What is covered under the Fraud Against Taxpayers Act?

By Brian Egolf

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Fraud Against Taxpayer's Act

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Last Modified on May 05, 2025

Fraud is a crime that involves lying or misrepresentation for financial gain. Those accused of fraudulent financial activity may face either federal or state prosecution. The Federal False Claims Act is relatively similar to New Mexico’s Fraud Against Taxpayers Act.

The Fraud Against Taxpayers Act expands on a prior New Mexico State Statute called the Medicaid False Claims Act. Both of these laws make it illegal for individuals or businesses to submit fraudulent financial claims to the government. These rules apply to Medicaid and to any other state-funded programs.

What exactly does the Fraud Against Taxpayers Act establish?

It creates financial penalties for fraud

Those accused of making fraudulent claims to government agencies or against government insurance programs will likely face financial penalties if the matter goes to court. However, bringing such matters to light can be a challenge. Therefore, the Fraud Against Taxpayers Act specifically protects individuals who work for organizations that engage in fraudulent activity. The law creates a qui tam lawsuit system. A qui tam lawsuit is a legal action technically brought on behalf of another party.

In the context of the Fraud Against Taxpayers Act in New Mexico, the lawsuit would come from an employee who serves as a relator. They would gather evidence and file a lawsuit on behalf of the New Mexico state government against the company making fraudulent claims.

It protects workers who speak up

If the state government takes over the lawsuit and pursues litigation, the person who initiated the lawsuit could receive between 15 and 25% of what the government recovers as a reward for their efforts. If they continue the lawsuit without government support, that amount may increase to between 25 and 30%. The law also extends protection against retaliation to those employees. Their employers should not fire them or take other punitive workplace actions because they have spoken up about the fraud that they witnessed.

Effectively, workers should be able to take action to address billing fraud without putting their future income or employment at risk. Workers at healthcare offices, for example, may learn that sometimes their employer bills for appointments that don’t take place or overcharges, possibly by changing the billing codes or separating typically discounted services to bill for them separately at higher amounts.

When successful, these qui tam lawsuits can change company practices and reduce the impact of fraud on taxpayers. The workers who make use of these rules usually benefit from legal guidance when developing their cases and preparing to go to court.

About the author: Brian Egolf

Partner at Egolf + Ferlic + Martinez, LLC

Brian Egolf is a Partner at Egolf + Ferlic + Martinez, LLC in Santa Fe, New Mexico. He represents clients in personal injury, medical malpractice, wrongful death, whistleblower, and complex civil litigation matters. He is admitted to practice in New Mexico and before the U.S. District Court for the District of New Mexico. Brian earned his J.D., magna cum laude, from the University of New Mexico School of Law and his B.S. from Georgetown University’s Edmund A. Walsh School of Foreign Service.

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