Governor Shapiro Calls for Pennsylvania to Pass State False Claims Act in Annual Budget Address

Pennsylvania’s Shapiro Pushes for False Claims Act to Combat Fraud

Governor Josh Shapiro of Pennsylvania called for the creation of a state False Claims Act (FCA) during his 2026-2027 Budget Address, positioning the legislation as a crucial tool in the fight against government fraud. Drawing on his experience as the Commonwealth’s Attorney General, Shapiro emphasized the potential to “prosecute waste, fraud, and abuse” while recovering additional damages from fraudulent activities that drain state resources.

“This would allow us to collect additional damages and recoup more state dollars that would otherwise be lost to fraud,” Shapiro stated, noting that the proposal has garnered bipartisan support in the legislature.

Pennsylvania remains conspicuously absent from the roster of states with comprehensive civil statutes designed to recover stolen tax dollars through FCAs. Despite being particularly vulnerable to Medicaid fraud, the Commonwealth has repeatedly failed to enact such legislation, with proposals dating back decades consistently faltering under pressure from special interest groups.

At the heart of the FCA framework is the qui tam provision, a legal mechanism with historical roots dating back centuries. The term, derived from Latin meaning “he who sues in the name of the king as well as himself,” enables private citizens to file lawsuits on the government’s behalf against entities engaged in fraudulent activities. These whistleblowers, legally referred to as “relators,” typically receive between 15% and 30% of any funds recovered, creating a powerful incentive for insiders to expose corporate wrongdoing.

This public-private partnership has proven remarkably effective at the federal level and in states with FCAs already in place. The approach leverages the unique position of employees and contractors who often witness fraudulent practices firsthand but might hesitate to come forward without financial protection and incentives.

“The qui tam mechanism allows governments to uncover sophisticated fraud schemes that might otherwise go undetected by resource-constrained regulatory agencies,” explained one legal expert familiar with such legislation. “It essentially deputizes private citizens as fraud detectors, multiplying the government’s oversight capabilities at minimal cost.”

Nationwide, FCAs have emerged as the government’s most effective weapon against fraud, generating billions in recoveries for federal and state treasuries. By failing to implement its own version, Pennsylvania is effectively foregoing substantial potential revenue that could fund critical public services including education, infrastructure, and healthcare programs.

Beyond their recovery potential, these laws also serve as powerful deterrents. Companies operating in states with robust FCAs typically implement stronger compliance programs and internal controls to avoid the substantial penalties and reputational damage associated with FCA violations.

Currently, 30 states, the District of Columbia, and Puerto Rico have enacted their own False Claims Acts. Among the ten largest states in the nation, only Pennsylvania and Ohio lack such legislation, placing them at a distinct disadvantage in combating fraud compared to their peers.

The political landscape appears increasingly favorable for passage, with Governor Shapiro’s administration signaling willingness to work across party lines to “finally get it done.” If successful, Pennsylvania would join the majority of states employing this modern approach to protecting public resources.

As healthcare costs continue to rise and government budgets remain tight, the potential financial impact of an effective FCA could be substantial. States with similar legislation have recovered hundreds of millions of dollars in fraudulently obtained funds, particularly in healthcare and government contracting sectors.

The governor’s push comes at a time when fiscal responsibility and government efficiency remain top priorities for voters across the political spectrum, potentially creating the conditions for Pennsylvania to finally close this longstanding gap in its anti-fraud arsenal.