The State of Colorado allows whistleblowers to bring suit in the name of the State of Colorado where a wrongdoer engages in conduct that defrauds the state or local government of its healthcare dollars. This statute is designed to address Medicaid fraud.
Section 25.5-4-304. Definitions
As used in this section and section 2 of this act:
(1) (a) “Claim” means a request or demand for money or property, whether under a contract or otherwise, and regardless of whether the state has title to the money or property, under the “Colorado Medical Assistance Act” that is:
(I) Presented to an officer, employee, or agent of the state; or
(II) Made to a contractor, grantee, or other recipient if the money or property is to be spent or used on the state’s behalf or to advance a program or interest of the state and if the state:
(A) Provides or has provided any portion of the money or property requested or demanded; or
(B) Will reimburse the contractor, grantee, or other recipient for any portion of the money or property that is requested or demanded.
(b) “Claim” does not include a request or demand for money or property that the state has paid to an individual as compensation for employment by the state or as an income subsidy with no restriction on that individual’s use of the money or property.
(2) “Colorado Medical Assistance Act” means this article and articles 5 and 6 of this title.
(3) (a) “Knowing” or “knowingly” means that a person, with respect to information:
(I) Has actual knowledge of the information;
(II) Acts in deliberate ignorance of the truth or falsity of the information; or
(III) Acts in reckless disregard of the truth or falsity of the information.
(b) “Knowing” or “knowingly” does not require proof of specific intent to defraud.
(4) “Material” means having a natural tendency to influence, or be capable of influencing, the payment or receipt of money or property.
(5) “Obligation” means a fixed or contingent duty arising from an express or implied contractual, quasi-contractual, grantor-grantee, licensor-licensee, statutory, fee-based, or similar relationship, and the retention of overpayment.
Section 25.5-4-305. False medicaid claims – liability for certain acts
(1) Except as otherwise provided in subsection (2) of this section, a person is liable to the state for a civil penalty of not less than five thousand dollars and not more than ten thousand dollars, plus three times the amount of damages that the state sustains because of the act of that person, if the person:
(a) Knowingly presents, or causes to be presented, to an officer or employee of the state a false or fraudulent claim for payment or approval;
(b) Knowingly makes, uses, or causes to be made or used a false record or statement material to a false or fraudulent claim;
(c) Has possession, custody, or control of property or money used, or to be used, by the state in connection with theColorado Medical Assistance Actand knowingly delivers, or causes to be delivered, less than all of the money or property;
(d) Authorizes the making or delivery of a document certifying receipt of property used, or to be used, by the state in connection with the “Colorado Medical Assistance Act” and, intending to defraud the state, makes or delivers the receipt without completely knowing that the information on the receipt is true;
(e) Knowingly buys, or receives as a pledge of an obligation or debt, public property from an officer or employee of the state in connection with theColorado Medical Assistance Act who lawfully may not sell or pledge the property;
(f) Knowingly makes, uses, or causes to be made or used, a false record or statement material to an obligation to pay or transmit money or property to the state in connection with the “Colorado Medical Assistance Act”, or knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the state in connection with the “Colorado Medical Assistance Act”;
(g) Conspires to commit a violation of paragraphs (a) to (f) of this subsection (1).
(2) Notwithstanding the amount of damages authorized in subsection (1) of this section, for a person who violates subsection (1) of this section, the court may assess not less than twice the amount of damages that the state sustains because of the act of the person if the court finds that:
(a) The person who committed the violation of subsection (1) of this section furnished to the officials of the state responsible for investigating false claims violations all information about the violation known to the person and furnished said information within thirty days after the date on which the person first obtained the information;
(b) At the time the person furnished the information about the violation to the state, a criminal prosecution, civil action, or administrative action had not commenced with respect to the violation and the person did not have actual knowledge of the existence of an investigation into the violation; and
(c) The person fully cooperated with any investigation of the violation by the state.
(3) A person violating this section shall also be liable to the state for the costs of a civil action brought to recover any penalty or damages.
(4) Any information furnished pursuant to subsection (2) of this section shall be exempt from disclosure under part 2 of article 72 of this title.
Section 25.5-4-306. Civil actions for false medicaid claims
(1) Responsibility of attorney general. The attorney general shall diligently investigate a violation under section 25.5-4-305. If the attorney general finds that a person has violated or is violating section 25.5-4-305, the attorney general may bring a civil action under this section against the person.
(2) Actions by private persons.
(a) A relator may bring a civil action for a violation of section 25.5-4-305 on behalf of the relator and the state. The action shall be brought in the name of the state. The action may be dismissed only if the court and the attorney general give written consent to the dismissal and their reasons for consenting.
(b) A copy of the complaint and written disclosure of substantially all material evidence and information the relator possesses shall be served on the state pursuant to rule 4 of the Colorado rules of civil procedure. The complaint shall be filed in camera, shall remain under seal for at least sixty days, and shall not be served on the defendant until the court so orders. The state may elect to intervene and proceed with the action within
sixty days after it receives both the complaint and the material evidence and information.
