Analysis

Synopsis:

 CS Synopsis March 01, 2021:

STBTCcs/SB 189: Senate Tax, Business and Transportation Committee, committee substitute for Senate Bill 189 enacts the Financial Exploitation Act and creates a civil cause of action. Definitions are provided.


Original Synopsis February 04, 2021:

Senate Bill 189 (SB 189) enacts the Financial Exploitation Act. SB 189 creates reporting requirements. SB 189 provides for the delay of suspect transactions. SB 189 describes training requirements for financial institutions. SB 189 creates a civil cause of action. SB 189 provides definitions. SB 189 changes sections of the NMSA 1978 to conform to this act.

Analysis:

 Senate Bill 189 (SB 189) enacts the Financial Exploitation Act. The following analysis will be on new laws enacted by this bill. Please see the original bill for changed laws listed under the NMSA 1978.

New Law: Reporting Financial Exploitation.

When a qualified individual reasonably believes that financial exploitation of an eligible adult may have occurred, may have been attempted, or is being attempted, the qualified individual will: 
•	(1) promptly notify the Financial Institutions Division of the Regulation and Licensing Department and the Adult Protective Services Division of the Aging and Long-Term Services Department;
•	(2) attempt to notify a third party previously designated by the eligible adult; and 
•	(3) attempt to notify a third party that is not designated, but is known by the qualified individual to be reasonably associated with an eligible adult. 

SB 189 prohibits a qualified individual from disclosing information to a third party who is suspected of financial exploitation or other abuse of the eligible adult. 


New Law: Immunity for Reporting Financial Exploitation.

•	A qualified individual who exercises reasonable care on behalf of a financial institution and complies with the provisions of Sections 4 and 8 of this 2021 act will be immune from liability that might otherwise arise from such disclosure, as will the financial institution.


New Law: Immunity for Delay in Suspect Transactions.

•	A financial institution or qualified individual that exercises reasonable care and is in compliance with Sections 6 and 8 of this 2021 act, will be immune from administrative and civil liability that might arise from delay in a disbursement or transaction pursuant to Section 6 of this 2021 act. 


New Law: Delay of Suspect Transactions.

SB 189 allows a financial institution to delay a disbursement or transaction from an account of an eligible adult or an account for which the eligible adult is a beneficiary, if: 

•	(1) after initiating an internal review of the requested disbursement or transaction, a qualified individual reasonably believes that the requested disbursement or transaction may result in financial exploitation of the eligible adult; and (2) the financial institution: 
•	(a) provides written notification of the delay and the reason for the delay to all parties authorized to transact business on the account no later than two business days after the requested disbursement or transaction, unless any such party is reasonably believed to have attempted the financial exploitation of the eligible adult; 
•	(b) notifies the Financial Institutions Division of the Regulation and Licensing Department and the Adult Protective Services Division of the Aging and Long-Term Services Department, no later than two business days after the requested disbursement or transaction; and 
•	(c) at the request of the Financial Institutions Division of the Regulation and Licensing Department, provides a status report of the internal review required pursuant to Paragraph (1) of Subsection A of this section. 


SB 189 requires any delay of a disbursement or transaction as authorized, to expire upon the sooner of: 
•	(1) a written determination by the Financial Institutions Division of the Regulation and Licensing Department that the disbursement or transaction will not result in financial exploitation of the eligible adult; or 
•	(2) fifteen business days from the date that the financial institution first delayed the disbursement or transaction unless either the Financial Institutions Division of the Regulation and Licensing Department or the Adult Protective Services Division of the Aging and Long-Term Services Department makes a written request that the financial institution extend the delay, in which case the delay will expire twenty-five days from the date the financial institution first delayed the disbursement or transaction unless terminated or extended by either of the divisions or by a court order. 

SB 189 allows a court to enter an order extending the delay of the disbursement or transaction or to order other protective relief based on: 
•	a petition of the director of the Financial Institutions Division of the Regulation and Licensing Department, the director of the Adult Protective Services Division of the Aging and Long-Term Services Department, the financial institution that instituted the delay pursuant to this section or any other interested party.


New Law: Training to Identify Financial Exploitation.

SB 189 requires the director of the Financial Institutions Division of the Regulation and Licensing Department to promulgate rules pertaining to training guidelines and standardized training curriculum guidelines that financial institutions may use to train qualified individuals to review, delay and report transactions that are identified to have potentially resulted from financial exploitation. 

SB 189 allows a financial institution to develop its own training as approved by the director of the division. 
•	Training will include a description of indicators of financial exploitation of an eligible adult and the process for reporting suspected financial exploitation internally and to the division and the Adult Protective Services division of the Aging and Long-Term Services Department. 
•	A financial institution will provide training regarding the financial exploitation of eligible adults to qualified individuals designated by a financial institution pursuant to Section 3 of the Financial Exploitation Act. 


New Law: Disclosure of Information.

SB 189 requires a financial institution to provide access to records or copies of records that pertain to the suspected or attempted financial exploitation of an eligible adult to:
•	the Financial Institutions Division of the Regulation and Licensing Department and the Adult Protective Services Division of the Aging and Long-Term Services Department, as part of a referral to the divisions and to law enforcement in the course of an investigation. 

SB 189 allows relevant records to include historical records or records relating to recent transactions that may serve as evidence of the financial exploitation of an eligible adult. 

SB 289 clarifies that:
•	A record made available pursuant to this section will not be considered a public record as defined in Subsection G of Section 14-2-6 NMSA 1978.
•	Nothing in this section will be construed to impede the authority of the director of the Securities Division of the Regulation and Licensing Department to access or examine the records of brokers and investment advisors as otherwise provided by law. 


