State ex rel. King v. Advantageous Cmty. Servs., LLC

I attest to the accuracy and
integrity of this document
New Mexico Compilation
Commission, Santa Fe, NM
'00'04- 10:42:42 2014.07.28
IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 2014-NMCA-076Filing Date: April 28, 2014
Docket No. 31,782
STATE OF NEW MEXICO, ex rel.
GARY KING, ATTORNEY GENERAL,
Plaintiff-Appellant,
v.
ADVANTAGEOUS COMMUNITY
SERVICES, LLC, a New Mexico
limited liability company,
Defendant-Appellee.
APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY
Valerie A. Huling, District Judge
Gary K. King, Attorney General
Santa Fe, NM
Amy Landau, Assistant Attorney General
Albuquerque, NM
for Appellant
Lewis and Roca LLP
Jason C. Bousliman
Albuquerque, NM
for Appellee
OPINION
VIGIL, Judge.
{1} The district court dismissed the State’s medicaid fraud claims against Defendant
Advantageous Community Services, LLC, doing business as Imagine, LLC, (Imagine) after
the State’s investigator procured a false and fictitious document relating to a central issue
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in the case. The investigator provided the document to the State’s lawyer without disclosing
that the document was false, and the lawyer then used it in a deposition of Imagine’s owner
and corporate representative. Concluding that the district court did not abuse its discretion,
we affirm.
I. BACKGROUND
{2} Imagine contracts with individual caregivers to provide home-based healthcare
services to Medicaid recipients through the Medicaid Developmental Disabilities Waiver
Program. New Mexico Department of Health (DOH) regulations require home-based
healthcare providers like Imagine to submit criminal history screening applications to DOH
for each of its caregivers. Once the criminal application is submitted, DOH then conducts
a state and nationwide criminal background check. Upon completion of the background
check, DOH sends a “clearance letter” stating whether a caregiver has any reported
disqualifying convictions. In its suit the State alleges that Imagine knowingly submitted bills
for services provided by six caregivers whose criminal histories did not meet the screening
requirements and that, therefore, Imagine violated the the Medicaid Fraud Act, NMSA 1978,
§§ 30-44-1 to -8 (1989, as amended through 2004). According to the State, the Medicaid
payments Imagine received from the State and paid to the six caregivers constituted
overpayments, which the State had a right to recoup as damages, in addition to civil
penalties.
{3} The State compared the date on the clearance letter for each of the six caregivers to
the date each caregiver was hired to support its claims that caregivers were providing
services that were billed to Medicaid before DOH confirmed that they had a clear criminal
history. Thus, the clearance letter issued for each caregiver is critical to the State’s theory
of liability. On the other hand, Imagine contends that DOH regulations permit caregivers to
work under conditional supervised employment while DOH conducts the screening and that
the regulations only require that criminal history screening applications be submitted for
each caregiver within the first twenty days of employment. Therefore, according to Imagine,
the dates Imagine submitted the criminal history screening applications and/or whether
applications were submitted at all would have been relevant to whether any violations
occurred, not the date on the clearance letters marking completion of the screening process.
{4} The Assistant Attorney General (the AAG) prosecuting the case asked an investigator
for the Attorney General’s Office (the investigator) working in the medicaid fraud unit to
prepare packets of documents relating to each of the six caregivers to be used at the
deposition of Dr. Arminder Kaur, the owner and corporate representative of Imagine. She
specifically asked the investigator to include a copy of the clearance letter from DOH for
each caregiver to be included in the packet. However, the investigator was unable to locate
copies of the actual clearance letters Imagine had previously produced for two of the
caregivers, so he called Walter Rodas at DOH to see if DOH had copies. Mr. Rodas told the
investigator that DOH did not keep hard copies of the letters on file, so the investigator
asked Mr. Rodas to “reprint” copies of the 2006 clearance letters from its electronic data
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base.
