Pennsylvania Emerges As Battleground Over State False Claims Laws

The push to enact a state False Claims Act in Pennsylvania is gaining momentum, reigniting a long-standing debate over the merits of implementing this powerful anti-fraud legislation in the nation’s fifth most populous state.

Pennsylvania currently stands as the largest U.S. jurisdiction without its own False Claims Act, a distinction that advocates argue leaves the state vulnerable to fraudulent activities that drain taxpayer resources. The proposed legislation would enable both the state government and private whistleblowers to pursue legal action against entities that knowingly submit false claims for government funds.

The renewed push comes amid increasing pressure from anti-fraud advocates and government accountability groups who point to successful recoveries in other states. According to data from the National Conference of State Legislatures, the 31 states that have enacted their own False Claims Acts have collectively recovered billions in fraudulently obtained public funds over the past decade.

“Pennsylvania taxpayers deserve the same protections that citizens in most other large states already enjoy,” said Maria Reynolds, executive director of the Pennsylvania Coalition for Government Accountability, a non-partisan watchdog group supporting the legislation. “Every dollar lost to fraud is a dollar that could be funding schools, infrastructure, or healthcare.”

The proposed legislation mirrors the federal False Claims Act, which has been in place since the Civil War era and was significantly strengthened in 1986. The federal law allows whistleblowers, known as “relators,” to file lawsuits on behalf of the government and potentially receive a percentage of any recovered funds, typically between 15 and 30 percent.

Business groups, however, have voiced strong opposition to the measure. The Pennsylvania Chamber of Business and Industry has expressed concerns that a state-level False Claims Act could create a hostile business environment and lead to frivolous litigation.

“What proponents fail to acknowledge is the significant compliance costs and legal exposure that comes with these laws,” said Thomas Harrington, the Chamber’s general counsel. “Companies operating in good faith could face substantial legal expenses defending against meritless claims.”

The healthcare industry has emerged as a particularly vocal opponent, with the Hospital and Healthsystem Association of Pennsylvania arguing that the sector already faces extensive regulation and oversight.

Supporters counter that the legislation includes provisions to prevent frivolous lawsuits, noting that the state attorney general would retain authority to dismiss cases deemed without merit. They also highlight that in states with similar laws, healthcare fraud has consistently represented the largest category of recoveries.

Senator Eleanor Williams, the bill’s primary sponsor, emphasized the potential fiscal benefits. “Our analysis suggests Pennsylvania could recover between $30 million and $50 million annually through a robust False Claims Act,” Williams said. “At a time when our budget faces persistent constraints, we simply cannot afford to leave these funds on the table.”

The legislation has garnered bipartisan support, though it faces a challenging path through the divided legislature. Previous attempts to pass similar legislation stalled in committee in 2019 and 2022.

Legal experts note that Pennsylvania’s status as a major healthcare and defense contracting hub makes it particularly susceptible to certain types of fraud. The state is home to numerous hospitals, research institutions, and defense contractors that receive substantial government funding.

“States with robust False Claims Acts create a powerful deterrent effect,” explained Professor James Morrison, who specializes in government contracting law at Pittsburgh University. “The combination of treble damages and substantial penalties makes potential fraudsters think twice.”

If enacted, Pennsylvania would join neighboring states New Jersey, New York, Delaware, and Maryland, all of which have their own False Claims Acts. Advocates suggest this regional consistency would simplify compliance for businesses operating across state lines.

The legislature is expected to hold hearings on the proposed legislation next month, with a full vote potentially coming before the summer recess. Governor Rebecca Anderson has indicated she would sign the bill if it reaches her desk, calling it “an important tool for ensuring fiscal responsibility.”