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Colorado Department of Public Health and Environment Executive Director Jill Hunsaker Ryan speaks at a news conference on COVID-19, the coronavirus, on March 3, 2020. (Jesse Paul, The Colorado Sun)

A Denver District judge is allowing a whistleblower lawsuit against the Colorado Department of Public Health and Environment to move forward in a ruling that cast doubt on testimony from the agency’s leader.

In a ruling last week, Judge Shelley Gilman denied the state’s motion to dismiss the lawsuit brought by a former high-level employee, Tony Cappello, who was the director of Disease Control and Public Health Response at CDPHE. 

Cappello claims in the lawsuit that CDPHE Executive Director Jill Hunsaker Ryan broke the law last year when she fired him after he blew the whistle on financial mismanagement related to how the state handled federal funds for HIV programs.

“The court did not find Director Ryan’s testimony to be credible in her recollection of events that occurred in 2019,” Gilman wrote. “The court similarly has difficulty placing much weight on her testimony regarding her expectations of Dr. Cappello or as to the reasons she took certain actions.”

The Colorado Attorney General’s Office had advised the health department in August 2019 that it should no longer use supplemental drug rebate dollars for HIV prevention. Instead, the state should spend the funds under the same guidelines used in the Ryan White program, which is for people who already have HIV or AIDS — not for prevention. But the state had already been using the money to pay for pre-exposure prophylaxis (called PrEP) to prevent HIV in high-risk communities.

Cappello informed HIV advocacy groups in late 2019 that the legal opinion would mean their prevention programs would lose that funding source, spawning a backlash that brought the matter to public attention

Hunsaker Ryan testified in court in July that she didn’t fully understand the significance of the 2019 legal opinion that led to nearly $3 million in lost funding for prevention programs.

“I don’t know if I knew the implications it would have,” Hunsaker Ryan said. “I was nine months into my job, so I didn’t grasp the full nuances.”

Gilman concluded in last week’s ruling that Cappello’s disclosure that CDPHE had mismanaged federal HIV money was protected under the state’s whistleblower law.

Hunsaker Ryan said that she did not consider Cappello’s removal from the HIV program soon after the issue came to public light to be disciplinary, an explanation the judge said “lacked credibility.” The judge also wrote that she was “not convinced that Director Ryan understood the material issues causing the members of the community to become upset.”

Hunsaker Ryan had testified that she was confused about the effect of the limitations on rebates, calling HIV funding “super complex and super nuanced,” and that she wasn’t “connecting all the dots” that would lead to millions of dollars in lost funding. But at the same time, she said “I felt like I had enough information for what was going on. I didn’t need to know the intricate fiscal details, the nuances of the HIV grants.”

Gilman was skeptical of Hunsaker Ryan’s reasons for firing Cappello. 

She noted that only a few months before the emotional meeting with HIV advocacy groups, the agency had actually promoted Cappello, who had an unblemished record. And Hunsaker Ryan herself had commended him in an all-staff email the day before.

On June 1, 2020, Hunsaker Ryan fired Cappello, then the state’s head of disease control, months into the COVID-19 pandemic.

Gilman found that Hunsaker Ryan removing Cappello from overseeing the HIV branch within two weeks of his disclosure was close enough in time “to justify an inference of retaliatory motive.”

The ruling means Cappello’s case survived the state’s efforts to get the case dismissed under a state law that attorneys for CDPHE argued made the agency immune from the lawsuit. Cappello wants a jury to hear his case.

Daniel Ducassi is a former Colorado Sun staff writer.