Bass, Berry & Sims attorneys Denise Barnes and Scott Gallisdorfer authored an article for Law360 examining the intersection of the Trump administration’s rescinding of Executive Order No. 11246 (EO) relating to diversity, equity and inclusion (DEI) programs with the False Claims Act (FCA). As the authors state, the EO “asserts that preferences based on race or sex can violate civil rights laws and mandates a streamlined contracting process that emphasizes compliance with anti-discrimination laws” and stress that the “order has far-reaching implications as it relates to federal contractors and grant recipients — namely, potential FCA liability should a contractor or grant recipient fail to comply.”
Denise and Scott further explain that “given the attendant treble damages and per-claim civil monetary penalties, even the mere possibility of potential FCA liability may well have a significant chilling effect on the operation of DEI programs and related initiatives, including those that may well be perfectly legal.”
The authors examine several issues and questions raised by the EO in the context of FCA claims to establish liability relating to materiality, scienter, falsity, and damages. Additionally, the authors explore the criminal liability aspect as raised with the February 5 memo issued by the Attorney General titled, “Ending Illegal DEI and DEIA [diversity, equity, inclusion and accessibility] Discrimination and Preferences.” Denise and Scott point out, “Although it remains to be seen what the grounds for criminal liability could be, the government will likely face similar — if not greater — hurdles, in establishing a criminal case on the basis of promoting DEI policies and 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 or in the PDF provided. Denise also provided insight on this topic for an article in Law360, “Trump’s Anti-DEI Push Poses New FCA Risks for Healthcare,” that was published February 11.