Colorado False Claims Act

The act establishes the "Colorado False Claims Act" (false claims act). Pursuant to the false claims act, a person is liable to the state or a political subdivision of the state for a civil penalty if the person commits, conspires to commit, or aids and abets the commission of any of the following (collectively, "false claims"):

• Knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval;
• Knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim;
• Having possession, custody, or control of property or money used, or to be used, by the state or a political subdivision and knowingly delivering, or causing to be delivered, less than all of the money or property;
• Authorizing the making or delivery of a document certifying receipt of property used, or to be used, by the state or a political subdivision and, with the intent to defraud the state or political subdivision, making or delivering the receipt without completely knowing that the information on the receipt is true;
• Knowingly buying, or receiving as a pledge of an obligation or debt, public property from an officer or employee of the state or a political subdivision who lawfully may not sell or pledge the property;
• Knowingly making, using, or causing to be made or used a false record or statement material to an obligation to pay or transmit money or property to the state or political subdivision, or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the state or political subdivision; or
• Knowingly making, using, or causing to be made or used, a false record or statement resulting in the underpayment of unemployment premiums or the payment of unemployment insurance benefits of more than $15,000 in a calendar year.

A person who makes a false claim is liable to the state for a civil penalty of $11,800 to $23,600 per violation, plus 3 times the amount of the damages sustained by the state. A court may assess a reduced penalty if the person who makes a false claim furnishes to investigators all the information the person knows about the violation within 30 days after first learning of a potential violation, the person did not know about the investigation when the person furnished the information, and the person fully cooperated with the investigation as follows:

• If the person furnished the information prior to an action being filed, the person is subject to a civil penalty of $5,900 to $11,800 per violation, plus 1.5 times the amount of the damages.
• If the person furnished the information while a pending action was under seal, the person is subject to a civil penalty of $7,800 to $15,700 per violation, plus double the amount of the damages.

The civil penalty range amounts for a violation are annually adjusted for inflation, rounded upward or downward to the nearest ten-dollar increment and certified by the secretary of state. A person who makes a false claim is also liable for the costs incurred for the investigation and prosecution of the false claim.

The attorney general may accept from a person alleged to have made a false claim an assurance of discontinuance or a consent order approved by a court in lieu of, or as a part of, a false claims action. Proof by a preponderance of the evidence of a violation of an assurance or stipulation or consent order is prima facie evidence of a violation for the purposes of any civil action or proceeding brought by the attorney general after the alleged violation of the assurance or stipulation or consent order, whether a new action or a motion or petition in a pending action or proceeding.

The false claims act requires the attorney general to investigate false claims. The attorney general or a private person may bring a civil action against a person who made a false claim. The attorney general may intervene in an action brought by a private person. A private person who brings a false claims action may be awarded up to 30% of the proceeds from the action based on the extent the private person contributed to the investigation and prosecution of the false claim. If the private person is an employee of the state and learns information about the false claim in the course of the person's work, the court will award that amount to the state.

The false claims act requires that a false claims action be filed in a state district court or federal court with jurisdiction over the action. A court cannot hear a false claim action:

• Brought against a serving member of the general assembly, a member of the state judiciary, an executive director of a state agency, or an elected official in the executive branch of the state of Colorado, acting in the member's, executive director's, or official's official capacity;
• Brought against an elected official of a political subdivision, a member of a political subdivision's judiciary, of an appointed official of a political subdivision, acting in the official's or member's official capacity; or
• Based on the same allegations or transactions that are the subject of a different civil or administrative proceeding.

The false claims act prohibits retaliatory action against an individual because of the individual's efforts in furtherance of investigating, prosecuting, or stopping false claims. A court hearing a false claims action may hear a claim for retaliation against the individual.

The false claims act clarifies how information subject to a person's attorney-client privilege is protected, unless the privilege is waived, an exception to the privilege applies, or disclosure of the information is permitted by an attorney pursuant to certain federal regulations applicable to attorneys appearing and practicing before the federal securities and exchange commission, the applicable Colorado rules of professional conduct, or otherwise.

The false claims recovery cash fund (fund) is created and any proceeds retained by the state from a false claims action are transferred to the fund. Subject to annual appropriation, the department of law may use money in the fund for the costs of investigating and prosecuting false claims. Remaining proceeds are transferred to the fund from which the false claim was paid and the false claims act sets forth the process for paying to a political subdivision any proceeds recovered that are attributable to the political subdivision.

The false claims act requires the attorney general to annually submit a report to specified committees of reference about false claims actions during the previous fiscal year.

The act authorizes the state auditor to share information about potential false claims with the attorney general and a political subdivision.

The act appropriates $13,568 from the general fund to the legislative department for use by the office of the state auditor.

(Note: This summary applies to this bill as enacted.)