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Colorado Expands False Claims Act Enforcement Beyond Medicaid

On June 7, 2022, the Governor of Colorado signed the Colorado False Claims Act (CFCA) into law. The CFCA, modeled after the federal False Claims Act (FCA), imposes liability on those who knowingly present false or fraudulent claims for payment to the state, misappropriate state property, or deceptively fail to pay obligations to the state, among other violations. Defendants who violate the CFCA may have to pay back to the state three times the actual damages caused by their fraud in addition to potentially significant civil penalties. The CFCA took effect on August 10, 2022.

Before the passage of the CFCA, Colorado’s only false claims law was the Colorado Medicaid False Claims Act (CMFCA). This statute, while also modeled after the FCA, was limited to false claims relating to Colorado’s medical assistance programs, like Medicaid. The passage of the CFCA broadens the scope of Colorado’s false claims enforcement and aligns Colorado with the majority of other states that have general purpose false claims act statutes.

The CFCA, like the CMFCA, allows whistleblowers, often called relators, to bring suit on behalf of the state and share in any recovery. Whistleblowers bringing claims under false claims laws are often knowledgeable insiders at companies committing fraud against the state government or political subdivisions. But they do not have to be. With a few exceptions, anyone with information about the submission of false claims to the State can bring a case under the CFCA and receive a recovery if their case is successful. Under the CFCA, whistleblowers may recover between 15-25% of the proceeds from an action or settlement if the state “intervenes” in the case and takes over the ligation, or between 25-30% if the state declines to intervene and the whistleblower and their counsel litigate the case on their own.

The Colorado False Claims Act also includes a provision allowing whistleblowers who are retaliated against for their efforts to report violations of the CFCA to bring a claim on their own behalf for damages they suffer. Significantly, the whistleblower does not need to actually bring a case under the statute—or succeed if they do bring a case—to be protected from retaliation, as long as the whistleblower had a “reasonable belief” that a violation of the CFCA occurred. The CFCA’s retaliation protection is also broader than the protection under the FCA because it protects whistleblowers from intimidation, countersuit, defamation, and blacklisting, in addition to the forms of retaliation protected under the FCA—discharging, demoting, suspending, harassing, and threatening. Whistleblowers who successfully bring suit for retaliation are entitled to significant remedies including reinstatement, back pay, interest on that back pay, and attorneys’ fees.

The CFCA is a powerful tool to protect Colorado from fraud and it will be an important contributor to Colorado’s state treasury. All proceeds recovered from the CFCA are paid into a “False Claims Recovery Cash Fund” created by the act. The proceeds in this fund are first used to fund the activities of the Colorado Attorney General to carry out its duties, and then to reimburse political subdivisions defrauded by false claims.

If you are aware of fraud against the State of Colorado or its political subdivisions and would like to discuss your options under the Colorado False Claims Act or Colorado Medicaid False Claims Act whistleblower programs, please contact Phillips & Cohen’s whistleblower attorneys to discuss the matter confidentially at no charge.

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