{5} Mr. Rodas told the investigator that it would not be possible to reprint accurate
copies of the letters because the computer system had updated several fields in the clearance
letter template. The investigator nevertheless told Mr. Rodas to go ahead and print the letters
with the updated data. Mr. Rodas faxed the letters to the investigator with a cover sheet
stating,
Per your request, attached find copies of the clearance letters for [the two
caregivers]. These letter[s] were issued for Imagine back in 2006. In addition
to the discrepancies I mentioned to you already over the phone, our letter
template pulls information current on our system. That is why the letters are
issued and addressed to Melissa McCue, but she may have not been the
contact person at Imagine back then. Also, the letters are signed by Gil
Mendoza, but he was not the manager of this department in 2006; nor was
Ms. Martinez the governor at that time either. Unfortunately, we do not have
access to the original letters any longer and this is the best I can do to assist
you from our computer records.
The investigator put the false letter in the packet for each caregiver and delivered the packets
to the AAG. However, he left the fax cover sheet explaining that the letters were not
authentic copies on his desk, and he did not tell the AAG that he had been unable to locate
copies of the actual clearance letters that were sent to Imagine.
{6} One of the created letters is attached to this Opinion as Appendix 1, and a copy of
the actual clearance letter sent to Imagine in 2006 for the same employee is attached to this
Opinion as Appendix 2. Though the dates of the two letters are the same, and the “Control
No.” for the employee match, the letters are obviously otherwise very different.
{7} At Dr. Kaur’s deposition she testified that, as far as she knew, Imagine was in
compliance with the criminal history screening requirements at the time of the alleged
violations. Her former business partner’s son, Karan Sangha, and former employee, Diane
Nunn, were in charge of ensuring compliance with the criminal history screening
requirements, and they had assured her that Imagine was at all times in compliance. Dr. Kaur
added that Karan Sangha and Diane Nunn later left to form their own home healthcare
business, taking with them the documentary evidence of Imagine’s compliance. After they
left, Melissa McCue, another employee at Imagine, took over the caregiver criminal history
compliance duties. When presented with Exhibit 15 (Appendix 1) and asked why it was
addressed to Melissa McCue in October of 2006, Dr. Kaur’s reaction was surprise. A
clearance letter sent to Imagine in 2006 should have been addressed to Karan Sangha, and
Exhibit 15 also had Imagine’s new office address rather than the address it had in 2006.
{8} Imagine filed a motion for sanctions against the State for using a fabricated document
at the deposition, as well as a motion for summary judgment on the merits. The district court
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held an evidentiary hearing to address the motion for sanctions at which the foregoing facts
were developed. The AAG also answered questions posed by the district court, denying that
she knew the letter was false when she utilized it in the deposition and admitting she did not
observe the discrepancy of the incorrect governor on the letterhead.
{9} The district court then filed detailed findings of fact and conclusions of law. In
pertinent part, the district court made findings of fact that Exhibit 15 is a purported letter
from DOH to Imagine, care of Melissa McCue, but it is a false document, and was created
by the State for this litigation. Specifically, the text of the letter, the addressee, and the
signature line are inaccurate. Further, the district court found, while the investigator was told
that Exhibit 15 is not a true and correct copy of the original document, the investigator did
not disclose that information to the AAG, and the AAG failed to observe the obvious
discrepancy in the document that Susana Martinez was not the Governor in 2006, which
would have alerted her that it could not be an accurate copy of a 2006 document. The district
court added that the investigator knew the document was false and that it was going to be
used at Dr. Kaur’s deposition, but he did not disclose his knowledge to the AAG, who then
attempted to impeach Dr. Kaur with the document. Importantly, the district court also found
that, “[c]onsidering his position as an investigator for the Attorney General’s Office, [the
investigator]’s testimony that he did not believe the information was important is not
credible.”
{10} All of the investigator’s actions were done in the course and scope of his employment
with the Attorney General’s Office of the State of New Mexico. Moreover, the district court
found, “[c]onsidering the immense power of the Attorney General’s Office, the public must
be able to rely on the truth of documents produced in litigation by the Attorney General’s
office, its attorneys and investigators” and that “[a]n investigator allowing an assistant
attorney general to utilize a document known to be false in discovery is an egregious offense
subject to sanctions.”
