The State of New Mexico is a “self-insured” government, generally meaning that it does not carry liability insurance to pay for claims against the state. Civil lawsuit defense and settlements are paid out of risk management funds, which is taxpayer money. The New Mexico Legislature funds each year what is known as the “Public Liability Fund” to pay claims against the state.
The Risk Management Division (RMD) is a Division of the State’s General Services Department with a Governor appointed Cabinet Secretary. The RMD has a Division Director, usually an attorney, and 6 Bureaus: Alternative Dispute Resolution, Employee Benefits, Finance, Loss Prevention & Control, Property and Casualty, and Workers Compensation. The New Mexico State Risk Management Division (RMD) provides legal representation to state agencies.
RMD insures state agencies against tort claims, claims alleging civil rights violations, personal injury claims, including Workers Compensation claims filed by state employees when injured on the job. RMD also provides insurance for some local government bodies. When it comes to defending lawsuits filed against the state, the RMD contracts with private attorneys and firms that competitively bid to provide what is considered insurance defense work. Last fiscal year upwards of $10 Million or more was paid by the state to private law firms to defend the state against claims.
The New Mexico Department of Finance and Administration (DFA) is considered one of the most powerful or influential departments in New Mexico Government which is overseen by a Governor appointed Cabinet Secretary. The DFA provides fiscal advice and problem-solving support to the Governor, and is suppose to provide budget direction and fiscal oversight to virtually all state agencies. The DFA is required to provide strict fiscal oversight of virtually every Department and Division within State Government, including the Risk Management Division.
DISCLOSURE OF SETTLEMENT PAID BY RMD
On June 23, 2019, the Albuquerque Journal did a report entitled “NM Approved at least $7.9M in settlements in 2018” on settlements paid by the state in an 9-month period. The Journal submitted an Inspection of Public Records (IPRA) request in order to review the settlement documents not readily available to the public. You can read the entire article here:
Frankly, the headline is very misleading when it says $7.9 million was paid during the 9-month period. The headline was misleading because buried in the article is the fact the state actually paid $32 million of taxpayer money from July 1, 2017, to June 30, 2018 on legal defense and settlements.
Highlights of State litigation settlements provided by the State Risk Management Division reveal the following approved settlements paid during the 9-month period:
1. New Mexico authorized approximately $7.9 million in settlements of at least $20,000 during a nine-month period.
2. $2.5 million was paid to resolve allegations of sexual harassment and discrimination in the Corrections Department. 6 correctional officers who worked at the state prison in Los Lunas said they endured a “sexualized, violent environment” in which male colleagues exposed themselves, made derogatory comments and inappropriately touched female officers. The suit alleged that female officers were “subject to unthinkable and constant sexually based violence and harassment.”
3. $1.5 million was paid to 1 of 6 developmentally disabled adults entrusted to state care who failed to get the protection from abuse and neglect they were entitled to. Six plaintiffs accused the state Department of Health and others of failing to provide adequate services and violating their constitutional rights. The attorneys in the case participated in an arbitration before arbitrator and retired District Court Judge William Lang to determine how much the state should pay. The range set and agreed to by the parties was at $500,000 to $1.5 million. Lange issued a $7.5 million award in the plaintiffs’ favor. The state paid $1.5 million, the maximum the parties had agreed to before the proceeding began. Former District Court Judge Lang has been recently appointed Chairman of the new Ethics Commission.
4. $775,590 was paid to Otis and Melissa Morehead, who filed a claim with the University of New Mexico Health Sciences Center concerning medical services provided to Melissa and a third family member.
5. $250,000 was paid to plaintiff Damian Horne and his attorney. Horne had worked in the Public Defender’s Office and filed a whistleblower lawsuit in 2016, contending the office had put him on leave and intended to fire him as retaliation for expressing his opinions about problems in the office.
6. $165,000 was paid to Plaintiff Diane Kretschmer to resolve claims against the state Livestock Board and several of its agents.
7. $150,000 was paid to Plaintiff Karl Rougemont, who filed a lawsuit in 2015 alleging he was injured during a defensive tactics demonstration while he was a cadet at the law enforcement academy.
8. $80,000 was paid to settle claims that then Governor Susana Martinez’s security team defamed and assaulted two people who showed up at a political event in Deming. The plaintiffs in that case run a youth ranch and wanted to deliver a petition to the governor. The allegations center on a 2014 incident at a motel in Deming. The plaintiffs said the Republican Party of Luna County had invited them and others to meet the governor that day, but State Police officers improperly threatened them with arrest when they showed up and forced them to leave, they allege. The Plaintiff’s were represented by private attorney Pete Domenici, Jr., the son of longtime New Mexico United State Senator Pete V. Domenici.
