As the curtain closed on the 2022 legislative session, the Colorado General Assembly passed the Colorado False Claims Act (the “CFCA”). The CFCA represents Colorado’s commitment to protecting public funds and pursuing those who wrongfully appropriate taxpayer dollars.
The amended CFCA is now on its way to Governor Polis’ desk, who is all but guaranteed to sign it into law. With enactment imminent, businesses must familiarize themselves with the CFCA’s private right of action and significant penalties, both of which promise a wave of enforcement suits. The CFCA mirrors the federal False Claims Act in many respects. In particular, the CFCA targets those who:
- submit a false bill to a state or local government;
- falsify records relating to a false claim;
- maintain custody over money recovered from a false claim;
- falsify a receipt for governmental property;
- purchase public property which was not lawfully for sale; or
- falsify a record regarding an obligation owed to the state or local government.
But the CFCA is not notable just because it cracks down on people and businesses that lie or mislead in order to receive payments from the government—indeed, such conduct is already unlawful. Rather, the CFCA’s most impactful features promise to be its novel enforcement scheme, extensive penalties and the inclusion of local (ie: city and county) level claims.
The CFCA provides two new avenues to target those who wrongfully seek government funds. First, the Colorado attorney general has broad authority to investigate and enforce the CFCA. Second, and perhaps most onerous, the CFCA authorizes and incentivizes private suits by individuals who come across unlawful conduct. Depending on how much the whistleblower contributes towards a judgment, that person may be entitled to up to 30% of the total proceeds recovered. And that recovery will not be slight.
Coupled with this invigorated enforcement scheme, the CFCA imposes the same penalties as the federal False Claims Act, which is currently not less than $12,537 and not more than $25,076, as adjusted for inflation, for each violation. Because penalties are instituted for each false claim, complex and sustained transactions threaten penalties in the hundreds of thousands, if not millions, of dollars. And those penalties are just the beginning, as violators are further liable for triple the damages that the state or local governments sustain, along with the attorneys’ fees and costs associated with prosecuting the violation.
While the CFCA was still pending in the General Assembly, Attorney General Phil Weiser and the Denver Chamber of Commerce asked the attorneys of Brownstein Hyatt Farber Schreck—who are experts on false claims litigation—to weigh in on the proposed legislation. Through a collaborative effort between our attorneys and policy experts, our firm advised the legislature on amendments that would allow the CFCA to serve its stated goals while not imposing unintended consequences on the business community. This included testimony by former U.S. Attorney and co-chair of the firm’s Government Investigations practice group Jason Dunn and litigation partner Joshua Weiss, who urged certain amendments that would promote compliance over punishment, and protect the interests of small businesses and other good-faith actors. With the amended CFCA now on course to become law, our attorneys are ready to help businesses navigate the influx of novel claims.
THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING THE CFCA LEGISATION. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS