, the state or political subdivision may dismiss or settle a qui tam claim or action brought pursuant to the Fraud Against Taxpayers Act, whether prosecuted jointly or separately by the state, political subdivision or the relator; provided that the state or political subdivision has served notice upon the relator of the state's or political subdivision's intent to dismiss or settle and the relator is afforded an opportunity for a hearing.

D. If the state or political subdivision elects not to intervene, the relator shall have the right to prosecute the qui tam action. If requested by the attorney general, the state or political subdivision shall be served with copies of pleadings and all deposition transcripts at the attorney general's expense.

E. Upon a showing of good cause, the court may allow the state or political subdivision to intervene in the qui tam action at a later date, without limiting the status and rights of the relator.

F. Upon a showing by the state or political subdivision, which shall take place in camera, that certain discovery on the part of the relator will interfere with the state's or political subdivision's own investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay such discovery by the relator for a period not to exceed sixty days. The court may extend the stay upon a further showing that the state or political subdivision has pursued a criminal or civil investigation or proceedings with reasonable diligence and that certain discovery by the relator will interfere with ongoing proceedings conducted by the state or political subdivision.

(1) the number of witnesses the relator may call;

(2) the length of a relator's examination of a witness;

(3) the cross-examination of a witness by a relator; or

(4) the relator's participation in the qui tam action in any other respect.

H. Notwithstanding the provisions of Section 44-9-5 NMSA 1978, the attorney general or a political subdivision may elect to pursue the state's or political subdivision's claim through any alternate remedy available, including an administrative proceeding to determine a civil money penalty. If an alternate remedy is pursued, the relator shall have the same rights in such a proceeding as the relator 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 18. Section 44-9-7 NMSA 1978 (being Laws 2007, Chapter 40, Section 7, as amended) is amended to read:

"44-9-7. AWARDS TO [QUI TAM PLAINTIFF] RELATOR AND THE STATE OR POLITICAL SUBDIVISION.--

A. Except as otherwise provided in this section, if the state or a political subdivision proceeds with an action brought by a [qui tam plaintiff] relator and the state or political subdivision prevails in the action, the [qui tam plaintiff] relator 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] relator 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] relator, 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] relator in advancing the case to litigation. However, if the attorney general or political subdivision determines and certifies in writing that the [qui tam plaintiff] relator provided a significant contribution in advancing the case, then the [qui tam plaintiff] relator shall receive the share of proceeds set forth in Paragraph (1) of this subsection.

B. If the state or political subdivision does not proceed with an action brought by a [qui tam plaintiff] relator and the state or political subdivision prevails in the action, the [qui tam plaintiff] relator 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 or political subdivision proceeds with an action brought by a [qui tam plaintiff] relator:

(1) if the court finds that the action was brought by a person that planned or initiated the violation of Section 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] relator 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 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 or political subdivision to continue the action.

D. Any award to a [qui tam plaintiff] relator shall be paid out of the proceeds of the action or settlement, if any. The [qui tam plaintiff] relator 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 or political subdivision is entitled to all proceeds collected in an action or settlement not awarded to a [qui tam plaintiff] relator. The state or political subdivision 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 or counsel employed by the political subdivision that shall be paid by the defendant.

F. Proceeds and penalties collected by the state or political subdivision 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, and attorney fees and costs incurred by the office of the attorney general 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; or

(3) [except as provided in Paragraph (4) of this subsection] 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] 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 that act; and

(b) one-half into the general fund [or

(4) remaining proceeds collected by counties or municipalities as political subdivisions acting on their own behalf shall be disposed of in accordance with the direction of the governing body of the county or municipality]."

SECTION 19. Section 44-9-8 NMSA 1978 (being Laws 2007, Chapter 40, Section 8, as amended) is amended to read:

"44-9-8. AWARD OF ATTORNEY FEES AND COSTS TO DEFENDANT.--If the state or political subdivision does not proceed with the qui tam action and the [qui tam plaintiff] relator 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 20. Section 44-9-9 NMSA 1978 (being Laws 2007, Chapter 40, Section 9, as amended) is amended to read:

"44-9-9. CERTAIN ACTIONS BARRED.--

A. No court shall have jurisdiction over [an] a qui tam action brought pursuant to Section 44-9-5 NMSA 1978 by a present or former employee of the state or political subdivision unless the employee, during employment with the state or political subdivision and in good faith, exhausted existing internal procedures for reporting false claims and the state or political subdivision failed to act on the information provided within a reasonable period of time.