{11} The district court accordingly concluded as a matter of law that “[d]ismissal of the
Complaint is warranted as a sanction considering the egregious nature of the actions of the
State’s investigator.” The district court also concluded that Imagine’s motion for summary
judgment should be granted. A formal order was entered dismissing the case with prejudice,
and the State appeals. Because we affirm dismissal of the case as a sanction, we do not
discuss the State’s argument that the court erred in granting summary judgment.
II. DISCUSSION
A. Authority of the District Court to Dismiss as a Sanction
{12} Since at least 1939, our courts have asserted an inherent power, independent of any
statute or rule, to regulate the proceedings before them, which includes imposing sanctions
when appropriate. See City of Roswell v. Holmes, 1939-NMSC-062, ¶ 6, 44 N.M. 1, 96 P.2d
701 (“[I]t is an inherent right of the courts and therefore one existing independently of any
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statute to dismiss a suit for failure to prosecute it with diligence.”). This authority stems from
“‘the control necessarily vested in courts to manage their own affairs so as to achieve the
orderly and expeditious disposition of cases.’” Beverly v. Conquistadores, Inc., 1975-
NMCA-070, ¶ 6, 88 N.M. 119, 537 P.2d 1015 (quoting Link v. Wabash R.R. Co., 370 U.S.
626, 630-31 (1962)).
{13} In State ex rel. New Mexico Highway & Transportation Department v. Baca, 1995-
NMSC-033, 120 N.M. 1, 896 P.2d 1148, our Supreme Court declared that “a court’s inherent
power is at the core of judicial authority,” and reaffirmed that courts in New Mexico possess
“inherent power to impose a variety of sanctions on both litigants and attorneys in order to
regulate their docket, promote judicial efficiency, and deter frivolous filings.” Id. ¶¶ 11, 20
(internal quotation marks and citations omitted); see Lujan v. City of Albuquerque, 2003-
NMCA-104, ¶ 10, 134 N.M. 207, 75 P.3d 423 (stating the general proposition that courts
have “authority to dismiss claims with prejudice for a party’s failure to . . . comply with
procedural rules or court orders”). Therefore, our Supreme Court concluded in Baca, a New
Mexico court has inherent authority, independent of any statute or rule, to award attorney
fees “in order to vindicate its judicial authority and compensate the prevailing party for
expenses incurred as a result of frivolous or vexatious litigation.” 1995-NMSC-033, ¶ 12.
{14} Historically, sanctions have been imposed most often in the context of misconduct
associated with discovery. Dismissal of a complaint with prejudice was held to be warranted
when a party willfully refused to obey a direct court order to supply the name of a witness.
Beverly, 1975-NMCA-070, ¶¶ 7, 16. In addition, a default judgment against a party was
upheld when a party failed to provide discovery “due to the willfulness, bad faith or fault of
the disobedient party.” United Nuclear Corp. v. Gen. Atomic Co., 1980-NMSC-094, ¶ 202,
96 N.M. 155, 629 P.2d 231. In this context, our Supreme Court has declared that
“willfulness” means “any conscious or intentional failure to comply therewith, as
distinguished from accidental or involuntary non-compliance, and no wrongful intent need
be shown to make such a failure willful.” Id. ¶ 203 (alteration, internal quotation marks, and
citations omitted); see Reed v. Furr’s Supermarkets, Inc., 2000-NMCA-091, ¶ 9, 129 N.M.
639, 11 P.3d 603 (discussing the requirements to justify dismissal as an appropriate
sanction); Gonzales v. Surgidev Corp., 1995-NMSC-047, ¶ 31, 120 N.M. 151, 899 P.2d 594(stating that failure to comply with a court order only provides grounds for dismissal if the
failure was due to willfulness, bad faith, or fault of the disobedient party); Medina v. Found.
Reserve Ins. Co., 1994-NMSC-016, ¶ 6, 117 N.M. 163, 870 P.2d 125 (stating that a finding
of “willfulness” may be based on a “gross indifference to discovery obligations”).
