A question for the powers that be in Denver:
If you could reduce fraud against the state and its municipalities and recover millions of dollars a year in the process, would you do it?
Clearly a no-brainer, by any measure. Especially these days, with Colorado —like the feds and most states — pumping out so much funding for both new infrastructure and Covid relief.
Enter House Bill 22-1119, which would enact the State’s first full-fledged False Claims Act. Modeled after the federal statute, the law would allow for whistleblowers to serve as private attorneys general and sue those committing fraud against the state (and local governments too), rewarding them with up to 30% of any recovery.
The federal False Claims Act has been on the books since the Civil War, when President Lincoln passed it to go after war profiteers trying to dupe the Union Army with lame mules and faulty weapons. The provisions to empower and reward whistleblowers have only gotten stronger since then, and for good reason: The government recovers billions of dollars under the statute every year, largely from actions originated by whistleblowers.
Colorado is already halfway there with its 2010 Medicaid False Claims Act, which allows whistleblowers to go after Medicaid fraudsters. The proposed legislation would expand the whistleblower reach beyond healthcare fraud to any type of fraud against the state and its municipalities. It is an especially important step for a state that is no stranger to non-healthcare related fraud.
In January, for example, two contractors settled DOJ charges of fraudulently securing construction contracts at the Fort Carson Army base. In 2019, two solar companies likewise settled DOJ charges of defrauding the government’s renewable energy program through projects in Colorado and other states. And last year, a Colorado Springs company recently settled DOJ charges of defrauding one of the government’s small business awards programs.
These are just a few examples of the numerous actions DOJ has brought over the past few years for fraud occurring in Colorado.
There is no record of why the Colorado General Assembly stopped short of allowing whistleblowers to go after this kind of non-healthcare fraud on the state level. But among the oft-cited reasons for restricting the role of whistleblowers is a supposed risk of baseless suits, a burden on the government to wade through them, and the small percentage of whistleblower actions that result in any government recovery.
None of those critiques hold up.
Empowering whistleblowers works. It leads to stronger fraud enforcement, more fraud recoveries, and a government better able to safeguard the health and safety of those within its charge.
We know this from the federal experience, especially since 1986, when the False Claims Act was amended to increase the protections and financial incentives for whistleblowers. The federal government has recovered $70 billion since then, with whistleblowers responsible for bringing in more than two-thirds of that amount.
This whistleblower success story has been replicated in dozens of states with their own laws that invite whistleblowers into the mix. It is a point Colorado Attorney General Phil Weiser highlighted in expressing his strong support for the proposed legislation, calling it “a tremendous opportunity … to make unprecedented investments in priorities like affordable housing, mental health services, and protecting our water.”
Clearly, Colorado appreciates the importance of whistleblowers and the critical role they play in supplementing the government’s limited resources to combat fraud. That is why the state already deputizes whistleblowers to go after Medicaid fraud. It also is why the attorney general has a dedicated webpage calling on the public to report fraud and misconduct in any area, recognizing how vital it is to the state’s overall enforcement regime.
It is time for Colorado to take the next step and vest whistleblowers with the authority and incentives to go after all types of fraud and misconduct, not just those in healthcare. From any reasonable vantage point, this simple legislative fix should be an easy call.
Denver, it is your move.
Max Voldman, of Washington, D.C., and Gordon Schnell, of New York City, are attorneys with the law firm Constantine Cannon, specializing in the representation of whistleblowers.
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