{"id":4549,"date":"2026-05-06T15:07:15","date_gmt":"2026-05-06T19:07:15","guid":{"rendered":"https:\/\/law.temple.edu\/10q\/?p=4549"},"modified":"2026-05-06T15:07:17","modified_gmt":"2026-05-06T19:07:17","slug":"the-false-claims-act-confronts-dei","status":"publish","type":"post","link":"https:\/\/law.temple.edu\/10q\/the-false-claims-act-confronts-dei\/","title":{"rendered":"The False Claims Act Confronts DEI"},"content":{"rendered":"\n

May 6, 2026<\/p>\n\n\n\n

For more than 160 years, the False Claims Act (FCA) has been the federal government\u2019s primary tool to combat fraud. In 2025, the U.S. Department of Justice (DOJ) announced<\/a> $6.8 billion in recoveries driven largely by health care fraud cases. Now, the Trump administration is using the FCA to target what it considers to be illegal diversity, equity, and inclusion (DEI) programs. A new frontier of potential liability \u2014 featuring treble damages and substantial statutory penalties \u2014 may define the future of enforcement.<\/p>\n\n\n\n

In his second term, President Trump moved swiftly to target diversity initiatives in federal procurement by issuing Executive Orders 14151<\/a> and 14173<\/a>, opening a new front in FCA enforcement by characterizing DEI programs as potential \u201ccivil rights fraud\u201d and launching<\/a> the Civil Rights Fraud Initiative<\/a> in May 2025.<\/p>\n\n\n\n

While FCA investigations are confidential, it is becoming clear that DOJ intends to focus in 2026 on challenging DEI initiatives it considers illegal, using FCA as its primary tool. DOJ just announced in April 2026 the first public resolution \u2014 a $17 million settlement with IBM \u2014 over alleged unlawful DEI practices.<\/p>\n\n\n\n

Understanding DOJ\u2019s Use of the FCA to Prosecute Civil Rights Fraud<\/strong><\/p>\n\n\n\n

The FCA serves as the primary mechanism for the government to recover losses associated with false claims for payment. It traditionally has been employed against contractors and health care providers that inflate costs or bill for services not performed. The FCA imposes civil liability on individuals or entities that knowingly submit false claims and authorizes treble damages, penalties, and qui tam actions.<\/p>\n\n\n\n

To pursue DEI-related claims, the government often relies on an implied false certification theory. Under this theory, every payment claim includes an implied certification of compliance with contractual provisions and applicable laws. According to DOJ, the FCA is implicated \u201cwhenever federal-funding recipients or contractors certify compliance with civil rights laws while knowingly engaging in racist preferences[.]\u201d<\/p>\n\n\n\n

Since announcing this initiative, DOJ enforcement activity expanded across several industries. In May 2025, DOJ launched<\/a> an FCA investigation into Harvard University\u2019s admissions policies following the recent Supreme Court decision ending affirmative action. In December 2025, The Wall Street Journal reported<\/a> that Google and Verizon received civil investigative demands regarding their workplace programs. And, in April 2026, DOJ announced its settlement with IBM.<\/p>\n\n\n\n

Materiality Will Continue to Be Key<\/strong><\/p>\n\n\n\n

DOJ\u2019s ability to prove materiality, a central issue in any FCA case, may be challenging in DEI-related cases. To prove a violation, the government must show that the alleged misrepresentation would actually affect its payment decision. In Universal Health Services, Inc. v. U.S. ex rel Escobar<\/em>, the Supreme Court established a rigorous, fact-specific materiality standard focused on government behavior.<\/p>\n\n\n\n

Executive Order 14173 addressed this issue by requiring agencies to include contract terms certifying compliance with federal anti-discrimination laws. However, not all agencies added these provisions, and some face ongoing legal challenges. Courts will continue to apply Escobar<\/em>, asking whether the government continued to pay claims despite knowledge of violations.<\/p>\n\n\n\n

Health Care Organizations May Be the Next Target<\/strong><\/p>\n\n\n\n

Health care is the largest source of FCA recoveries. Because providers submit claims and make certifications to federal programs, such as Medicare, Medicaid, and TRICARE, the industry presents a prime testing ground for DEI-related claims under an implied certification theory.<\/p>\n\n\n\n

The full article in its original form can be found here<\/a>.<\/p>\n\n\n\n

Bios:<\/em><\/p>\n\n\n\n