NM Sunshine Portal keeps public in the dark as big state payouts go unreported

The New Mexico Sunshine Portal has been keeping the public in the dark about certain high-dollar state settlements of legal cases involving the alleged abuse or death of minors and disabled adults, according to a new legislative report.

Last year alone, more than $3 million in out-of-court settlements paid by the state went unreported by the portal, which says it's the "official transparency and accountability portal for New Mexico state government."

The recent evaluation by Legislative Finance Committee staff found the portal has routinely failed to report millions of dollars in payouts. Some of the highest-cost settlements involving, for instance, "those around child death or abuse at the Children, Youth and Families Department never reach the Legislature." Or the public, evaluators found.

A top state official told lawmakers such monetary settlements aren't posted out of "concern" for the victims.

The LFC report says the practice has deprived the public and the state Legislature from getting the full picture of the financial and legal consequences of state settlements, the report states.

Moreover, though the portal reporting is voluntary, the state Risk Management Division is legally required to report every settlement from the state public liability fund over $1,000 to the Legislature every year. But that hasn't happened since 2020, when settlements from 2019 were provided.

"The consequence of this non-reporting is that the Legislature is ill-equipped" to even ask for basic information about what processes or operations spurred the settlement or to find out how the agency plans to avoid repeating those mistakes, states the LFC program evaluation of the Risk Management Division, which provides insurance coverage and legal defense for state agencies and some New Mexico public entities.

With transparency, "There's a strong incentive for loss prevention and loss mitigation that agencies feel when they know settlements are going to end up in the newspaper. And that incentive is lost if settlements stay buried," said LFC program evaluation manager Micaela Fischer told legislative committee members on Sept. 29. She said the practice has "kept some really high-dollar settlements out of the public view."

For instance, the Sunshine Portal didn't report a $1.5 million settlement in 2022 in a case of severe abuse experienced by a brother and sister in state foster care.

Also unreported was a $985,000 settlement in 2022 of a lawsuit filed on behalf of two brothers allegedly sexually abused in their Bernalillo County foster home and a $400,000 settlement paid to the estate of a 2-year-old foster child who was returned to his mother and died a few months later from abuse-related injuries, stated the evaluation.

"This is a sample from just last year. There are many more out there," Fischer said.

The incoming administration of Gov. Michelle Lujan Grisham set up the portal in 2019 in response to concerns about undisclosed state payouts worth millions of dollars to resolve claims of discrimination and retaliation against state public safety department officials and other state personnel under the administration of former Gov. Susana Martinez.

The Sunshine Portal provides limited information about legal settlements, including the state agency involved, the settlement amount, the claimant, the date the case was settled, and general documentation about the terms. The portal also provides information about budgets, purchases and employee salaries.

Lujan Grisham's administration, in another effort to increase transparency, also backed legislation in 2019 that eliminated a prior 180-day confidentiality period on records of legal settlements paid by the state.

General Services Department Secretary Robert E. Doucette Jr., told the Legislative Finance Committee on Sept. 29 that his agency, which oversees the state Risk Management Division, decided against posting certain settlements "out of concern for the children and disabled."

There's no mention on the portal that such settlements are excluded. And Doucette didn't attribute the practice to any legal requirement to do so.

Lawsuits filed against the state typically do not reveal the names of the children or disabled adults allegedly harmed by the state. Settlement documents don't either. Typically, such lawsuits are filed by personal representatives on behalf of the injured or deceased person. Victims are usually identified in court records by initials or pseudonyms.

Some ongoing costs also unreported

Also going publicly unreported are the ongoing costs of some settlements, such as the recent Kevin S. settlement signed in 2020 that aims to improve the treatment of children in state custody. The total cost to date of that settlement has grown to $7.3 million, the LFC evaluation stated.

"Though infrequent, settlement cases against the state can have ongoing costs, and without more transparent reporting, the full view of these costs is lost," the evaluation stated.

The state's liability fund pays the ongoing cost of the Kevin S. settlement, not CYFD. Though the settlement agreement included $2.4 million for the fees and costs of attorneys who sued CYFD, the additional costs have primarily paid three so-called "co-neutral" experts appointed to evaluate the state's progress in meeting the targets set out in the agreement.

Under that settlement, the experts can hire staff and consultants, and the state is responsible for paying those costs. Their duties end when they certify the state has reached each of the targets for a continuous 24 months. That hasn't happened yet, and most recently, the co-neutrals released a scathing letter concluding that the CYFD system had gone from a "crisis" last year to a "state of chaos" this year.

The costs incurred as a result of the Kevin S. settlement are eventually incorporated into the premiums CYFD must pay to the Risk Management Division, but the evaluation states that "CYFD is essentially buffered from experiencing those costs, so long as the Legislature appropriates enough funding to cover the rate increases."

"In other states, these settlements aren't quite as hidden because the authority to approve them doesn't just lie with Risk Management or their equivalent, like it does in New Mexico," Fischer told lawmakers.

In Utah, for example, "they have escalating levels of approval needed for payouts over $500,000," she said, adding that settlements over $1.5 million require legislative approval.

Moreover, the state isn't doing enough to help keep large settlements and other claims costs from occurring, the evaluation stated. For instance, there's no formal or centralized loss prevention activity occurring, and the state hasn't outlined steps for remediating or preventing future losses after a claim or settlement has been reached.

One recommendation from the LFC evaluators is that the Legislature require approval by the state Attorney General, or state Department of Finance before settling cases for more than $500,000. Lawmakers should also update state law to mirror Washington state's requirement that agencies investigate and report significant losses.

A Risk Management response to the evaluation stated that it will consider the merits of the LFC recommendations. The division has been without a director for more than two years but expects to hire a director for the job this month, Doucette told the committee.