Supposed ‘Benefits’ of State False Claims Act are Misleading
Proposal Would Expand Liability, Benefit Trial Lawyers, and Threaten Health Care Access
HARRISBURG – Following Governor Josh Shapiro’s release of his 2026–27 budget proposal, the Pennsylvania Coalition for Civil Justice Reform (PCCJR) is warning lawmakers and the public about the serious consequences of a proposed state False Claims Act (FCA).
“A state False Claims Act is being sold as a good-government reform, but in practice it’s a major giveaway to the trial bar,” said Curt Schroder, Executive Director of PCCJR. “Pennsylvania already has strong fraud-fighting tools, and they’re working. This proposal would expose hospitals and private employers to massive new liability, with little benefit to taxpayers. In addition to being duplicative and unnecessary, this is an anti-business, anti health care proposal.”
Supporters claim a state FCA would strengthen Medicaid fraud enforcement and generate new revenue. In reality, the proposal is duplicative, unnecessary, and harmful, expanding liability across the Commonwealth while primarily enriching private trial lawyers and professional bounty hunters. A state FCA promises much but delivers little in benefit.
Pennsylvania already operates under the federal False Claims Act, which allows the Commonwealth to recover its full share of misspent Medicaid dollars. Most FCA cases involve Medicaid, and federal law already provides all necessary enforcement authority.
The results speak for themselves. Pennsylvania’s Medicaid error rate is just 2.5 percent, one of the lowest in the nation. In 2024, the Attorney General’s Medicaid Fraud Control Section ranked first nationally in fraud charges filed, third in convictions, and recovered more than $1.3 million in misused Medicaid funds.
A state FCA would not strengthen enforcement. Instead, it would outsource enforcement to private attorneys, allowing them to file lawsuits on the government’s behalf and collect up to 30 percent of any recovery from Pennsylvania’s share of Medicaid dollars. Operating under the current federal False Claims Act, the plaintiff and attorneys only recover from the federal portion of the recovery.
That change would allow plaintiffs to effectively double dip—taking up to 30 percent of both federal and state recoveries—leaving Pennsylvania with less money, not more. While supporters point to a 10 percent federal reimbursement incentive, that amount is often outweighed by the percentage paid to private litigants under a state FCA.
The proposal would also fuel a costly “sue-and-settle” culture. With treble damages and steep per-claim penalties at stake, providers often settle meritless cases simply to avoid financial ruin.
Those risks fall hardest on hospitals, health systems, community clinics, and independent physician practices, particularly in rural and underserved areas already under severe financial strain. Even defending a False Claims Act lawsuit—often based on complex billing issues rather than intentional fraud—can threaten a provider’s survival and reduce access to care.
“Everyone agrees fraud should be pursued,” Schroder said. “We are mindful of the outrageous fraud uncovered recently in other states. But the answer is stronger public enforcement—not turning enforcement over to private bounty hunters who profit from litigation.”
PCCJR urges lawmakers to reject a state False Claims Act and instead invest in the anti-fraud programs already in place—programs that are accountable, effective, and working for Pennsylvania taxpayers.
Curt Schroder is the executive director of the Pennsylvania Coalition for Civil Justice Reform. Before joining PCCJR, he served as a member of the Pennsylvania Housing of Representatives (Chester-R) for 17 years. Contact Schroder at curt@pccjr.org.