{15} Deception or reliance in fact by the other party is not a prerequisite to dismissal, and
“the ultimate importance of the false or deceptive information” is not a requirement for
dismissal. Medina, 1994-NMSC-016, ¶ 9. In Reed, we applied Medina and concluded that
dismissal as a sanction for discovery abuse does not require: “(1) that the party seeking
dismissal be deceived in fact or that the party relied on the misrepresentations; (2) that the
information misrepresented be critical to preparation for trial; and (3) that dismissal be
preconditioned upon the ultimate importance of the false or deceptive information.” Reed,
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2000-NMCA-091, ¶ 28 (internal quotation marks and citation omitted).
{16} Importantly, our Supreme Court has held that attorney fees may be imposed against
the State when it is a party because other considerations, such as the depletion of public
revenues and the punishment of innocent taxpayers, “must be subordinate to a court’s
authority to control the parties and the litigation before it.” Baca, 1995-NMSC-033, ¶ 25.
Thus, in Harrison v. Board of Regents, we stated, “a court’s inherent authority extends to
all conduct before the court and to all parties appearing before the court, regardless of the
party’s status as a private litigant or as a governmental/public entity.” 2013-NMCA-105,
¶ 16, 311 P.3d 1236, cert. granted, 2013-NMCERT-010, 313 P.3d 251. We therefore
concluded that the district court in that case had inherent authority to impose a non-
compensatory, punitive sanction against the board of regents, notwithstanding that it is a
public entity. Id. ¶ 27.
{17} From what we have said, it is apparent that the district court had inherent authority
to dismiss the State’s complaint with prejudice. We now turn to whether the district court
properly did so.
B. Standard of Review
{18} We review a district court’s dismissal of a complaint for engaging in abusive
litigation practices for an abuse of discretion. See id. ¶ 14 (“We generally review a district
court’s imposition of sanctions under its inherent power for an abuse of discretion.); Reed,
2000-NMCA-091, ¶ 10 (stating that we review dismissal of a complaint as a sanction for an
abuse of discretion); see also Baca, 1995-NMSC-033, ¶¶ 11-12 (applying an abuse of
discretion standard to review a district court’s imposition of sanctions under its inherent
power); State v. Candelaria, 2008-NMCA-120, ¶ 12, 144 N.M. 797, 192 P.3d 792(reviewing the sanction of dismissal of a criminal case by a trial court under its inherent
power for an abuse of discretion).
{19} Under the abuse of discretion standard of review, we do not determine whether we,
as a reviewing court, would have arrived at the same result as the district court. See United
Nuclear Corp., 1980-NMSC-094, ¶ 385; Emerick v. Fenick Indus., Inc., 539 F.2d 1379, 1381
(5th Cir. 1976); see also Candelaria, 2008-NMCA-120, ¶ 12 (stating that appellate review
of trial court’s discretion does not turn on whether the appellate court would have arrived
at the same result). Rather, we only determine “whether the trial court’s decision is without
logic or reason, or clearly unable to be defended.” Enriquez v. Cochran, 1998-NMCA-157,
¶ 20, 126 N.M. 196, 967 P.2d 1136. Moreover, “[b]ecause the trial court’s decision must be
based on its conclusions about a party’s conduct and intent, implicit in the standard of review
is the question of whether the court’s findings and decision are supported by substantial
evidence.” Id.; see Reed, 2000-NMCA-091, ¶¶ 24-25 (stating that in a hearing on a motion
for discovery abuse sanctions, the district court sits as a fact finder). Thus, we review the
evidence, and its inferences, in the light most favorable to the district court’s decision. See
Candelaria, 2008-NMCA-120, ¶ 12.
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C. Analysis
{20} On appeal, the State first contends that the created letters are not “false.” The State
attempts to minimize the obvious differences between the created letters and actual letters
by asserting that the letterhead, addressee, signatory, and body of the letters are not “critical”
fields. According to the State, the “critical” fields on the created letter relate to the caregiver:
the name of the provider, the provider number, and the date of clearance. The State asserts
that these fields remained the same in the 2006 copy and the 2011 “printout,” that the
information in the created letter was independently verifiable by Imagine through the online
registry system, and that none of the updated fields in the letters “contained evidence
relevant to the State’s claims.”
