N.M. Stat. Ann. § 44-9-6
A. If the state or political subdivision proceeds with the action, it shall have the primary responsibility of prosecuting the action and shall not be bound by an act of the qui tam plaintiff. The qui tam plaintiff shall have the right to continue as a party to the action, subject to the limitations of this section.
B. The state or political subdivision may seek to dismiss the action for good cause notwithstanding the objections of the qui tam plaintiff if the qui tam plaintiff has been notified of the filing of the motion and the court has provided the qui tam plaintiff with an opportunity to oppose the motion and to present evidence at a hearing.
C. The state or political subdivision may settle the action with the defendant notwithstanding any objection by the qui tam plaintiff if the court determines, after a hearing providing the qui tam plaintiff an opportunity to present evidence, that the proposed settlement is fair, adequate and reasonable under all of the circumstances.
D. Upon a showing by the state or political subdivision that unrestricted participation during the course of the litigation by the qui tam plaintiff would interfere with or unduly delay the prosecution of the case, or would be repetitious, irrelevant or for the purpose of harassment, the court may, in its discretion, impose limitations on the qui tam plaintiff's participation, such as:
(4) otherwise limiting the qui tam plaintiff's participation in the litigation.
E. Upon a showing by a defendant that unrestricted participation during the course of litigation by the qui tam plaintiff would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the qui tam plaintiff in the litigation.
F. If the state or political subdivision elects not to proceed with the action, the qui tam plaintiff shall have the right to conduct the action. If the attorney general or political subdivision so requests, the qui tam plaintiff shall serve the attorney general or political subdivision with copies of all pleadings filed in the action and all deposition transcripts in the case, at the state's or political subdivision's expense. When the qui tam plaintiff proceeds with the action, the court, without limiting the status and rights of the qui tam plaintiff, may permit the attorney general or political subdivision to intervene at a later date upon a showing of good cause.
G. Whether or not the state or political subdivision proceeds with the action, upon a showing by the attorney general on behalf of the state or political subdivision, or a political subdivision on its own behalf, that certain actions of discovery by the qui tam plaintiff would interfere with an investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay such discovery for a period of not more than sixty days. The showing by the state or political subdivision shall be conducted in camera. The court may extend the sixty-day period upon a further showing in camera that the state or political subdivision has pursued the criminal or civil investigation or proceeding with reasonable diligence and any proposed discovery in the civil action will interfere with the ongoing criminal or civil investigation or proceeding.
H. Notwithstanding the provisions of Section 44-9-5 NMSA 1978, the attorney general or 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 qui tam plaintiff shall have the same rights in such a proceeding as the qui tam plaintiff 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.
History: Laws 2007, ch. 40, § 6; 2015, ch. 128, § 5.
The 2015 amendment, effective June 19, 2015, provided for the rights of a political subdivision when bringing an action pursuant to the Fraud Against Taxpayers Act; added "or political subdivision" throughout the section; in the catchline, added “or political subdivision”; in the introductory paragraph of Subsection D, after "unduly delay the", deleted "state’s"; in Subsection G, after "behalf of the state", added "or political subdivision, or a political subdivision on its own behalf", after "interfere with", deleted "the state’s" and added "an"; and in Subsection H, after "Section", deleted "5 of the Fraud Against Taxpayers Act" and added "44-9-5 NMSA 1978", and after "remedy available", deleted "to the state".
The district court was authorized to permit the attorney general to participate in the qui tam action after the attorney general initially declined to intervene. — In a qui tam action, where the district court entered a judgment that dismissed the plaintiffs' Fraud Against Taxpayers Act (FATA) claims in their entirety and also approved a settlement negotiated by the attorney general's office (AGO), and where the plaintiffs claimed that the AGO was without authority to seek dismissal of the FATA claims and approval of the settlement agreement when the AGO declined to intervene in the qui tam action, and that once the AGO declined to take over the case, plaintiffs became the sole representative of the state's interest, the district court did not err in allowing the AGO to participate in the qui tam action because § 44-9-6(F) NMSA 1978, expressly authorizes the court to permit the attorney general to intervene at a later date upon a showing of good cause. State ex rel. Foy v. Vanderbilt Capital Advisors, 2022-NMCA-026, cert. denied.
Material elements test adopted to determine a relator's right to an award in an alternate remedy proceeding. — The general rule is that a subsequent action is related, and therefore, barred from a share of the proceeds if it alleges the same material elements of fraud described in an earlier suit, regardless of whether the allegations incorporate somewhat different details. When a relator's complaint pleads sufficient facts to put the government on notice of the related fraud in the alternate remedy proceeding, the relator deserves a share of the award. When the state pursues its claim through an alternate remedy proceeding, the qui tam plaintiff has the same rights as if the action continued in the district court. Galloway v. N.M. Off. of the Superintendent of Ins., 2025-NMSC-012, vacating A-1-CA-38974, mem. op. (N.M. Ct. App. July 14, 2022) (nonprecedential).
