Recent Decisions Quashing DOJ Administrative Subpoenas Provide A Roadmap For Companies Facing DEI-Focused False Claims Act Investigations

The US Department of Justice (DOJ) has reportedly launched False Claims Act (FCA) investigations related to corporate diversity, equity, and inclusion (DEI) practices, raising the stakes for companies seeking to manage DEI legal risks in a challenging enforcement environment.¹While companies could face significant possible exposure in these DEI investigations, recent court decisions arising from other DOJ investigations brought under novel legal theories offer a roadmap for companies as they evaluate their options, including potential litigation. In particular, a series of decisions quashing administrative subpoenas issued to hospitals relating to the provision of gender-affirming care provide strong precedent for seeking to set aside civil investigative demands (CIDs) issued by DOJ under the FCA as part of its new DEI probes.

The False Claims Act

As the primary tool used to combat fraud in government programs, the FCA imposes treble damages and civil monetary penalties on individuals and companies that knowingly submit false claims for payment to the government or cause such claims to be submitted.²The statute also imposes liability for knowingly making false statements that are "material" to a government payment decision.³The penalty amounts under the FCA can create massive exposure for companies, even where the actual damage to the government may be minimal.

Many FCA cases concern claims for payment that are asserted to be false because a company allegedly misrepresented its compliance with various legal requirements imposed by statute, regulation, or contract. In these cases involving allegedly false "certifications," there may be uncertainty about the correct interpretation of the applicable legal requirements and disputes about the defendant's knowledge of its noncompliance with the correct interpretation.

FCA cases may be initiated either by DOJ or by private whistleblowers, known as relators, who are authorized to file qui tam actions on behalf of the government in exchange for a share of the recovery. That mechanism—which gives relators a chance to receive between 15 and 30 percent of potentially multimillion-dollar recoveries—creates powerful incentives for employees, among others, to litigate perceived wrongdoing by their companies.

Recent DEI-Focused Investigations

On December 28, 2025, The Wall Street Journal reported that DOJ has initiated investigations into the use of diversity initiatives in hiring and promotion at prominent technology and telecommunications companies, as well as at companies in the automotive, pharmaceuticals, defense, and utilities industries.⁴ The investigations are reportedly being brought under the FCA.

While many specifics of DOJ's recent investigations have yet to come to light, they build on a January 21, 2025 executive order titled "Ending Illegal Discrimination and Restoring Merit-Based Opportunity" and a May 19, 2025 DOJ memorandum announcing the formation of a "Civil Rights Fraud Initiative."⁵President Trump's executive order directed the heads of federal agencies to impose new requirements on federal contractors and grant recipients to certify that they do "not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws" and to agree that their "compliance in all respects with all applicable Federal anti-discrimination laws is material to the government's payment decisions" under the FCA.

The DOJ memorandum, in turn, signaled a significant expansion of the use of the FCA to investigate and pursue claims against any recipient of federal funding that "knowingly violates federal civil rights laws" and "falsely certifies compliance with such laws." The DOJ memo laid out the government's current view of what constitutes a potential violation, highlighting "diversity, equity, and inclusion (DEI) programs that assign benefits or burdens on race, ethnicity, or national origin," certain policies relating to gender identity, and issues relating to antisemitism.

In the months following the executive order and DOJ memorandum, there was limited public reporting of any investigations. The recent reporting is therefore notable and confirms that DOJ is, in fact, conducting FCA investigations under the initiative. It is uncertain how many investigations are currently open and how many will be initiated in the coming weeks and months.

New Precedent Supporting Motions to Set Aside CIDs

Companies facing DEI-related investigations can seek to set aside improperly issued CIDs, and recent precedent quashing DOJ subpoenas to hospitals may help support those efforts.