{21} The State also argues that dismissal was an inappropriate sanction because its actions
were not “willful.” The State blames DOH’s failure to keep copies of the 2006 letters and
its computer limitations for its “mistake,” asserting that the criminal history screening
program’s “inherent computer limitations and inability to ‘reprint’ exact copies of the
original two 2006 [criminal history] clearance letters sent to Imagine” caused the
“inadvertent error.” The State asserts that “there was no testimony to support Imagine’s
contentions that [the investigator] intentionally fabricated and/or falsified [the letters]”
blaming his lack of law office experience and training in evidence for causing the
“inadvertent error.”
{22} We reject these arguments as contrary to the findings of fact made by the district
court. The created letters were falsely represented as accurate copies of actual clearance
letters sent to Imagine in 2006. A cursory visual inspection of the documents quickly
discloses that they are not even close to being similar. Arguments about “critical” fields do
not, and cannot, alter the undisputed fact that the State created, presented, and used a false
document at the deposition of Dr. Kaur, the owner and corporate representative of Imagine,
the defendant it was suing.1 The State fails to appreciate that DOH’s computer system
limitations are not the issue. Rather, the issue is the consequence of the investigator
instructing DOH to create the false documents, and knowing they were false, giving them
to the AAG to use in the deposition without telling the AAG why or how the false document
was created. The immediate consequence to Dr. Kaur was that after she testified in her
deposition that former employees Karan Sangha and Diane Nunn were in charge of criminal
history screening requirements for Imagine in 2006, she was confronted with one of the
created documents and asked why it was addressed to someone else. The State seemingly
overlooks the district court’s explicit finding of fact that the investigator’s testimony that he
thought the information about the falsity of the letters was “not important” was “not
credible,” considering his position as an investigator for the Attorney General’s Office. This
1
The State does not contest the district court’s conclusion of law that the
investigator’s actions were performed in the course and scope of his employment with the
Attorney General’s office.
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finding is more than ample support to conclude that his actions were “willful.”
{23} Finally, the State argues that Imagine was not entitled to a dismissal because the false
exhibit “did not prejudice Imagine and/or adversely impact its ability to prepare for, and
present its case at trial.” This argument of a lack of prejudice overlooks our precedent. See
Medina, 1994-NMSC-016, ¶ 9 (stating that deception or reliance in fact by the other party
is not a prerequisite to dismissal, and “the ultimate importance of the false or deceptive
information” is not a requirement for dismissal); Reed, 2000-NMCA-091, ¶ 19-20 (stating
that dismissal as a sanction does not require that the other party be deceived in fact, that the
information be critical to preparation for trial, or that dismissal be conditioned on the
ultimate importance of the false or deceptive information).
{24} Moreover, if we were to accept the State’s argument of no prejudice, a district court
would be powerless to dismiss a case for misconduct during the pretrial discovery phase of
a case. And that is clearly contrary to our well-settled precedent, which we have already
pointed out, allows for sanctions, including dismissal with prejudice, for misconduct in
discovery. Moreover, our Supreme Court has pointed out, “It would be ridiculous to allow
a party who completely thwarts discovery to escape penalty simply because it could not be
proven that other litigants were in fact deceived by such misconduct or actually relied upon
it.” Medina, 1994-NMSC-016, ¶ 9.
{25} Finally, the State’s argument overlooks what took place here. Preservation of the
integrity of the judicial process is crucial to ensuring that our courts can properly perform
their constitutional duty. When conduct perverts the very process used by courts for
ascertaining the truth, the core reason for their very existence evaporates. The constitutional
integrity of our courts demands that no party may fabricate “evidence,” represent it to be
something which it is not, and then use it in connection with a judicial proceeding. When this
occurs, the entire judicial system is “prejudiced,” and dismissal with prejudice is warranted.
See United Nuclear Corp., 1980-NMSC-094, ¶ 397 (stating that the interest protected when
a party has displayed a willful, bad faith approach to discovery is “to preserve the integrity
of the judicial process and the due process rights of the other litigants”); Harrison, 2013-
NMCA-105, ¶ 24 (“The policy behind a district court’s inherent authority is the need to
prevent abusive litigation practice and preserve the integrity of the judicial process.”); Reed,
2000-NMCA-091, ¶ 9 (‘“When a party has displayed a willful, bad faith approach to
discovery, it is not only proper, but imperative, that severe sanctions be imposed to preserve
the integrity of the judicial process and the due process rights of the other litigants.’”
