Gov. Josh Shapiro urged Pennsylvania to pass a state False Claims Act (FCA) in his 2026 budget address. There is bipartisan support for House Bill 1697, which would create a state FCA modeled after the federal FCA, one of the government’s best fraud-fighting tools.
The FCA encourages whistleblowers to come forward with information about fraud against the government and helps protect them from the often devastating effects of retaliation by letting them share in 15% to 30% of the money they help the government recover. In fiscal year 2025, FCA cases recouped more than $6.8 billion for the federal government.
Pennsylvania, like many states, is wracked with fraud that drains public money meant to serve state residents. As Shapiro noted in his speech, the state charged 119 cases of Medicaid fraud in 2024 and recovered more than $11 million but could recoup far more with the help of whistleblowers properly incentivized and empowered under the FCA.
When you hear “Medicaid fraud,” you might think about individuals who falsely claim to be Medicaid-eligible. The far bigger threat to Medicaid is from hospital systems and other health care companies that fraudulently bill Medicaid for their services. For instance, in December 2025 Recovery Centers of America paid $1 million for allegedly billing for drug and alcohol treatment services it never provided. A whistleblower began that case by filing a complaint under the federal FCA in the Eastern District of Pennsylvania.
Medicaid is funded by both state and federal dollars, so Medicaid fraud recovery money gets divided between state and federal government. When states have a qualifying state FCA, the federal government gives them an extra 10% of the Medicaid money recovered. This 10% bonus incentivizes states to create strong state FCAs. Without a state FCA, Pennsylvania is losing out on significant money.
The proposed Pennsylvania FCA doesn’t just target Medicaid fraud. As state Rep. Frank Burns, D-Cambria, the bill’s sponsor, said, “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.”
Beyond Medicaid fraud, Pennsylvania needs tools to target contractors who illegally divert government funds, including, for example, in state-funded infrastructure and construction programs.
Thirty states, including many of Pennsylvania’s neighbors, already have state FCAs. Delaware, New Jersey, New York and Maryland do. Yet Pennsylvania remains the largest state in the nation without an FCA. While Pennsylvania drags its feet, Philadelphia and Allegheny County passed their own versions of the FCA to recover stolen government dollars at the county level.
If passed, the Pennsylvania state FCA would be even stronger than its federal counterpart, because it covers tax-related fraud. (The federal FCA has a carveout excluding tax fraud, which is handled under the IRS whistleblower program.) New York’s FCA also covers tax fraud, which allowed the state to recover a whopping $105 million in a 2021 tax fraud settlement.
Industry groups claim Pennsylvania doesn’t need its own FCA, because it already benefits from Medicaid recoveries under the federal FCA. Besides overlooking the extra 10% Pennsylvania is missing out on, that argument ignores that a state FCA would address non-Medicaid fraud, too. That includes cases like the recent whistleblower-initiated case brought under the New Jersey state FCA to recover $100 million from Horizon Blue Cross Blue Shield for allegedly cheating on a contract to administer state employee benefits.
The real reason industry lobbyists, especially those representing hospitals, are against the Pennsylvania FCA is because they’re scared it will hurt their bottom line. Hospitals don’t want more ways for whistleblowers to come forward, because significant money is at stake for them when they get caught defrauding the government.
More is at stake for everyone who wants their tax dollars not to be stolen. Pennsylvania is leaving money on the table by letting its proposed state FCA languish in the state Legislature. After many failed attempts dating back to 1997, it’s time to pass the Pennsylvania FCA. As Shapiro urged, “Let’s finally get it done.”
Elizabeth Soltan is an associate at Whistleblower Partners, a law firm representing clients in False Claims Act cases and on tips to federal agencies including the SEC, CFTC and Financial Crimes Enforcement Network. She was born and raised in Pennsylvania.