When a company receives a CID under the FCA, it typically seeks to narrow the requests and then produce sufficient information to satisfy DOJ's demands. Courts historically have been fairly deferential and have given DOJ significant leeway to investigate, even when there may be limited evidence of wrongdoing at the outset of an investigation. Accordingly, there are few prior examples of judicial decisions on petitions to set aside or modify CIDs issued pursuant to the FCA.⁶

The statute, however, provides an express mechanism to seek to set aside a CID. Under the FCA, "[a]ny person who has received a civil investigate demand issued under [the FCA] may file ... a petition for an order of the court to modify or set aside such demand."⁷The petition must specify the grounds relied on and "may be based upon any failure of the demand to comply with the provisions of this section or upon any constitutional or other legal right or privilege of such person."⁸While the petition is pending, "the court may stay, as it deems proper, the running of the time allowed for compliance with the demand, in whole or in part, except that the person filing the petition shall comply with any portions of the demand not sought to be modified or set aside."⁹A petition would need to be filed within 20 days of the service of the CID or "within such longer period as may be prescribed in writing" by DOJ. And a petition to set aside the CID must be filed "in the district court of the United States for the judicial district within which [the party challenging the CID] resides, is found, or transacts business."¹⁰Courts reviewing a petition to set aside or modify a CID apply the general standards governing motions to quash administrative subpoenas, asking whether the CID (1) was issued for a congressionally authorized purpose, (2) seeks information relevant to that purpose, and (3) adequately describes the information sought.¹¹

While prior examples of motions to set aside FCA CIDs are limited, DOJ's recent losses regarding gender-affirming care subpoenas have generated helpful precedent for CID recipients.

In July 2025, DOJ publicly announced that it had issued over 20 subpoenas to doctors and clinics involved in gender-affirming care.¹²The subpoenas in those investigations seek a broad swath of sensitive and confidential records related to both patients and medical providers, including personnel records, as well as extensive billing and medical encounter data and communications with third parties.¹³In response, multiple hospitals and patient groups moved to set aside or modify the subpoenas.

The hospitals and patient groups in these cases have argued that: (1) the subpoenas were issued for the improper purpose of preventing patients from accessing lawful medical care that the Trump Administration disfavors; (2) the information sought by the subpoenas—including highly sensitive patient and provider information—is not relevant to any congressionally authorized purpose; and (3) the subpoenas are overbroad, vague, and unduly burdensome, and therefore the information sought is not "adequately described." To date, the hospitals and patient groups have been uniformly successful, with their motions to set aside or modify being granted in all material respects.¹⁴In the process, courts have been highly critical of DOJ for pursuing legal theories that do not withstand scrutiny.¹⁵

Depending on the circumstances, recipients of DEI-focused CIDs might be able to make similar arguments, including that: (1) the CIDs were not issued for a proper purpose under the FCA and instead attempt to stop lawful practices the Administration disfavors as a policy matter; and (2) some or all of the information sought is not relevant to enforcement of the FCA.

Relatedly, companies might be able to argue that there is no valid FCA claim because there is no basis to allege falsity, scienter, or materiality—all of which are essential elements of FCA liability. There would be no basis to allege falsity, for example, if there were no evidence that companies have been operating in violation of federal civil rights laws or the government is unable to identify an express or implied certification of compliance for periods of time before 2025. There would be no basis to allege scienter if there were no evidence that companies acted with "actual knowledge" or in "deliberate ignorance" or "reckless disregard" of their legal obligations. And there may be no basis to allege materiality, particularly prior to President Trump's executive order in January 2025 and the Administration's recent focus on so-called "illegal DEI." Even where the government has now labeled a requirement material, the Supreme Court has explained that "expressly identify[ing] a provision as a condition of payment" is "not automatically dispositive."¹⁶Overall, a company could argue that the lack of a basis for opening an investigation further confirms that the CID was issued for an improper purpose.

In sum, the approach taken by some hospitals facing recent subpoenas from DOJ offers a possible roadmap for companies facing DEI-focused CIDs under the FCA. The success that the hospitals have had in quashing administrative subpoenas has created judicial precedent that companies receiving CIDs can potentially use to challenge similarly novel FCA investigations targeting DEI practices.