(quoting United Nuclear Corp., 1980-NMSC-094, ¶ 397)); Sandoval v. Martinez, 1989-
NMCA-042, ¶ 21, 109 N.M. 5, 780 P.2d 1152 (“[A] false response to a discovery request,
unlike other violations of the discovery rules, is a clandestine violation” and that “[i]t is not
enough to say that such a party will gain no advantage if the lie is uncovered.”).2 Such
2
Other courts confronted with similar circumstances have reached the same result.
In Vargas v. Peltz, 901 F. Supp. 1572, 1574-75, 1581 (S.D. Fl. 1995), the court utilized its
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misconduct is so egregious that even a single instance warrants dismissal. Beverly, 1975-
NMCA-070, ¶ 15 (“The fact that persistent misconduct provides the basis for dismissal does
not mean that one instance of misconduct may not be sufficiently extreme to warrant
dismissal.”).
{26} We acknowledge that dismissal with prejudice is a severe sanction. However, the
district court was presented with severe misconduct, prejudicial to the administration of
justice. The circumstances are ironic in that the State was prosecuting a claim of fraud using
created, false documents to do so. Under the circumstances, we cannot conclude that the
district court abused its discretion in imposing the sanction of dismissal with prejudice.
CONCLUSION
{27} The order of the district court dismissing the State’s complaint with prejudice is
affirmed.
{28} IT IS SO ORDERED.
____________________________________
MICHAEL E. VIGIL, Judge
I CONCUR:
“firmly established” inherent power to dismiss the plaintiff’s sexual harassment claim
against the defendant when she produced panties to corroborate her substantive claim, and
it was learned they were not even manufactured at the time of the alleged harassment. In
doing so, the court referred to and relied upon Chambers v. NASCO, Inc., 501 U.S. 32, 46-48
(1991) (stating that the inherent power of federal courts to impose sanctions extends to a full
range of litigation abuses). See Pope v. Fed. Express Corp., 138 F.R.D. 675, 677, 683 (W.D.
Mo.1990), aff’d in part, 974 F.2d 982 (8th Cir. 1992) (stating that the plaintiff's action for
sexual harassment was dismissed where the plaintiff manufactured an alleged note
containing improper remarks from her supervisor); Aoude v. Mobil Oil Corp., 892 F.2d 1115,
1118 (1st Cir. 1989) (stating that the cause of action was dismissed for “fraud on the court”
where the plaintiff attached a bogus agreement to the complaint); TeleVideo Sys., Inc. v.
Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (per curiam) (stating that a default was
entered where the defendant engaged in an elaborate scheme involving perjury designed to
willfully deceive the court); Sun World, Inc. v. Lizarazu Olivarria, 144 F.R.D. 384, 389-90
(E.D. Cal. 1992) (stating that default judgment was appropriate where the plaintiff submitted
a false document and committed perjury in furtherance of fraud); Eppes v. Snowden, 656 F.
Supp. 1267, 1279 (E.D. Ky. 1986) (stating that the defendant’s answer and counterclaim
were stricken where the defendant committed “fraud on the court” by producing backdated
letters).
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____________________________________
LINDA M. VANZI, Judge
MICHAEL D. BUSTAMANTE (specially concurring).
Bustamante, Judge (specially concurring).
{29} I concur in the Majority Opinion and most of its rationale. I agree, for example, that
the State should bear the consequences of the remarkably obtuse actions of its investigator
in not informing the attorney in the case that the letters he included in the package were not
exact duplicates of the letters issued in 2006. The State’s arguments trying to minimize the
investigator’s fault for what he did fly in the face of the record and the district court’s
finding of fact.
