Governor Shapiro Uses his Annual Budget Address to Call for Pennsylvania to Finally Pass a State False Claims Act

In a move to fortify the Pennsylvania treasury’s defenses against fraud, Governor Josh Shapiro utilized his 2026-2027 Budget Address earlier today to call for the creation of a Pennsylvania state False Claims Act (“FCA”).  Federal and state FCAs allow the government to seek enhanced damages against fraudsters and offer whistleblowers awards for exposing fraud against the government. Governor Shapiro, leaning on his past experience as the Commonwealth’s Attorney General, emphasized that the Commonwealth can augment its toolkit “to prosecute waste, fraud, and abuse by finally passing a False Claims Act in Pennsylvania, which allows us to collect additional damages and recoup more state dollars that would otherwise be lost to fraud.”  Shapiro noted that  there is bi-partisan support for such legislation.

Despite Pennsylvania’s status as a magnet for Medicaid fraud, it remains one of the few states without a comprehensive civil statute to claw back stolen tax dollars through the public-private partnership of a state FCA.  State FCA bills have been proposed in Pennsylvania for decades.  But the bills have always floundered and never passed, having faced stiff resistance from special interest lobbying groups.

The cornerstone of the FCA legal framework is a centuries-old mechanism known as qui tam. Derived from the Latin phrase meaning “he who sues in the name of the king as well as himself,” qui tam provisions empower private citizens—often called “relators” or whistleblowers—to file lawsuits on behalf of the government against companies defrauding the state. These insiders, who often have front-row seats to corporate malfeasance, are incentivized to come forward by receiving a percentage of the final recovery (often ranging from 15% to 30%). The qui tam mechanism has allowed federal and state governments to uncover complex fraud schemes that would otherwise go undetected by under-resourced government agencies.

Nationwide, False Claims Acts have become the most potent weapon against fraud on the government, yielding billions of dollars in recoveries for federal and state treasuries. By failing to pass a state FCA, Pennsylvania is effectively leaving billions of dollars on the table that could be used to fund schools, infrastructure, and healthcare.  And FCAs are not just important instruments for recovery, they offer a strong deterrent effect as well.

Currently, 30 states, the District of Columbia, and Puerto Rico have enacted their own False Claims Acts, recognizing the immense return on investment these laws provide. Perhaps most glaring is Pennsylvania’s status among its peers: of the 10 largest states in the U.S., Pennsylvania and Ohio are the only two states that lack a state FCA. As the Shapiro administration signals a willingness to work across the aisle to “finally get it done,” the Commonwealth stands on the precipice of joining a majority of states in a modern, aggressive fight against the plundering of public resources.