Colorado False Claims Act: Recent Changes and Best Practices
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Faculty of Federal Advocates – February 13, 2024
Colorado False Claims Act
MELISSA KESSLER, ASSISTANT DEPUTY AG, CORPORATE FRAUD
BEN GILLIG, ASSISTANT AG, FALSE CLAIMS UNIT
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Presentation to the Faculty of
Federal Advocates.
February 13, 2024.
This presentation is for educational purposes; its content does
not necessarily represent the statements and opinions of the
Colorado Attorney General.
3
What is the
Colorado
False Claims
Act (CFCA)?
The CFCA is a robust anti-fraud statute designed to
ensure that public funds are used for their intended
purposes.
The CFCA mirrors, but is not identical to, the federal
FCA.
Effective date: August 10, 2022.
Broad application to public funds administered or
used by the state, state agencies, local governments,
school districts, special districts, public higher
education institutions, and private entities that
operate publicly-funded programs, among others.
Codified at C.R.S. § 24-31-1201,
et seq.
CONFIDENTIAL - LAW ENFORCEMENT ONLY
4
What is a
“false claim”?
1.
Defendant makes a
claim
for payment
or creates a record in furtherance of a
claim for payment.
2.
The claim or record is
false
.
3.
The defendant
knows
the claim or
record is false.
◦
The Act defines knowledge.
◦
No specific intent required.
4.
The falsity is
material
to payment of
the claim.
5
False record or statement resulting in underpayment of unemployment insurance premiums.
“Reverse” false claim.
CFCA
Damages
The Act provides significant damages against
liable defendants, including:
◦
Per-claim penalties between $12,410 and $28,410.
◦
Treble damages.
◦
Attorneys’ fees and costs.
Damaged public entities are, by statute, entitled
to compensation for their losses.
6
CFCA
Damages
Penalties and damages may be reduced to reward
defendant cooperation.
Cooperation means:
◦
Defendant furnished the responsible officials with all information
about the CFCA violation within 30 days of learning of a potential
violation;
◦
At the time the defendant furnished the information, the
defendant did not have actual or constructive knowledge of the
existence of an investigation into the violation;
and
◦
The defendant fully cooperated with any investigation by the
state.
Reduced damages:
◦
1.5x damages and $5,900 to $11,800 in penalties per violation
if defendant cooperates
before
criminal prosecution, civil
action, or administrative action with respect to the violation.
◦
2x damages and $7,800 to $15,700 in penalties per violation if
defendant cooperates
during
criminal prosecution, civil action,
or administrative action with respect to the violation.
7
How does the
AG enforce
the CFCA?
The Attorney General is charged with enforcing
the CFCA statewide and in federal courts around
the country.
The AG has significant pre-suit investigatory
powers, including the power to subpoena
documents and compel testimony.
The AG prioritizes cooperation with law
enforcement partners.
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May decline to pursue at any point.
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What role do
whistleblowers
play?
Private whistleblowers (called “relators”) can file
lawsuits on behalf of the state to recover for false
claims.
◦
Relator lawsuits are filed under seal and served on
the AG’s office.
◦
The False Claims Unit investigates and determines
whether to intervene in the lawsuit.
Relators are entitled to a portion of the recovery
if their suit is ultimately successful.
◦
15-25% of recovery if the state intervenes.
◦
25-35% of recovery if the state does not intervene.
◦
Percent based on relator’s substantial
contribution.
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Relator
protections
Creates a cause of action for retaliation against
relators for a list of protected activities related
to the CFCA.
◦
Retaliation broadly defined.
◦
Protected activities broadly defined to include
conducting or assisting with an investigation into a
CFCA action, meeting with investigators, providing
investigators or relator’s counsel with confidential
information, or filing a
qui tam
action.
Relators entitled to compensation and attorneys’
fees.
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Colorado Department of Law
Consumer Protection Section
False Claims Unit
Ben Gillig
, Assistant Attorney General
720-508-6098
Ben.gillig@coag.gov
CONFIDENTIAL - LAW ENFORCEMENT ONLY
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Panel Discussion
1.
Differences between federal and state false claims statutes and enforcement regimes.
2.
Trends in false claims cases over the last three years:
◦
Post-COVID trends.
◦
Trends in who becomes a relator.
◦
Trends in types of cases.
3.
Good practices for interaction with different parties in a false claims case:
◦
Federal officials.
◦
State officials.
◦
Relators and their lawyers.
◦
Target/defendant companies and their lawyers.
4.
Good practices for preventing false claims.
13
Colorado False Claims Act (CFCA) mirrors the federal False Claims Act, aiming to safeguard public funds. The act covers various entities and imposes penalties for false claims. Liable defendants face significant damages, including penalties, treble damages, and attorneys' fees. Cooperation can lead to reduced penalties. Effective date: August 10, 2022.