B. No court shall have jurisdiction over [an] a qui tam action brought pursuant to Section 44-9-5 NMSA 1978 against an elected or appointed [state] official of the state or of a political subdivision, a member of the state legislature or a member of the judiciary if the action is based on evidence or information known to the official of the state [agency] or political subdivision who is charged with responsibility to act in the circumstances to which the false claim was made or to the attorney general when the action was filed.

C. Unless the attorney general [or political subdivision] determines and certifies in writing that the qui tam action is in the interest of the state or political subdivision, no court shall have jurisdiction over an action brought pursuant to Section 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 or political subdivision is a party.

D. Upon motion of the attorney general [or political subdivision], a court may, in its discretion, dismiss [an] a qui tam action or claim brought pursuant to Section 44-9-5 NMSA 1978 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]:

(1) in a state criminal, civil or administrative proceeding to which the state or political subdivision or an agent of either was a party;

(2) in a legislative or other state report, audit or investigation; or

(3) in the news media."

SECTION 21. Section 44-9-10 NMSA 1978 (being Laws 2007, Chapter 40, Section 10, as amended) is amended to read:

"44-9-10. STATE OR POLITICAL SUBDIVISION NOT LIABLE.--The state or political subdivision shall not be liable for expenses or fees that a [qui tam plaintiff] relator may incur in investigating or bringing [an] a qui tam action pursuant to the Fraud Against Taxpayers Act."

SECTION 22. Section 44-9-12 NMSA 1978 (being Laws 2007, Chapter 40, Section 12, as amended) is amended to read:

"44-9-12. 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 political subdivision or the [qui tam plaintiff] relator shall be required to prove all essential elements of the cause of action, including damages, by a preponderance of the evidence."

SECTION 23. 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 have information, or be in possession, custody or control of any document or tangible thing that the attorney general believes to be relevant to a false claims investigation, the attorney general may, prior to filing a civil proceeding alleging violations of the Fraud Against Taxpayers Act or intervening in a qui tam proceeding under that act, execute in writing and cause to be served upon such person a civil investigative demand requiring such person to:

(1) produce documents or tangible things for inspection or copying;

(2) give written answers to written interrogatories; or

(3) give oral testimony.

B. The civil investigative demand shall not be a matter of public record and shall not be disclosed or published by the attorney general except by court order.

C. A civil investigative demand shall:

(1) state the nature of the conduct constituting the alleged Fraud Against Taxpayers Act violation that is under investigation and the applicable provision of law alleged to have been violated;

(2) if the demand is for the production of documents or tangible things:

(a) describe the documents or tangible things with reasonable particularity;

(b) specify the date, time and place on which the documents or tangible things are to be produced, which shall not be less than ten days after service of the demand; and

(3) if the demand is for answers to written interrogatories, specify the date, time and place on which answers shall be served upon the attorney general; and

(4) if the demand is for the giving of oral testimony:

(c) state that attendance and testimony are necessary to the investigation and provide notice of the right to be accompanied by counsel.

D. A civil investigative demand shall not:

(2) contain any requirement that would be unreasonable or improper if contained in a subpoena or subpoena duces tecum issued by a court of this state;

(3) require the disclosure of privileged matters or matters otherwise protected from disclosure under standards applicable to a subpoena or subpoena duces tecum issued by a court of this state; or

(4) require the removal of any documents from the custody of the person upon whom the demand is served, except in accordance with Subsection E of this section.

F. Except as provided by Subsection G of this section, the attorney general shall not disclose the product of discovery received pursuant to a civil investigative demand to anyone.

G. The attorney general may disclose the product of discovery received pursuant to a civil investigative demand to:

(1) an attorney general of another state, law enforcement authorities of this or another state or federal law enforcement authorities for purposes of investigating:

(a) allegations of one or more violations of the Fraud Against Taxpayers Act that form the basis of the civil investigative demand; or

(b) other violations of state or federal law arising from matters disclosed pursuant to the civil investigative demand; and

(2) a relator and the relator's counsel; provided that the product of discovery relates to the relator's qui tam action.

H. Service of a duly executed copy of the civil investigative demand shall be made by:

(3) registered or certified mail addressed to the person at the person's principal office or place of business, whether in this state or elsewhere.

SECTION 24. APPLICABILITY.--The provisions of this act apply to civil actions alleging violations of the Medicaid False Claims Act or the Fraud Against Taxpayers Act filed on or after July 1, 2016.

SECTION 25. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2016.

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