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Sunday, April 20, 2025

Trump Plan to Use False Claims Act Against DEI May Face Headwinds - Bloomberg Law

President Donald Trump’s executive order on “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” is an ambitious gambit: using the False Claims Act as a lever to curtail diversity, equity, and inclusion programs among federal contractors and grant recipients. In effect, the order requires contractors to certify that they don’t have unlawful DEI policies—and sets them up for potentially ruinous FCA investigations and lawsuits if they do.

A Maryland judge recently blocked some aspects of the executive order on constitutional grounds, and the government is appealing. But even if that injunction doesn’t stand, recent judicial trends suggest that the administration’s approach may face significant headwinds.

Courts have increasingly reined in executive branch authority to create major rules without specific congressional authorization. Several have particularly questioned presidents’ power to implement broad social policies through federal contractor requirements. At the same time, the bar for establishing FCA violations based on technical noncompliance with regulations has also risen, with courts demanding stringent proof of materiality and unlawful intent.

Statutory Authority

The executive order’s authority stems from the Federal...



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