Jessica M. Karmasek Jun. 16, 2015, 9:30am



SANTA FE (Legal Newsline) - New Mexico Attorney General Hector Balderas is firing back at claims that his office filed and has continued to pursue a lawsuit against nursing service providers at the urging of outside counsel.




 




Balderas, who took over for Attorney General Gary King in January, defended his decision to renew the lawsuit against the Preferred Care defendants.




 




“Bilking taxpayers for inadequate care and denying helpless and vulnerable residents basic services will not be tolerated,” he said in a statement to Legal Newsline.




“Our office will continue to aggressively protect New Mexico’s taxpayers and our most vulnerable populations.”




 




The 18 defendants, who filed multiple motions to dismiss the case last month, argue the claims are “unsubstantiated” -- based on a simulation never used by health officials or adopted by the courts or health-care community -- and the result of outside counsel looking to cash in.




 




Balderas alleges that the nursing facilities have failed to provide basic services to its residents.




 




The attorney general filed his amended complaint in the New Mexico First Judicial District Court April 1. A month later, the defendants removed the case to the U.S. District Court for the District of New Mexico.




 




“(Preferred Care looked) to generate outsized revenues at the expense of the physical well-being of vulnerable nursing home residents through false representations to the state's Medicaid program,” the complaint states.




 




Balderas claims the mistreatment started on July 1, 2007 and continues to the present. The lawsuit, originally filed in 2014 by King, also contends Preferred Care limited the nursing staff on duty at the facilities, which resulted in it not providing basic care to the residents.




 




“While the intent may have been to control costs, the effect on resident care was dramatic,” the complaint states.




 




The attorney general argues the facility essentially made false claims on its state and federal assessments about the level of care it was able to provide.




 




Balderas is asking the court to require the facility to rectify the procedures, and enter a judgment against it for the services it did not perform. He also is seeking an unspecified amount in damages plus court costs.




 




But the defendants in the case contend the action was filed at the urging of Cohen Milstein & Toll, an out-of-state plaintiffs law firm known for targeting long-term care facilities.




 




Balderas denies the claim.




 




A spokesman for the attorney general said the office is heading up the lawsuit; Cohen Milstein is merely assisting.




 




“We are directing the suit,” Balderas spokesman James Hallinan said in an email. “Outside counsel takes our direction.”




 




Hallinan pointed to Balderas’ new policies on case review and outside counsel, adopted after a three-month, office-wide review of all pending litigation involving outside counsel.




 




The move was seen by many as a response to a New York Times article published in December  showing that more attorneys general are hiring private law firms to file lawsuits on behalf of their states. King was featured prominently in the article.




 




Balderas said in March that his office now will seek bids from law firms and appoint a senior staff member to oversee the litigation.




 




“Pursuant to my statutory authority and responsibilities regarding litigation on behalf of the state, this office will adhere strictly to an improved process regarding the use of outside counsel to ensure accountability and transparency,” he said at the time, adding that such cases must be “meritorious” and in the best interest of residents.




 




The attorney general has said he also is committed to making all documents pertinent to request-for-proposal processes -- including the total payment to outside counsel made by the Attorney General’s Office -- publicly available.




 




Indeed, the office promptly turned over a copy of its contract with Cohen Milstein in the Preferred Care case -- without having to file a Freedom of Information Act request.




 




It could not be found online because, as Hallinan explained, the office is still “building out” its website, including that particular section.




 




According to the 13-page contract, signed and agreed to in May 2014, the firm works and acts “at the direction of the agency.”




 




“The Contractor shall adhere to timetables established by the Agency and shall contact the Agency with regard to all settlement offers and discussions and strategy decisions,” the contract states. “The Agency will maintain control of the Litigation and will make all strategic decisions, including whether and how to proceed with litigation, where to file, which claims to advance, which defendants to sue, what relief to seek, and whether and on what terms to settle.”




 




Under the contract, the firm is required to meet, coordinate with and submit interim reports to the Attorney General’s Office on a regular basis and as requested.




 




Also, as required under the contract, at least one point of contact -- designated by the office -- supervises the litigation.




 




As for compensation, the firm only will be paid for services rendered upon the “successful recovery” of restitution, damages and penalties for the state.




 




Only then can the firm petition the court for its contractor fees -- and reasonable costs and expenses they advanced. The money will be awarded to the firm by the court from the funds paid by the defendants.




 




The agreement is scheduled to terminate April 1, 2018.




 




Since 2010, Cohen Milstein has donated $71,000 to 16 different state attorneys general campaigns, according to a recent search of FollowTheMoney.org. Of those candidates, 13 would go on to win their state’s general election.




 




Some of the firm’s largest donations went to: Missouri Attorney General Chris Koster, $5,000; Oregon Attorney General Ellen Rosenblum, $10,000; Pennsylvania Attorney General Kathleen Kane, $10,000; and Balderas, $5,000.




 




Despite the firm’s donation -- and additional, substantial donations from individual firm attorneys -- Balderas maintains he is committed to “greater transparency” in appointing outside counsel.




 




Still, the defendants in the Preferred Care case call the State’s action a “text book case” of lawyers depositing money in the campaign coffers of attorneys general and then pushing them to file questionable claims against in-state businesses.




 




“It’s an egregious display of greed and opportunism that moved one former attorney general of Massachusetts to say it ‘threatens the perception of integrity and professionalism of the office’… of the attorney general,” said Mike Gavin, president of Preferred Care Partners Management Group.




 




From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.


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