On Saturday, February 8, the New Mexico Senate voted 38-0 to approve Senate Bill 64. The legislation removes all waiting periods required before settlement agreements involving state employees, officials and agencies where the State pays amounts to settled cases can be made public. The legislation will also remove the existing penalty for those who break confidentiality provisions. SB 64 now advances to the House but there is less than two weeks left in the 30-day legislative session.
There is a minimum 180-day waiting period before settlements can be made public and that would be eliminated under SB 64. The legislation mandates that settlement agreements are to be made public once they are signed by the parties to the lawsuit or upon a final judgment resolving the claims, whatever comes first.
BCAKGROUND ON NONDISCLOSURE PROVISIONS
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) insures state agencies against tort claims, claims alleging civil rights violations, personal injury claims, including Workers Compensation claims filed by state employees who are injured on the job. RMD also provides insurance for some local government bodies. RMD contracts with private attorneys and firms that competitively bid to provide to defend the state. Last fiscal year upwards of $10 Million or more was paid by the state to private law firms to defend the state against claims.
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 the current law, the timeline for mandatory disclosure is not clear and settlement terms, conditions and settlement records cannot be disclosed to the public but must be kept confidential for at least 180 days, or a full 6 months. Because of complicated or conflicting language used in settlements, it is unclear which claims have been settled or when they can be released to the public. 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.
CATALYST FOR CHANGE IN LAW
On June 23, 2019, it was reported that $7.9M in settlements were paid in 2018 by the state in an 9-month period. Former Republican Governor Susana Martinez’s administration approved the settlements with lengthy gag orders during the final weeks of 2018, Martinez’s final year in office.
Highlights of State litigation settlements provided by the State Risk Management Division revealed the following approved settlements paid during the 9-month period before Marinez left office:
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.”
Absent from the report on Risk Management settlements is a $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.
SPECIAL AUDIT REVEALS ABUSE OF POWER TO PROTECT A GOVERNOR
A special audit commissioned last year State Auditor Brian Colón ordered a special audit of State Risk Management settlements and the audit identified $2.7 million in fast-tracked legal settlements. On Monday, November 18, New Mexico State Auditor Brian Colon announced the results of the special audit he had ordered. The audit found $2.7 million in secret settlements involving appointees of former Republican Governor Susana Martinez.
The special audit found settlements of civil rights claims from fiscal year 2015 to the end of the Martinez Administration and the present averaged 607 days and higher. According to the audit, 18 claims were settled before Martinez left office much faster with most under 200 days. The audit also found that in a number of the settlements examined, the confidentiality periods and damages assessed for violating those agreements exceeded what is mandated by state law. The contracted state auditors reviewed the paper trail for each settlement and tried to speak with the outside attorneys hired to defend the state, along with former Risk Management Division officials and plaintiffs’ attorneys.
The settlements lacked proper documentation, transparency, and investigations and were fast tracked according to the audit. Colon proclaimed the settlements an “abuse of power” by former Republican Governor Susana Martinez. According to Colon, the secret settlements were done to save the former Governor from embarrassment, protect her personal reputation, and to protect her political appointees and her political agenda.
On November 18, 2019, New Mexico State Auditor Brain Colon held a press conference to announce the results of the special audit he ordered. Colon strongly condemned the secret settlements by saying:
“This is about an abuse of power. It’s about a lack of transparency, and particularly as it relates to political appointees by our former governor. … We should never settle matters and use taxpayer dollars to protect political interest, political legacies and personal agendas. These are not anomalies that don’t matter … These are anomalies that actually represent secret payouts to protect the [former Gov. Martinez] administration’s reputation. … [W]hat’s truly concerning and what really is disgusting is that $2.7 million of those $5 million in settlements were done in secret without process and without a proper investigation. … There was virtually no proof in the files and in the records as to why these high dollar amounts were approved [by the Martinez administration.]”
After the Colon press conference, New Mexico Risk Management Division (RMD) issued the following statement saying:
“The Risk Management Division no longer enters into settlements with confidentiality periods that extend beyond those established by state law. … It also no longer threatens claimants with excessive monetary penalties to keep them quiet. … [State settlements] are examined thoroughly, objectively and consistently.”
It was embarrassing that New Mexico State Police Chief Kassetas for his part said about the special audit:
“The Office of the State Auditor validated the information I brought forward in a factual manner that cannot be disputed. This has always been about public corruption and exposing the fraud perpetrated against the New Mexico taxpayers.”
The comments about “exposing” things coming from the former New Mexico State Police Chief who was accused of exposing his rear end to employees is revealing.
Many New Mexico State Senators, both Democrat and Republican, were outraged by the secret settlement agreements approved by former Risk Management Division officials under the Martinez administration.
Democrat Senator Joseph Cervantes, D-Las Cruces, a prominent trial attorney, had this to say on the Senate floor during debate on the bill:
“There was a fraud perpetrated on New Mexico taxpayers at the end of the last administration. … The worst part of all this is they tried to hide it.”
Republican Senator Sander Rue, R-Albuquerque had this to say on the Senate floor during debate on the bill:
“We have to legislate to bad behaviors. … There are those individuals that find a way to get around these things.”
Cabinet Secretary Ken Ortiz for the General Services Department which Risk Management is a division of, announced last year that the State would automatically publish all state settlement agreements. The legislation mandates that settlement agreements are to be made public once they are signed by the parties to the lawsuit or upon a final judgment resolving the claims, whatever comes first.
ANALYSIS AND COMMENTARY
Six months for the public to have to wait to find out the terms and conditions of a settlement is outrageous. 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.
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 on the state’s sunshine portal. There should be absolutely no confidentiality clauses when it comes to the settlements including attorney fees paid. It is taxpayer money and the legislature need to act in the interest of complete transparency.
Governor Michelle Lujan Grisham and Cabinet Secretary Ken Ortiz supporting the SB 64 is commendable. What is also commendable is posting the settlements on the sunshine poral. What also needs to 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 New Mexico Senate senate voted 38-0 to approve the bill. Senate Bill 64 sends a very strong message that secret settlements must end. The House should send the same message and vote to enact the legislation and send it on to the Governor for her signature.
For a related blog article see:
$32 Million Paid In State Settlements; Department of Finance (DFA) Needs More Control Over Risk Management Division (RMD); Publish Settlements