Key takeaways
- HB 1697, if enacted, would allow relators to bring False Claims Act claims on behalf of the Commonwealth.
- HB 1697 does not include any provisions that would explicitly bar relators from bringing claims relating to Pennsylvania taxes or holders’ Pennsylvania unclaimed property obligations.
- Abusive and nuisance claims have been common in other states that have enacted False Claims Act legislation that did not include a complete bar on tax-related claims.
On July 9, 2025, the Pennsylvania House passed HB 1697, which would create a False Claims Act (“FCA”) regime patterned after the federal FCA. Although the federal FCA expressly excludes federal taxes from being the subject of FCA claims, HB 1697 does not include an express tax bar and thus arguably could apply to state taxes (without any of the safeguards enacted by states that expressly include taxes in the scope of their FCA regimes). If enacted, HB 1697 could thus pose significant risk to Pennsylvania taxpayers and open the potential for abuse by relators. HB 1697 would also increase the risk for holders of unclaimed property. HB 1697 is now proceeding to consideration by the Pennsylvania Senate.
HB 1697, which was introduced on July 2, only one week before the House passed it, would create an FCA regime for Pennsylvania that is closely patterned after the federal FCA regime. HB 1697 states that it “adopts the intent of Congress in enacting the Federal False Claims Act” and incorporates many of the FCA’s distinguishing features: liability for both affirmative and “reverse” false claims,1 private “qui tam” lawsuits brought by private parties, and potential treble damages. Despite these similarities, HB 1697 has at least one significant difference from the federal FCA: while the federal FCA expressly carves out “claims, records, or statements made under the Internal Revenue Code,”2 commonly referred to as the “tax bar,” HB 1697 contains no such provision. Thus, there could be a question over whether HB 1697’s broad statement of intent excludes tax claims from the scope of Pennsylvania’s FCA in the absence of an express tax bar provision.