As federal contractors and grant recipients navigate the changing landscape of diversity, equity, and inclusion (DEI) programs, the Trump administration’s rescinding of Executive Order No. 11246 (EO) raises new concerns about potential False Claims Act (FCA) liability for non-compliance.
In a recent article for Law360, we examined how the rescission of EO 11246 intersects with the FCA. We discussed how the EO asserts that preferences based on race or sex could violate civil rights laws, while also streamlining the contracting process to emphasize compliance with anti-discrimination laws. This shift has significant implications for federal contractors and grant recipients, particularly with regard to potential FCA liability if they fail to comply with the new guidelines.
While the EO clearly aims to curb DEI preferences, we highlighted that the mere possibility of FCA liability—coupled with the risk of treble damages and per-claim penalties—could discourage the continuation of DEI programs, even those that are fully compliant with the law. In our article, we explore several key legal issues related to FCA claims, including materiality, scienter, falsity, and damages, which could arise as a result of the EO’s impact.
We also addressed the potential for criminal liability, as outlined in the February 5 memo from the Attorney General titled, “Ending Illegal DEI and DEIA Discrimination and Preferences.” While it remains unclear what specific grounds for criminal liability may exist, we noted that the government may face significant challenges in pursuing a criminal case based on DEI programs.
The full article, “What Trump Admin’s Anti-DEI Push Means for FCA Claims,” was published by Law360 on February 12 and is available online (subscription required). This piece follows Denise’s recent contribution to another Law360 article, “Trump’s Anti-DEI Push Poses New FCA Risks for Healthcare,” which was published on February 11.