{30} I write separately only because the Majority Opinion does not adequately address the
State’s argument that dismissal is too harsh a sanction absent a showing of prejudice to
Imagine. The Majority Opinion provides a partial response in ¶ 23, citing Medina and Reed
for the proposition that actual deception and reliance need not be demonstrated in order to
affirm dismissal as a sanction. I agree with the proposition, but the question of prejudice
here makes the outcome a close thing and in my view merits more detailed scrutiny. The
notions of actual deception and reliance are relevant to the question of prejudice, but do not
necessarily displace the concerns inherent in the prejudice analysis. Reed, after all, noted
that “[n]onetheless, prejudice may be a factor for the district court to consider when
evaluating the propriety of dismissal for discovery abuse.” Reed, 2000-NMCA-091, ¶ 28.
Reed also noted that “the non-deceiving party must show that the misrepresentations were
significant to the discovery process.” Id. ¶ 29. I also believe that consideration of prejudice
is the better practice in cases such as this because it prompts a broader review of the
circumstances surrounding the events and the district court’s decision. This broader review
would be of aid in assessing whether the offending party’s acts suffice to meet the level of
extraordinariness we look for when the ultimate sanction of dismissal has been imposed. It
would seem particularly appropriate in cases such as this where a single incident led to the
sanction.
{31} The State relies heavily on criminal cases discussing appropriate considerations for
sanctions when the prosecutor has lost, destroyed, or withheld evidence. See State v.
Harper, 2011-NMSC-044, ¶ 19, 150 N.M. 745, 266 P.3d 25; State v. Bartlett, 1990-NMCA-
024, ¶ 4, 109 N.M. 679, 789 P.2d 627. These cases are not helpful here if only because of
the very different considerations inherent in the criminal law.
{32} The State also relies on a civil prelitigation spoliation case which makes clear that
prejudice to the opposing party should be considered when evaluating whether dismissal as
a sanction is warranted. See Rest. Mgmt. Co. v. Kidde-Fenwal, Inc., 1999-NMCA-101, ¶ 13,
127 N.M. 708, 986 P.2d 504. Though this case involved prelitigation destruction of
evidence, its analytical framework was grounded in the inherent authority of the courts to
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regulate their dockets, promote judicial efficiency, and deter frivolous claims. Id. ¶¶ 11, 12.
Thus, the rationale underlying the existence and exercise of inherent powers—the necessity
to be able to command the obedience of litigants and their attorneys in order to protect the
integrity of the litigation process—has been applied to both prelitigation and litigation-based
conduct. As such, consideration of prejudice to the non-offending party is also appropriate
here.
{33} As suggested by Kidde-Fenwal, the State organizes its prejudice argument around
the relevance of the evidence to the cause of action in the case and the effect the “created”
documents might have on Imagine’s ability to prepare and present its case. Id. ¶ 15. As
noted in ¶¶ 2 and 3 of the Majority Opinion, the State and Imagine disagreed about when a
caregiver could be hired and paid. The State maintained that caregivers could not be paid
until they had cleared their criminal background screening. Imagine asserted that caregivers
could be hired and paid pending completion of the screening process. Thus, for the State’s
purpose, the most salient information on the falsely reproduced letters was the identity of the
caregiver and the date the approved screening issued. There is no issue that these “critical
fields”—as the State terms them—were accurate.
{34} Based on the fact that the “critical fields” information was accurate, the State argues
with some force that there could be no effect on Imagine’s defense in any event. The State
also asserts that once the error was discovered it agreed that the false letters would not be
used for any purpose; thus there could be no prejudice shown. Viewed in isolation these
arguments could be persuasive.
{35} But prejudice is not a controlling factor. Courts should also consider the degree of
fault of the offending party. Id. ¶ 14. The district court clearly found great fault in the
actions of the investigator. Courts should balance the degree of fault against the magnitude
of prejudice in designing a sanction. Id. ¶ 17. If the reasonably potential effect of the
offending party’s action on the administration of justice is severe enough, the court can opt
for the severest sanction to deter such conduct by others in the future. Id.
{36} I construe the district court’s decision as a judgment by it that the creation and use
made of the false, recreated letters was simply not to be tolerated. Given the “immense
power” of the Attorney General and its position as the attorney for the State of New Mexico,
I cannot disagree with the district court’s conclusion. I conclude that this is one of those
cases in which the degree of fault can fairly trump a showing of relatively minimal prejudice.
______________________________________
MICHAEL D. BUSTAMANTE, Judge
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