Colorado State Lawmakers Introduce False Claims Act

Colorado lawmakers took a significant step last week to enhance the state’s anti-fraud capabilities by introducing the Colorado False Claims Act (CFCA). The bipartisan bill, sponsored by Representatives Emily Sirota and Matt Soper alongside Senators Julie Gonzales and Bob Gardner, aims to provide Colorado with powerful new tools to combat fraud against state and local governments.

The proposed legislation mirrors the federal False Claims Act, which has served as the U.S. government’s primary civil fraud enforcement mechanism since the Civil War era. If passed, Colorado would join 31 other states that have already enacted similar laws to recover taxpayer funds lost to fraudulent activities.

Under the CFCA, individuals and companies who knowingly submit false claims to state or local government entities would face significant liability. The bill establishes penalties of between $11,803 and $23,607 for each false claim, plus three times the amount of damages sustained by the government. These substantial penalties are designed to serve as both punishment and deterrent.

A distinctive feature of the legislation is its qui tam provision, which empowers private citizens to file lawsuits on behalf of the government against those who have committed fraud. These whistleblowers, known as relators, would be entitled to receive between 15% and 30% of any recovered funds, creating a powerful incentive for insiders with knowledge of fraudulent activities to come forward.

The Colorado Attorney General’s office would play a central role in the enforcement process. After a whistleblower files a complaint, the Attorney General would have 60 days to investigate the allegations and decide whether to intervene in the case. If the office chooses to take over, it would assume primary responsibility for prosecuting the action. If not, the whistleblower could proceed independently.

Healthcare fraud is expected to be a primary target of enforcement actions under the CFCA. At the federal level, healthcare-related cases account for approximately 80% of False Claims Act recoveries. The legislation could significantly impact healthcare providers, pharmaceutical companies, and medical device manufacturers operating in Colorado, who would face increased scrutiny of their billing practices and government program compliance.

Industry experts note that the healthcare focus aligns with national trends. “We’ve seen healthcare consistently dominate False Claims Act enforcement at both federal and state levels,” said Eleanor Thompson, a healthcare compliance attorney with Denver Health Law Partners. “Companies in this sector should be reviewing their compliance programs now, before this legislation potentially becomes law.”

The bill contains important provisions to protect whistleblowers from retaliation. Employees who face adverse actions after reporting fraud would be entitled to reinstatement, double back pay with interest, and compensation for litigation costs.

Colorado’s move comes as states nationwide increasingly adopt false claims legislation to supplement federal enforcement efforts. Since 2009, state false claims acts have recovered billions in taxpayer funds across the country.

Business groups have expressed concerns about the potential for increased litigation. The Colorado Chamber of Commerce has indicated it is reviewing the legislation carefully. “While we support efforts to combat fraud, we want to ensure that legitimate businesses aren’t subjected to frivolous claims that could be costly to defend,” said Martin Reynolds, the Chamber’s policy director.

Supporters counter that the bill contains provisions to prevent misuse, including requirements that complaints be filed with particularity and limitations on lawsuits based on publicly disclosed information.

The legislation now moves to committee hearings, where lawmakers will consider amendments before potential floor votes in both chambers. If enacted, the Colorado False Claims Act would represent one of the most significant updates to the state’s anti-fraud framework in decades.

Governor Jared Polis has not yet taken a public position on the bill, though his administration has generally supported increased accountability measures in state government operations.

The bill’s progress through the legislature is being closely watched by government contractors, healthcare providers, and compliance professionals across the state, as its passage would create significant new compliance obligations and liability risks.