New Mexico Fraud Against Taxpayers Act (FATA) Guide: How to Report State Fraud

Understanding the New Mexico Fraud Against Taxpayers Act

When dishonest companies steal money from state programs, it hurts every resident. To combat this, the state legislature passed the New Mexico Fraud Against Taxpayers Act (FATA), found at N.M. Stat. Ann. § 44-9-1 and subsequent sections. This powerful law is the state equivalent of the federal False Claims Act. It empowers private citizens with insider knowledge of fraud to file a lawsuit on behalf of the State of New Mexico. This unique legal mechanism is known as a "qui tam" provision.

Under FATA, individuals (referred to as "relators") who expose fraud are financially rewarded and legally protected from retaliation by their employers. Because these cases involve massive amounts of state money, the legal procedures are highly complex and strictly enforced. A landmark case, State ex rel. Foy v. Austin Capital Management, Ltd., 355 P.3d 1 (NM Supreme Court 2015), solidified the broad authority of whistleblowers and the Attorney General to pursue entities that defraud the state. Hiring an experienced whistleblower attorney from our directory is essential to navigate this specialized area of law.

What Constitutes Medicaid and State Contract Fraud in NM

Fraud against the state can take many forms, but the most common areas involve healthcare and government procurement.

Medicaid Fraud: New Mexico spends billions annually on its Medicaid program, Turquoise Care (formerly Centennial Care). Fraud occurs when clinics, hospitals, or pharmacies bill the state for services never performed, double-bill for single procedures, or provide medically unnecessary treatments. Overcharging for prescription drugs or paying kickbacks to doctors for patient referrals also strongly violate FATA provisions.

State Contract Fraud: This occurs when private companies secure contracts with state agencies-such as the Department of Transportation or the Public Education Department-and then intentionally overcharge for goods, use substandard materials, or falsify testing data. If a contractor lies about meeting the required specifications to get paid by the state, they are committing actionable fraud.

How the Relator's Share is Calculated

The primary incentive for blowing the whistle is the relator's share-the percentage of the recovered money awarded to the whistleblower. Under N.M. Stat. Ann. § 44-9-7, the calculation depends on the state's level of involvement:

• If the State Intervenes: If the Attorney General decides to take over and lead your lawsuit, you are generally entitled to receive between 15% and 25% of the total recovered proceeds.
• If the State Declines: If the government declines to intervene but you and your attorney pursue the case successfully on your own, your reward increases to between 25% and 30% of the recovery.

The exact percentage is determined by the court, based on how much your information and your attorney's work contributed to the success of the case.

Statute of Limitations for FATA Claims

Unlike the federal False Claims Act, New Mexico law provides exceptional leeway for whistleblowers. Under N.M. Stat. Ann. § 44-9-12(A), a civil action pursuant to the Fraud Against Taxpayers Act may be brought at any time for unlawful conduct occurring after July 1, 1987. There is no three-year discovery or ten-year repose cutoff under state law. However, acting swiftly remains vital so that evidence is preserved and other whistleblowers do not file ahead of you.

Filing Under Seal in NM Courts: The Step-by-Step Process

Qui tam lawsuits are fundamentally different from standard civil lawsuits because they must be filed in absolute secrecy.

Step 1: Gathering Evidence

Before filing, you must have concrete evidence. This includes emails, internal audits, falsified invoices, or billing records. Do not illegally hack into computers to get this data, but do secure copies of documents you have lawful access to during your normal job duties.

Step 2: Drafting the Complaint and Disclosure Statement

Your attorney will draft a comprehensive civil complaint alongside a written disclosure statement containing all the evidence you have gathered. This disclosure is provided exclusively to the government, not to the company you are suing.

Step 3: Filing Under Seal

The lawsuit is filed "under seal" at a local court, usually the First Judicial District Court, Santa Fe, because it is the seat of state government. Your attorney will file an original complaint complying with Rule 1-008 NMRA and Rule 1-010 NMRA, accompanied by a Civil Case Cover Sheet under Rule 1-003 NMRA, while the clerk locks the file. The company you are suing will not know the lawsuit exists. It is illegal for you to discuss the case publicly while the seal is active.

Step 4: The Attorney General Investigation

The New Mexico Office of the Attorney General, Santa Fe is given at least 60 days (often extended for months or years) to investigate your claims in secret. They may issue subpoenas and interview witnesses. Eventually, the AG will decide whether to "intervene" (take over the case) or allow you to proceed privately.

How Much Does a Whistleblower Attorney Cost?

Whistleblowers rarely pay out-of-pocket for FATA representation.

Furthermore, if you win, FATA requires the fraudulent company to pay your attorney's fees and litigation costs on top of the settlement, ensuring your relator's share is protected.

Frequently Asked Questions (FAQ)