(c) The state may, for good cause shown, move the court for extensions of the time during which the complaint remains under seal under paragraph (b) of this subsection (2). Any such motion may be supported by affidavits or other submissions in camera. The defendant shall not be required to respond to a complaint filed under this section until twenty days after the complaint is unsealed and served upon the defendant pursuant to rule 4 of the Colorado rules of civil procedure.
(d) Before the expiration of the sixty-day period pursuant to paragraph (b) of this subsection (2) or any extensions obtained under paragraph (c) of this subsection (2), the state shall:
(I) Proceed with the action, in which case the state shall conduct the action; or
(II) Notify the court that it declines to take over the action, in which case the relator shall have the right to conduct the action.
(e) When a relator brings an action under this subsection (2), the federal false claims act, or any similar provision of the laws of any other state, no person other than the state may intervene or bring a related action based on the facts underlying the pending action.
(3) Rights of parties to private actions.
(a) If the state proceeds with an action brought under subsection (2) of this section, it shall have the primary responsibility for prosecuting the action and shall not be bound by an act of the relator. The relator shall have the right to continue as a party to the action, subject to the limitations set forth in paragraph (b) of this subsection (3).
(I) The state may dismiss the action notwithstanding the objections of the relator if the relator has been notified by the state of the filing of the motion and the court has provided the relator with an opportunity for a hearing on the motion.
(II) The state may settle the action with the defendant notwithstanding the objections of the relator if the court determines, after a hearing, that the proposed settlement is fair, adequate, and reasonable under all the circumstances. Upon a showing of good cause, the hearing may be held in camera.
(III) Upon a showing by the state that unrestricted participation during the course of the litigation by the relator would interfere with or unduly delay the state’s prosecution of the case, or would be repetitious, irrelevant, or for purposes of harassment, the court may, in its discretion, impose limitations on the relator’s participation, including but not limited to:
(A) Limiting the number of witnesses the relator may call;
(B) Limiting the length of the testimony of the witnesses;
(C) Limiting the relator’s cross-examination of witnesses; or
(D) Otherwise limiting the participation by the relator in the litigation.
(IV) Upon a showing by the defendant that unrestricted participation during the
course of the litigation by the relator would be for purposes of harassment or would cause the defendant undue burden or unnecessary expense, the court may limit the participation by the relator in the litigation
(c) If the state elects not to proceed with the action, the relator who initiated the action shall have the right to conduct the action. If the state so requests, it shall be served with copies of all pleadings filed in the action and, at the state’s expense, shall be supplied with copies of all deposition transcripts. When a relator proceeds with the action, the court, without limiting the status and rights of the relator, may nevertheless permit the state to intervene at a later date upon a showing of good cause.
(d) Regardless of whether the state proceeds with the action, upon a showing by the state that certain actions of discovery by the relator would interfere with the state’s investigation or prosecution of a criminal or civil matter arising out of the same facts, the court may stay the discovery for a period of not more than sixty days. The showing shall be conducted in camera. The court may extend the sixty-day period upon a further showing in camera that the state has pursued the criminal or civil investigation or proceedings with reasonable diligence and that any proposed discovery in the civil action will interfere with the ongoing criminal or civil investigation or proceedings.
(e) Notwithstanding the provisions of subsection (2) of this section, the state may elect to pursue its claim through any alternate remedy available to the state, including any administrative proceeding to determine a civil money penalty. If an alternate remedy is pursued in another proceeding, the relator shall have the same rights in the proceeding as the relator would have had if the action had continued under this section. Any find-
ing of fact or conclusion of law made in another proceeding that has become final shall be conclusive on all parties to an action under this section. For purposes of this para-graph (e), a finding or conclusion is final if it has been finally determined on appeal to the appropriate court of the state, if all time for filing such an appeal with respect to the finding or conclusion has expired, or if the finding or conclusion is not subject to judicial review.
(4) Award to private persons. (a) (I) If the state proceeds with an action brought by a relator under subsection (2) of this section, the relator shall, subject to subparagraph (II) of this paragraph (a), receive at least fifteen percent but not more than twenty-five percent of the proceeds of the action or settlement of the claim, depending upon the extent to which the relator substantially contributed to the prosecution of the action.
(II) If the court finds the action to be based primarily on disclosures of specific information, other than information provided by the relator, relating to allegations or transactions in a criminal, civil, or administrative hearing, in a legislative, administrative, or state auditor’s report, hearing, audit, or investigation, or from the news media, the court may award to the relator such sums as it considers appropriate, but in no case more than ten percent of the proceeds, taking into account the significance of the information and the role of the relator in advancing the case to litigation.
(III) Any payment to a relator under subparagraph (I) or (II) of this paragraph (a) shall be made from the proceeds. The relator shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred plus reasonable attorney fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.
