States With False Claims Laws Recover Millions While Pennsylvania Legislation Stalls

Pennsylvania Lags Behind Other States in False Claims Act Implementation, Costing Millions

Commonwealth Media Services recently captured Governor Josh Shapiro unveiling his 2026 budget address at the Pennsylvania Capitol, as the state faces mounting questions about its failure to adopt a False Claims Act—a law that has generated millions in recovered funds for other states.

Pennsylvania remains one of only a handful of states without a False Claims Act, a legislative tool designed to combat fraud against government programs. These laws typically allow whistleblowers to file lawsuits on behalf of the government against entities that have submitted false claims for payment, with whistleblowers receiving a portion of any recovered funds.

In neighboring states and across the nation, these laws have proven remarkably effective. New York has recovered over $700 million since implementing its version of the law in 2010. Similarly, Massachusetts has clawed back more than $200 million in fraudulent claims over the past decade. These recoveries often target fraudulent healthcare billings, defense contractor overcharges, and other misuses of taxpayer funds.

“The math is straightforward,” said Elizabeth Morgan, director of the Taxpayer Protection Coalition, a nonpartisan watchdog group. “Every year Pennsylvania delays passing this legislation is another year millions of dollars remain in the pockets of those defrauding state programs.”

The federal False Claims Act, originally signed by President Abraham Lincoln during the Civil War to combat defense contractor fraud, has been modernized over decades and serves as a model for state legislation. The federal version has recovered more than $70 billion since 1986 amendments strengthened its provisions.

When states implement their own versions, they can recover additional funds beyond what federal actions provide. Under the federal Deficit Reduction Act of 2005, states with qualifying False Claims Acts receive an additional 10% of federal recoveries in Medicaid fraud cases—a significant incentive Pennsylvania currently forgoes.

Previous attempts to pass such legislation in Pennsylvania have stalled repeatedly. A 2023 bill introduced by State Senator Marty Flynn (D-Lackawanna) gained initial bipartisan support but failed to advance beyond committee hearings. Similar legislation proposed in 2019 and 2021 met the same fate.

Industry groups have consistently opposed the measure. The Hospital and Healthcare Association of Pennsylvania has argued the law would create additional regulatory burdens and potentially lead to frivolous lawsuits. “Healthcare providers already operate under strict compliance guidelines,” said Association President Michael Thompson in testimony last year. “Adding another layer of potential liability could drive up costs for everyone.”

Advocates counter that properly drafted legislation includes safeguards against meritless claims while providing substantial financial incentives for the state. Studies from the National Conference of State Legislatures indicate states with robust False Claims Acts typically recover between $10-20 for every dollar spent on enforcement.

The timing of this issue is particularly relevant as Pennsylvania grapples with projected budget shortfalls. Current estimates suggest the state could face a deficit approaching $3 billion by fiscal year 2027-28 without significant revenue enhancements or spending reductions.

Governor Shapiro has not explicitly endorsed a False Claims Act in his recent budget address, focusing instead on education funding and infrastructure investments. However, sources within the administration indicate the governor is “actively exploring all revenue options that don’t require broad-based tax increases.”

Democratic lawmakers appear poised to make another push for the legislation this session. House Judiciary Committee Chair Tim Briggs (D-Montgomery) confirmed his intention to prioritize the bill, stating, “This is fundamentally about accountability for taxpayer dollars. When businesses defraud the government, they’re defrauding every Pennsylvania resident.”

Republican leadership has expressed cautious interest, contingent on specific provisions. Senate Majority Leader Joe Pittman (R-Indiana) noted his caucus would consider legislation that “protects legitimate businesses while providing meaningful tools against actual fraud.”

As debate continues in Harrisburg, neighboring states continue to recover millions through their False Claims statutes—funds that experts say Pennsylvania leaves uncollected each year the legislation fails to pass.