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Presentation Transcript
Faculty of Federal Advocates February 13, 2024 FEDERAL AND STATE FEDERAL AND STATE FALSE CLAIMS ACTS FALSE CLAIMS ACTS: RECENT CHANGES & BEST PRACTICES 1
Colorado False Claims Act MELISSA KESSLER, ASSISTANT DEPUTY AG, CORPORATE FRAUD BEN GILLIG, ASSISTANT AG, FALSE CLAIMS UNIT COLORADO DEPARTMENT OF LAW COLORADO DEPARTMENT OF LAW 2
Presentation to the Faculty of Federal Advocates. February 13, 2024. This presentation is for educational purposes; its content does not necessarily represent the statements and opinions of the Colorado Attorney General. 3
The CFCA is a robust anti-fraud statute designed to ensure that public funds are used for their intended purposes. What is the Colorado False Claims Act (CFCA)? The CFCA mirrors, but is not identical to, the federal FCA. Effective date: August 10, 2022. Broad application to public funds administered or used by the state, state agencies, local governments, school districts, special districts, public higher education institutions, and private entities that operate publicly-funded programs, among others. Codified at C.R.S. 24-31-1201, et seq. 4 CONFIDENTIAL - LAW ENFORCEMENT ONLY
1. Defendant makes a claim for payment or creates a record in furtherance of a claim for payment. Reverse false claim. 2. The claim or record is false. What is a false claim ? 3. The defendant knows the claim or record is false. The Act defines knowledge. No specific intent required. 4. The falsity is material to payment of the claim. False record or statement resulting in underpayment of unemployment insurance premiums. 5
The Act provides significant damages against liable defendants, including: Per-claim penalties between $12,410 and $28,410. Treble damages. Attorneys fees and costs. CFCA Damages Damaged public entities are, by statute, entitled to compensation for their losses. 6
Penalties and damages may be reduced to reward defendant cooperation. Cooperation means: Defendant furnished the responsible officials with all information about the CFCA violation within 30 days of learning of a potential violation; At the time the defendant furnished the information, the defendant did not have actual or constructive knowledge of the existence of an investigation into the violation; and The defendant fully cooperated with any investigation by the state. CFCA Damages Reduced damages: 1.5x damages and $5,900 to $11,800 in penalties per violation if defendant cooperates before criminal prosecution, civil action, or administrative action with respect to the violation. 2x damages and $7,800 to $15,700 in penalties per violation if defendant cooperates during criminal prosecution, civil action, or administrative action with respect to the violation. 7
The Attorney General is charged with enforcing the CFCA statewide and in federal courts around the country. How does the AG enforce the CFCA? The AG has significant pre-suit investigatory powers, including the power to subpoena documents and compel testimony. The AG prioritizes cooperation with law enforcement partners. 8
The AGs Enforcement Procedure The AG s Enforcement Procedure Initial Case Assessment Is there reasonable cause to believe a violation of the CFCA has or will occur? Voluntary requests for information. Formal Investigation Compulsory process available. Merits of the alleged false claims. Enforcement Action or Settlement File or intervene in federal or state lawsuit. AOD or settlement. May decline to pursue at any point. 9
Private whistleblowers (called relators) can file lawsuits on behalf of the state to recover for false claims. Relator lawsuits are filed under seal and served on the AG s office. The False Claims Unit investigates and determines whether to intervene in the lawsuit. What role do whistleblowers Relators are entitled to a portion of the recovery if their suit is ultimately successful. 15-25% of recovery if the state intervenes. 25-35% of recovery if the state does not intervene. Percent based on relator s substantial contribution. play? 10
Creates a cause of action for retaliation against relators for a list of protected activities related to the CFCA. Retaliation broadly defined. Protected activities broadly defined to include conducting or assisting with an investigation into a CFCA action, meeting with investigators, providing investigators or relator s counsel with confidential information, or filing a qui tam action. Relator protections Relators entitled to compensation and attorneys fees. 11
Colorado Department of Law Consumer Protection Section False Claims Unit Please reach out Please reach out with questions with questions Ben Gillig, Assistant Attorney General 720-508-6098 Ben.gillig@coag.gov CONFIDENTIAL - LAW ENFORCEMENT ONLY 12
Panel Discussion 1. Differences between federal and state false claims statutes and enforcement regimes. 2. Trends in false claims cases over the last three years: Post-COVID trends. Trends in who becomes a relator. Trends in types of cases. 3. Good practices for interaction with different parties in a false claims case: Federal officials. State officials. Relators and their lawyers. Target/defendant companies and their lawyers. 4. Good practices for preventing false claims. 13