9. $25,000 was paid to settle a lawsuit filed by a woman who accused New Mexico State University of refusing to hire her because she is a Christian and heterosexual. According to the plaintiff, the school improperly rescinded an offer to make her an assistant basketball coach. The Plaintiff was a former college basketball star, and alleged she had initially been offered a job as an assistant women’s basketball coach but that the offer was rescinded after the coach saw an online interview, she’d participated in. In an interview, the Plaintiff explained that she gave up same-sex relationships because they conflicted with her Christianity, and she described homosexuality as “wrong” and sports as “evil.”
FACTS OF $1.7 MILLION SETTLEMENT YET TO BE FULLY DISCLOSED
Absent from the report on RMD settlements is the $1.7 million settlement in a lawsuit alleging that the former New Mexico State Police Chief Pete Kassetas engaged in “blatant, ongoing and systematic discrimination” during his time as New Mexico State Police Chief, including at one time “mooning” his employees. According to the lawsuit, Kassetas described his employees as “dumb [‘efing’] bitches” and he once sent an image of a man’s testicles blocking out the sun to a Deputy Cabinet Secretary in the Department of Public Safety, all allegations Kassetas presumably denied. The case was settled in December, 2018 after two days of negotiations.
The Plaintiff’s alleged discrimination based on gender and sexual orientation and retaliation for whistle blowing activities. The attorney representing the three law enforcement officials who filed the suit, said she could confirm there was a settlement in the case but a confidentiality clause barred her from discussing how much money was paid to each of the Plaintiffs by saying:
“There was a settlement, but they have us bound and gagged in terms of state money. I can’t tell you the amount.”
A KRQE News 13 investigation found that the Kassetas lawsuit resulted in a confidential settlement that cost taxpayers a total of $1.7 million. According to the news report, the Risk Management Division paid a group of disgruntled public employees huge sums of money in order to keep alleged compromising information about then Republican Governor. KRQE News 13 learned Risk Management officials did not assign investigators before settling the cases in the last days of the Republican administration. The settlement was fast tracked and the case settled within 30 days contrary to the normal 6 months usually taken.
WHAT WAS PAID IN SETTLEMENTS FOR A FULL FISCAL YEAR
According to the State Risk Management Department, the state’s Public Liability Fund spent approximately $32 million during the fiscal year of July 1, 2017, to June 30, 2018, on legal defense and settlements. The legal defense costs include paying outside counsel to defend the case, costs of depositions, submission of interrogatories, answering interrogatories, and assembling documents and evidence for disclosure known as discovery. The cost of defending the state in attorney fees and similar expense accounted for $10 million of the liability fund’s spending in fiscal 2018. The cost of settlements, such as “indemnity payments,” made up $22 million, according to state records.
The state’s Risk Management Division report warned that it is “highly unlikely that cost of defense trends will experience an appreciable decrease in coming years.” According to the report “the Public Liability Fund’s total spending has fluctuated over the last seven years from $28 million to $43 million. The cost of legal defense has ranged from $10 million to $15 million a year, and the cost of settlements has ranged from $16 million to $30 million a year.”
When the State Risk Management Division settles a case, it denies any and all wrongdoing, and demands that the settlement makes it clear the State is agreeing to end the case as a compromise or to avoid further litigation costs. This is standard practice in most civil lawsuit settlements and common even in the private sector. The parties usually agree to avoid disparaging each other or speaking about the terms and conditions of the settlement.
Under state law, state Risk Management Division (RMD) settlement terms and conditions cannot be disclosed to the public for 180 days, or a full six months. All too often, because of language and the terms in the settlements, it is unclear which claims have been settled or when they can be released to the public.
Under the current law, the timeline for mandatory disclosure is not clear. Current State law provides that the confidentiality period can start on 4 dates:
1. The date the settlement is signed
2. The date the claim is closed administratively by the state, or
3. The date all litigation is completed or even
4. The date all statutes of limitations have run on a claim.
EFFORTS TO DISCLOSE SETTLEMENTS TO PUBLIC
During the 2019 legislative session, a bill jointly sponsored Bernalillo County Republican State Senator Sander Rue and Santa Fe Democrat State Representative Linda Trujillo calling for the state to publish settlements in discrimination claims, the agency they were lodged against and the total amount of state money paid to settle the case, including damages and attorney fees. The legislation would have required settlements paid be published on the state’s sunshine portal after a certain amount of time elapsed. General Services Department Cabinet Secretary Ken Ortiz supported the legislation. The proposal passed the New Mexico Senate, but it did not make it through the New Mexico House of Representatives.
