Takeaways

• SCOTUS held that liability under federal fraud statutes can extend to misrepresentations even absent proof of economic loss.
• The decision may affect enforcement of current federal priorities, including EO 14173 and DOJ’s Civil Rights Fraud Initiative (which plans to pursue False Claims Act actions based on alleged violations of nondiscrimination laws).
• Under the False Claims Act, alleged false statements must have a direct connection to a government decision to contract or pay, i.e., they must be “material.”
• Contractors and grant recipients should review DEI-related programs, policies, and practices under privilege to address potential Title VII compliance issues and reduce False Claims Act risk.

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Article

The materiality of alleged violations of federal fraud statutes, including the False Claims Act (FCA), is expected to increase in importance given a recent U.S. Supreme Court decision and the shifting priorities at the Department of Justice (DOJ) for federal contractors.

In United States v. Kousisis, 145 S. Ct. 1382 (2025), the Supreme Court held that federal mail and wire fraud liability can extend to misrepresentations even without proof of economic loss. The ruling comes as the White House, with Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”) (EO), seeks to make compliance with Title VII of the Civil Rights Act a material contract term and the DOJ prioritizes its enforcement efforts under the FCA.

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