(b) If the state does not proceed with an action brought under subsection (2) of this section, the relator bringing the action or settling the claim shall receive an amount that the court decides is reasonable for collecting the civil penalty and damages. The amount shall be not less than twenty-five percent and not more than thirty percent of the proceeds of the action or settlement and shall be paid out of the proceeds. The relator shall also receive an amount for reasonable expenses that the court finds to have been necessarily incurred, plus reasonable attorney fees and costs. All such expenses, fees, and costs shall be awarded against the defendant.
(c) Regardless of whether the state proceeds with an action brought under subsection (2) of this section, if the court finds that the action was brought by a relator who planned and initiated the violation of section 25.5-4-305 upon which the action was brought, then the court may, to the extent the court considers appropriate, reduce the share of the proceeds of the action that the relator would otherwise receive under paragraph (a) or (b) of this subsection (4), taking into account the role of the relator in advancing the case to litigation and any relevant circumstances pertaining to the violation. If the relator is convicted of criminal conduct arising from his or her role in the violation of section 25.5-4-305, the relator shall be dismissed from the civil action and shall not receive any share of the proceeds of the action. Such dismissal shall not prejudice the right of the state to continue the action.
(d) If the state does not proceed with an action brought under subsection (2) of this section and the relator bringing the action conducts the action, the court may award to the defendant its reasonable attorney fees and expenses if the defendant prevails in the action and the court finds that the claim of the relator was clearly frivolous, clearly vexatious, or brought primarily for purposes of harassment.
(5) Certain actions barred. (a) A court shall not have jurisdiction over an action brought under this section against a member of the general assembly, a member of the state judiciary, or an elected official in the executive branch of the state of Colorado.
(b) A relator shall not bring an action under subsection (2) of this section that is based upon allegations or transactions that are the subject of a civil suit in a court of this state or an administrative civil money penalty proceeding in which the state is already a party.
(I) A court shall not have jurisdiction over an action brought under subsection (2) of this section if the action is based upon the public disclosure of allegations or transactions in a criminal, civil, or administrative hearing, in a legislative, administrative, or state auditor’s report, hearing, audit, or investigation, or from the news media, unless the action is brought by the state or the relator is an original source of the information that is the basis for the action.
(II) For purposes of this paragraph (c), “original source” means an individual who has direct and independent knowledge of the information on which the allegations are based and has voluntarily provided the information to the state before filing an action under subsection (2) of this section that is based on the information.
(6) State not liable for certain expenses. The state is not liable for expenses that a relator incurs in bringing an action under this section.
(7) Private action for retaliation. (a) A relator shall be entitled to all relief necessary to make the relator whole, if the relator is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of the relator’s employment by the defendant or by any other person because of lawful acts done by the relator in furtherance of an action under this section or in furtherance of an effort to stop any violations of section 25.5-4-305.
(b) (I) A relator who seeks relief pursuant to this subsection (7) shall be entitled to all re-
lief necessary to make the relator whole. Such relief shall include:
(A) If the relator is an employee, reinstatement with the same seniority status the relator would have had but for the discrimination, twice the amount of back pay, and interest on the back pay; and
(B) Compensation for any special damages sustained as a result of the discrimination or retaliation, including litigation costs and reasonable attorney fees.
(II) A relator may bring an action in the appropriate court of the state for the relief provided in this subsection (7).
Section 25.5-4-307. False medicaid claims procedures
(1) A civil action under section 25.5-4-306 (1) or (2) may not be brought after the later of:
(a) More than six years after the date on which the violation of section 25.5-4-305 is committed; or
(b) More than three years after the date when facts material to the right of action are known or reasonably should have been known by the official of the state charged with responsibility to act in the circumstances, but in no event more than ten years after the date on which the violation of section 25.5-4-305 is committed.
(2) If the state elects to intervene and proceed with an action brought under section 25.5-4-306, the state may file its own complaint or amend the relator’s complaint to clarify or add detail to the claims in which the state is intervening and to add any additional claims with respect to which the state contends it is entitled to relief. For statute of limitations purposes, any such pleadings by the state shall relate back to the filing date of the relator’s complaint, to the extent that the state’s claim arises out of the conduct, transactions, or occurrences set forth, or attempted to be set forth, in the prior complaint of the relator.
(3) In an action brought under section 25.5-4-306, the state or relator must prove all essential elements of the cause of action, including damages, by a preponderance of the evidence.
(4) Notwithstanding any other provision of law, the Colorado rules of criminal procedure, or the Colorado rules of evidence, a final judgment rendered in favor of the state in a criminal proceeding charging fraud or false statements, whether upon a verdict after trial or upon a plea of guilty or nolo contendere, shall estop the defendant from denying the essential elements of the offense in any action that involves the same transaction as in the criminal proceeding and that is brought under section 25.5-4-306.
Section 25.5-4-308. False medicaid claims jurisdiction
An action under section 25.5-4-306 may be brought in any judicial district in which the defendant or, in the case of multiple defendants, any one defendant can be found, resides, or transacts business or in which an act proscribed by section 25.5-4-305 occurred. A summons as required by the Colorado rules of civil procedure shall be issued by the appropriate district court and served at any place.