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Lawsuit: Gag order on settlements unconstitutional

Copyright © 2019 Albuquerque Journal

An Albuquerque woman is asking a state court to throw out a state law that makes it a crime for “any person” to reveal the details of a civil settlement with a state agency before a certain time period outlined in the law has passed.

Shani Madden filed the lawsuit this week after finding out that a contract attorney for the state, in another case, claimed it was the General Services Department’s position that state law requires everyone involved in a settlement, including people not employed by the state, to abide by a 180-day gag order in state law or face criminal prosecution.

Madden and her attorney recently settled a civil lawsuit filed under the state Inspection of Public Records Act against the General Services Department for failing to respond to a request for public records she wanted in connection with her hard-fought, 7-year-old divorce case.

The department had no comment on the specifics of the lawsuit.

“Claimants in settlements with GSD’s Risk Management Division (RMD) are made aware of the state law regarding RMD records, but they aren’t threatened with criminal prosecution,” GSD Secretary Ken Ortiz said in a statement. “Neither GSD nor RMD has authority to enforce the law.”

Madden said through her attorney that she wants to be able to tell people about the IPRA settlement.

“After years of harrowing divorce litigation, I discovered a potential conflict between the judge and opposing counsel and had to sue the State to get relevant records,” Madden said in a statement. “Being prohibited from telling my story adds insult to injury and prevents me from discussing a matter of valuable public interest.”

Although the law uses the term “any person,” Ortiz said people who have made claims that are resolved in Risk Management Division settlements are not prohibited by the law from talking about their claims.

Madden’s attorney, Ken Stalter, took aim at the statute.

“This case goes to the core of the freedom of speech – shining a light on the conduct of public officials,” he said. “We are asking the court to strike down the unconstitutional law that keeps state settlements cloaked in shadow.”

In January, Madden filed an Inspection of Public Records Act request asking for billing records of certain private law firms to determine whether the judge in her divorce case might have an undisclosed conflict of interest.

Despite written assurances that the department was going to respond, Madden didn’t receive the records and subsequently filed a civil lawsuit alleging the department had violated IPRA.

According to the recent lawsuit, the department eventually produced the requested records and agreed to settle Madden’s claims for a monetary payment for failing to comply with IPRA within the time periods required by law. There was no confidentiality agreement attached to the settlement.

And the settlement didn’t make any reference to the state law making it a misdemeanor for anyone to disclose details of the settlement within the 180-day time limit mentioned in the statute.

Risk Management has taken the position that settlements are confidential for 180 days after the latest of several dates, including when a settlement is reached and when the statute of limitations for the claim has expired. In many cases, that interpretation keeps a settlement secret far longer than 180 days from when they are reached.

“While Secretary (Ken) Ortiz has committed to publishing settlements upon the expiration of the 180-day period, RMD (Risk Management Division) has taken the position that private citizens can be criminally prosecuted for revealing settlements before the expiration of the 180-day period,” Stalter said in lawsuit.

Ortiz said the department is “committed to open and transparent handling of claims by the Risk Management Division to the extent allowed by law.”

He also said the department welcomes changes to clarify the law on risk management records.

The interpretation that Madden could be subject to criminal charges for violating the confidentiality statute over the early disclosure of settlements never arose in her case but came up in settlement discussions of another case.

According to a string of emails attached to Madden’s lawsuit, a contract attorney for the department in another case said it was the department’s policy and interpretation of the state law that “anyone” revealing the contents of a settlement before expiration of the 180-day gag order could be charged with a crime.

“RMD’s position is that Section 15-7-9(C) imposes a duty on all persons, even private citizens, to maintain the confidentiality of settlement agreements … regardless of whether the claimant has agreed to confidentiality as part of the settlement,” according to the email.

The email was written by attorney Douglas Gardner, a private attorney contracted with the state Risk Management Division to represent the state.

In the email string, Gardner told an attorney representing a person with a claim against UNM, “RMD’s position is that 15-7-9(C) applies to ‘Any person who reveals records.’

“This would include Plaintiff, so far as the settlement amount and the release itself, it automatically applies and does not require Plaintiff to ‘agree’ to it, rather, they contend that they are informing Plaintiff of the consequences should she violate State statute. We can modify the language to reflect this, but we need a record that Plaintiff was informed.”

Madden’s lawsuit seeks a preliminary injunction against the state and local prosecutors from enforcing the criminal provisions of the law because it infringes on her free speech rights.

It also asks for a declaratory judgment that the law is unconstitutional under state and federal law and award Madden costs and reasonable attorney fees.

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