Relator's qui tam complaint put the government on notice of related frauds uncovered during an alternate remedy proceeding. — In a qui tam action, where plaintiffs brought a declaratory judgment action against the office of superintendent of Insurance seeking a twenty percent qui tam share of $15.6 million recovered from an alternate remedy proceeding, and where the district court denied plaintiffs' recovery, finding there was insufficient overlap between plaintiffs' Fraud Against Taxpayers Act (FATA) lawsuit and the administrative recovery because plaintiffs' complaint lacked the required specificity to allow recovery of proceeds from the alternate remedy, the district court erred in denying plaintiffs' recovery, because a relator is entitled to a share of the proceeds if their FATA action put the government on notice of the related frauds uncovered during the alternate remedy proceeding, and in this case, although the attorney general joined two additional defendants and alleged five additional claims, each of the supplemental claims was against the original defendant and based on allegations from plaintiffs' FATA complaint. The record suggests a finding that plaintiffs' allegations put the State on notice of defendant's improper application of tax credits. Galloway v. N.M. Off. of the Superintendent of Ins., 2025-NMSC-012, vacating A-1-CA-38974, mem. op. (N.M. Ct. App. July 14, 2022) (nonprecedential).
Standard of proof to find "good cause" for dismissal of qui tam action. — Good cause for dismissal of a qui tam action on behalf of a political subdivision exists where the dismissal is rationally related to a legitimate government purpose, and not arbitrary, capricious, made in bad faith, based on improper or illegal motives, founded on an inadequate investigation, or pretextual. In exercising its discretion, the trial court may consider any matter relevant to the issue, including the relative merits of the action, the interest of the qui tam plaintiff, the purposes underlying the Fraud Against Taxpayers Act, and the potential waste of government resources. State ex rel. Foy v. Vanderbilt Capital Advisors, 2022-NMCA-026, cert. denied.
The district court applied an appropriate standard of proof to find "good cause" for dismissal of the qui tam action. — In a qui tam action, where the district court entered a judgment that dismissed the plaintiffs' Fraud Against Taxpayers Act (FATA) claims in their entirety and also approved a settlement negotiated by the attorney general's office (AGO), and where the plaintiffs claimed that the district court erred in dismissing the FATA claims, the district court did not abuse its discretion in dismissing plaintiffs' claims or in approving the settlement agreement where the court detailed the AGO's extensive collection efforts taken apart from the FATA claims, and the court's observations and concerns about the viability and practicality of plaintiffs' litigation strategy were well-founded. Comparing the relative success of the AGO's alternative remedies with the lack of progress and built-in difficulties with plaintiffs' efforts supports the district court's decision. The district court did not err in concluding that the AGO's request to dismiss was well-founded, in good faith, not pretextual and based on adequate investigation. State ex rel. Foy v. Vanderbilt Capital Advisors, 2022-NMCA-026, cert. denied.
Qui tam plaintiffs not entitled to full-blown discovery prior to proposed settlement approval. — Although a qui tam plaintiff is entitled to discovery on the fairness of a proposed settlement, the discovery must be limited to effectuate the goal of allowing plaintiffs a meaningful participation in the fairness hearing without unduly burdening the state or political subdivision or the defendants, or causing unnecessary delay. N.M. State Inv. Council v. Weinstein, 2016-NMCA-069, cert. denied.
Where qui tam plaintiffs, in an appeal of the district court’s approval of settlements in a qui tam action, argued that the district court denied all discovery, the district court did abuse its discretion in limiting discovery and denying plaintiffs’ broad discovery requests that were unrelated to the factors the district court considered to assess the fairness, adequacy, and reasonableness of the settlements. N.M. State Inv. Council v. Weinstein, 2016-NMCA-069, cert. denied.
Decisions in an alternate remedy proceeding dispose of claims in a qui tam action. — Where qui tam plaintiffs, in an appeal of the district court’s approval of settlements in a qui tam action, argued that the district court acted beyond its jurisdiction when, in approving the settlements, the district court released the defendants from claims in an entirely separate case, the district court did not exceed its jurisdiction because the fact that a decision in a qui tam action may have an impact on another pending proceeding does not necessarily diminish the court’s jurisdiction, and 44-9-6(H) NMSA 1978 contemplates the disposal of claims in a qui tam action by decisions rendered in an alternate proceeding. N.M. State Inv. Council v. Weinstein, 2016-NMCA-069, cert. denied.