Pennsylvania Sues Character.ai Over Chatbot That Posed As Licensed Psychiatrist

Key Takeaways

The litigation and legislative landscape continues to develop in relation to companies in the AI space. Companies deploying AI chatbots should assess their potential exposure in light of these developments.

Pennsylvania and its medical licensing board have filed suit against Character Technologies, Inc., alleging that a chatbot on its Character.ai platform unlawfully practiced medicine. Commonwealth, Dep't of State, State Bd. of Med. v. Character Techs., Inc., No. 220 MD 2026 (Pa. Commw. Ct. filed May 1, 2026). The suit targets a user-created AI character named “Emilie” who is alleged to have offered to perform psychiatric assessments and claimed to have attended medical school and practiced psychiatry for seven years. When asked directly whether she was licensed in Pennsylvania, the complaint alleges that she confirmed that she was and provided a false license number. By mid-April 2026, the complaint alleges that Emilie had accumulated over 45,000 user interactions. The state alleges that the chatbot held itself out as a medical professional in violation of the Medical Practice Act and is seeking a preliminary injunction to prohibit chatbots from acting as medical professionals on the platform.

Character Technologies contends that the characters on its platform are fictional, intended for roleplaying, and that prominent disclaimers accompany every chat to ensure users understand they are not interacting with a real person. Character Technologies’ argument is, among other things, that a user who is told an interaction is fictional cannot reasonably claim to have relied on the information it provides.

As we highlighted in our article on New York Senate Bill S7263, a growing number of states including Nevada (AB406), Illinois (HB1806), and Tennessee (SB1580) have enacted legislation restricting AI from providing mental and behavioral health services. Since that article was published, S7263 has advanced in amended form as S7263A, passing the New York Senate on May 26, 2026, and is now awaiting action in the Assembly. While the amended bill no longer confers a private right of action, it provides that chatbot operators “shall not waive or disclaim liability under this section by notifying consumers that they are interacting with a non-human chatbot system.” Violations would be subject to Attorney General enforcement and civil penalties of up to $15,000 per day. 

The Pennsylvania complaint does not arise under S7263A, and it remains to be seen how new and forthcoming potential legislation may apply in litigation. Companies in this space should continue monitoring these developments to assess their impact as claims continue to be asserted under various theories of liability.