Cabinet Secretary for the General Services Department Ken Ortiz announced he is working with staffers to start automatically publishing the state settlement agreements. The goal is to post all settlements online as soon as the legally required confidentiality period of 180 days (6 months) expires. Secretary Ortiz supports clarifying the law that sets the initial 180 days of confidentiality with the goal to precisely define when the 180-day period starts. Ortiz wants to make making it clear the 180 days starts on the day the settlement is reached.
CONFLICTS BETWEEN DFA AND RMD
Confidential sources within the Department of Finance and Administration (DFA) reported that for the entire 8 years of the former Republican Governor Administration, Republican defense lawyers who had the Governor’s ear and considered her allies and supporters were awarded lucrative defense contracts. The same confidential sources disclosed that there were times the previous Governor’s office would intervene and force the hiring of Republican political operatives who were attorneys and who had lost elections be given jobs at the State Risk Management Division.
The most disturbing information provided by DFA confidential sources is that the State Risk Management Division would often block or fail to get approval of settlements from DFA. According to the confidential sources, DFA was repeatedly and essentially left in the dark about settlements agreed to be paid by RMD. The DFA was not allowed to participate in settlement discussions nor allowed to have any say in the amount of the settlements. Further, according to one source, DFA was not allowed to participate with selection of attorney defense contracts with the RMD carrying out the orders from the former Republican Governor’s office as to who was to be chosen.
COMMENTARY AND ANALYSIS
The Albuquerque Journal headline “NM Approved at least $7.9M in settlements in 2018” is very misleading when it says $7.9 million was paid during the 9 month period because buried in the article was the truth that the state spent $32 million from July 1, 2017, to June 30, 2018, on legal defense and settlements. The Public Liability Fund’s total spending fluctuated over the last seven years from about $28 million to $43 million, all paid under the Administration of former Republican Governor “She who must not be named.” During the same time period, the cost of legal defense ranged from $10 million to $15 million a year, and the cost of settlements ranged from $16 million to $30 million a year.
The fact that former Governor “She who must not be named” was not even mentioned by the Albuquerque Journal in the article on settlements paid is truly amazing, but comes as no surprise to political observers. For the entire 8 years of the previous Republican Governor Administration, the Albuquerque Journal consistently and very openly supported most if not all of the actions of the former Republican Governor. Ditto for the full 8 years of the former Republican Mayor of Albuquerque. But the truth has a way of always coming out, such as the amounts paid in settlements by the state and the incompetence of managing a police department by a Mayor and the failure of a legacy project known as ART.
Governor Michelle Lujan Grisham should issue executive orders mandating that the Department of Finance and Administration (DFA) be given far more authority over the State Risk Management Division (RMD). In particular DFA needs to be given at a minimum some say on the final approval of all settlements negotiated by RMD as well be allowed to give input on attorneys selected to do defense work for the state. The RMD should never be used as a “dumping ground” for political operatives or cronies looking for jobs. Too much taxpayer money is at stake.
It is extremely disappointing that the 2019 New Mexico legislature failed to enact the legislation requiring the state to publish the nature of discrimination claims, the agency against whom they were lodged and the total amount of state money used to settle the allegation, including damages and attorney fees. Notwithstanding, even that legislation did not go far enough. The current state law that provides 4 separate dates when the 180 day or 6-month confidentiality period starts to run should be repealed or drastically amended by the legislature.
Six months for the public to have to wait to find out the terms and conditions of a settlement is outrageous. In the interest of full disclosure and transparency, all settlements should be posted within at least 30 days if not sooner from the date the settlement is agreed to by the parties. There should be absolutely no confidentiality clauses when it comes to the settlement. It is taxpayer money and the legislature need to act in the interest of complete transparency.
Kudos go to Governor Michelle Lujan Grisham and Cabinet Secretary Ken Ortiz working with information technology staffers to start automatically publishing the state settlement agreements with the goal to post all settlements. What should also be posted on the sunshine portal are the names of attorneys or firms awarded state contracts to defend the state, the amounts of the contracts awarded, the term of the contracts, and the hourly rate being charged.
The settlements are taxpayer money being paid as are defense fees paid to private attorneys and taxpayers have the right to know what was paid, why and to whom.