Pennsylvania Lawmakers Urged to Pass State False Claims Act After Years of Delay

Pennsylvania is poised to join 30 other states in adopting a False Claims Act (FCA) to combat fraud against the state government, following Governor Josh Shapiro’s recent call for action in his 2026 budget address. The proposed legislation, House Bill 1697, has garnered bipartisan support and would establish a framework modeled after the highly effective federal False Claims Act.

The federal FCA, considered one of the government’s most powerful fraud-fighting tools, recovered more than $6.8 billion in fiscal year 2025. The law empowers whistleblowers to report fraud against the government by offering them protection from retaliation and financial incentives—allowing them to receive between 15% and 30% of recovered funds.

“No matter what kind of scheme someone cooks up, we need to make sure Pennsylvania recoups as much as possible to protect the hard-earned money of our taxpayers,” said state Representative Frank Burns, a Democrat from Cambria County who sponsored the bill.

Pennsylvania officials have highlighted the urgent need for such legislation. In 2024 alone, the state prosecuted 119 cases of Medicaid fraud and recovered more than $11 million. However, experts believe this represents only a fraction of potential recoveries that could be achieved with a comprehensive state-level False Claims Act.

While many associate Medicaid fraud with individuals falsely claiming eligibility benefits, the more significant financial threat comes from healthcare providers and hospital systems submitting fraudulent bills. These corporate schemes can drain millions from state coffers that should be directed toward essential services for residents.

The financial implications for Pennsylvania are substantial. Currently, Medicaid funding comes from both federal and state sources, with recovery proceeds divided between the two governments. States with qualifying False Claims Acts receive an additional 10% of recovered Medicaid funds as a bonus from the federal government—an incentive Pennsylvania currently forfeits without its own FCA.

The proposed Pennsylvania FCA would go beyond addressing just Medicaid fraud. It would target contractors illegally diverting government funds from various programs, including state-funded infrastructure and construction projects. Notably, Pennsylvania’s version would be more robust than the federal law by including tax-related fraud, which is excluded from the federal FCA and handled separately through IRS whistleblower programs.

While Pennsylvania’s state legislature has yet to pass the bill, some local governments have already taken action. Philadelphia and Allegheny County have implemented their own versions of the FCA to recover misappropriated government funds at the county level, demonstrating growing recognition of the need for such protections.

Industry opposition to the bill has been significant. Healthcare providers and hospital associations have lobbied against the legislation, arguing that Pennsylvania already benefits from Medicaid recoveries under the federal FCA. Critics of this position point out that this argument ignores both the additional 10% recovery bonus and the fact that a state FCA would address numerous types of non-Medicaid fraud.

“The real motivation behind industry opposition is concern about their bottom line,” said one advocate for the bill who requested anonymity. “Many healthcare providers fear increased scrutiny from empowered whistleblowers who could expose fraudulent practices.”

The Pennsylvania FCA has faced a difficult road to passage, with numerous unsuccessful attempts dating back to 1997. As Governor Shapiro makes this legislation a priority in his budget address, supporters hope this renewed focus will finally push the bill across the finish line.

With billions in potential recoveries at stake, proponents argue that Pennsylvania taxpayers can no longer afford to leave money on the table by allowing fraud to go unchallenged. The proposed legislation represents a critical opportunity for the state to protect public funds while aligning with proven anti-fraud measures already implemented across much of the nation.