New Law: Civil Remedies.

SB 189 allows an eligible adult or an attorney-in-fact, conservator, temporary conservator, or trustee acting for or on behalf of an eligible adult to commence a civil action in a court of competent jurisdiction against a person suspected of financially exploiting an eligible adult in order to: 
•	(1) return property; (2) stop or enjoin a transaction; (3) return any profit received from a transaction; (4) seek compensatory damages for a transaction; or (5) void or rescind a transaction. 

SB 189 requires the plaintiff, to prevail on a claim made pursuant to this section, to prove by a preponderance of the evidence that financial exploitation occurred. 

SB 189 requires punitive damages to be awarded when a plaintiff proves that the defendant committed financial exploitation and: 
•	(1) acted with knowledge that the transaction was wrongful; 
•	(2) made a transaction in indifference or reckless disregard for the financial interests of the eligible adult that resulted in financial harm to the eligible adult; and 
•	(3) failed to cure the alleged financial exploitation within fifteen days of receiving notice of intent to seek relief from the plaintiff. 

SB 189 allows the plaintiff, if a plaintiff prevails against a defendant on a financial exploitation claim, to recover reasonable attorney fees and any costs incurred while pursuing such relief.
•	A remedy obtained will not limit in any way the right, title, and interest of a good faith purchaser, mortgagee, holder of a security interest or other third party who obtains an interest in property transferred from an eligible adult. 
•	Relief obtained will not affect the value of a mortgage. 
•	Nothing in this section will limit any other cause of action under the laws of this state. 
•	Allows, when a plaintiff dies during the course of a civil proceeding initiated pursuant to this section, for the personal representative of the plaintiff's estate to continue with the proceeding; provided no proceeding made pursuant to this section will be initiated after the plaintiff's death.

A person who is found to have committed financial exploitation is liable for payment of the following to the eligible adult: 
•	(1) the amount of restitution required to restore the value of the property that the eligible adult would have had if the financial exploitation had not occurred; and 
•	(2) any profit the defendant received through the financial exploitation.


Financial Exploitation Act-Definitions:

(A). Caregiver means a person who has been entrusted with or who has assumed responsibility for the care of an eligible adult or the eligible adult's property and may include a family member that is related to the eligible adult by blood or marriage; a court-appointed guardian or conservator; an adult living in the same household as the eligible adult; a health care provider; or an employee or volunteer of an adult daycare, assisted living or residential care facility, group home, nursing home, hospital, mental health treatment center or continuing care community or a service provider of such entity.

(B). Confidential Relationship means a relationship of confidence and trust between an eligible adult and another person, including but not limited to a family member; business associate or partner; financial advisor; caregiver; health care or mental health care provider; legal professional; or clergy member, imam, minister, priest, rabbi or similar religious or spiritual advisor.

(C). Eligible Adult means a person eighteen years of age or older with cognitive impairment or a mental, physical or developmental condition or a person who is experiencing other circumstances that cause the person to be susceptible to undue influence or substantially impaired in the ability to provide adequately for the person's personal or financial affairs or protection, regardless of whether the person has been adjudicated pursuant to Section 45-5-303 NMSA 1978.

(D). Fiduciary Relationship means an agreement or arrangement that creates fiduciary duties owed from one person to another and includes the relationship between a principal and an attorney-in-fact pursuant to a power of attorney; a conservator and a protected person; a trustee and a beneficiary; a financial advisor or broker and an account owner; or a representative payee and a beneficiary.

(E). Financial Exploitation means: 
•	(1) the wrongful or unauthorized taking, conversion, withholding, appropriation, or use of an eligible adult's assets, including money or other property; or 
•	(2) an act or omission taken by a trusted person to obtain the benefit, control, or use of an eligible adult's assets, including money or other property, through the use of deception, intimidation, or undue influence. 

(F). Financial Institution means an organization authorized to do business pursuant to state or federal laws relating to financial entities and includes a bank, trust company, savings bank, building and loan association, savings and loan company, or credit union. 

(G). Qualified Individual means a person designated by a financial institution to conduct a review of suspected financial exploitation, report suspected financial exploitation or delay transactions, and receive training pursuant to the provisions of the Financial Exploitation Act.

(H). Transaction means an agreement; contract; conveyance; deed; encumbrance; gift; guarantee; loan; mortgage; pledge; purchase; sale; title transfer; transfer of money, security or other financial asset or real or personal property; or withdrawal from a financial, investment or securities account or changes to ownership on such account, but excludes wills, trusts or transfer on death designations or instruments of a similar type.

(I). Trusted Person means: 
•	(1) a caregiver, health care or mental health care provider; 
•	(2) a person upon whom an eligible adult is dependent and with whom the eligible adult has a confidential or fiduciary relationship; or 
•	(3) a person in a position of authority, including an eligible adult's family member, financial advisor, legal professional, clergy member, imam, minister, priest, rabbi, or similar religious or spiritual advisor.

(J). Undue Influence means excessive persuasion or domination of the decision-making process of an eligible adult by a trusted person that causes an eligible adult to consent to a transaction or refrain from consenting to a transaction that would reasonably be expected to result in financial harm to the eligible adult, including:
•	controlling the eligible adult's interaction with others, access to information or necessaries of life; using affection, intimidation, or coercion; or initiating changes in the eligible adult's personal or property rights in haste, secrecy, or at inappropriate times and places. 
•	The fact that an eligible adult had independent legal counsel with respect to the transaction is evidence that the transaction was not the product of financial exploitation, but will not be dispositive on whether the issue of financial exploitation occurred.


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