WilmerHale's Efforts to Assist Clients in This Area

WilmerHale's False Claims Act Practice and Government and Regulatory Litigation Group are closely monitoring the Trump Administration's actions and are available to advise companies participating in federal programs on how to navigate the risks posed by the shifting landscape for federal contractors and recipients of federal funding. Our Anti-Discrimination Practice and Labor and Employment Practice are also available to provide guidance on DEI issues as the law and enforcement environment regarding these issues continue to evolve. Following DOJ's announcement of the Civil Rights Fraud Initiative, WilmerHale launched a False Claims Act Civil Rights Task Force.¹⁷We have been assisting clients with:

• Conducting proactive compliance reviewsto identify and address potential vulnerabilities in DEI and civil rights-related programs.
• Navigating new federal contract and grant requirements, including certifications of compliance with civil rights laws that may now be material to government payment decisions.
• Responding to government inquiries and whistleblower complaintsunder the FCA and other statutory and regulatory schemes.
• Litigating cases brought by the government or private party "relators"under the FCA.

WilmerHale will continue to provide timely updates and strategic counsel to help clients stay ahead of enforcement risks and maintain compliance in an evolving legal landscape.

Footnotes

1 See Lydia Wheeler, Justice Department Using Fraud Law to Target Companies on DEI, Wall St. J. (Dec. 28, 2025).

2 31 U.S.C. § 3729(a)(1). The FCA does not require strict actual knowledge: It defines "knowingly" to include acting with deliberate ignorance or reckless disregard of the truth or falsity of the information. See id. § 3729(b)(1).

3 Id. § 3729(a)(1)(G).

4 See id

5 Executive Order No. 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025); Memorandum, Office of the Deputy Attorney General, Civil Rights Fraud Initiative (May 19, 2025).

6 See, e.g., United States v. Kernan Hospital, 2012 WL 5879133 (D. Md. Nov. 20, 2012); In re Civil Investigative Demand 15-439, 2016 WL 4275853 (W.D. Va. Aug. 12, 2016); Cleveland Clinic Found. v. United States, 2011 WL 862027 (N.D. Ohio Mar. 9, 2011).

7 31 U.S.C. § 3733(j)(2)(A).

8 Id. § 3733(j)(2)(B).

9 Id.

10 Id. § 3733(j)(2)(A).

11 See, e.g., U.S. Dep't of Justice v. Ricco Jonas, 24 F.4th 718, 726 (1st Cir. 2022) (administrative subpoena); United States v. Powell, 379 U.S. 48, 58 (1964) (holding that an administrative subpoena may be quashed if it was "issued for an improper purpose"); In re Civil Investigative Demand 15-439, 2016 WL 4275853, at *3 (W.D. Va. Aug. 12, 2016) (applying Powell to motion to set aside FCA CID); Maccaferri Gabions, Inc. v. United States, 938 F. Supp. 311, 314-318 (D. Md. 1997) (applying improper purpose test to motion challenging a DOJ antitrust CID).

12 Press Release, DOJ, Department of Justice Subpoenas Doctors and Clinics Involved in Performing Transgender Medical Procedures on Children (July 9, 2025).

13 Azeen Ghorayshi and Glenn Thrush, Justice Dept. Demands Patient Details From Trans Medicine Providers, N.Y.Times (July 10, 2025); Chris Cameron, Trump Officials Demanded Confidential Data About Transgender Children Seeking Care, N.Y. Times (Aug. 20, 2025).

14 In re Subpoena Duces Tecum No. 25-1431-016, 2025 WL 3562151 (W.D. Wash. Sept. 3, 2025); In re Admin. Subpoena No. 25-1431-019, 2025 WL 2607784 (D. Mass. Sept. 9, 2025); QueerDoc, PLLC v. U.S. Dep't of Justice, 2025 WL 3013568 (W.D. Wash. Oct. 27, 2025); In re Subpoena No. 25-1431-014, 2025 WL 3252648 (E.D. Pa. Nov. 21, 2025); In re: 2025 UPMC Subpoena, 2025 WL 3724705 (W.D. Pa. Dec. 24, 2025); In re: Dep't of Justice Admin. Subpoena No. 25-1431-030, 2026 WL 33398 (D. Colo. Jan. 5, 2026) (Magistrate Judge report and recommendation).

15 See Chris Geidner, Multiple Judges Call Out DOJ's Methods of Defending Its Invasive Trans Care Subpoenas, LAWdork (Nov. 23, 2025).

16 Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176, 194 (2016) (emphasis added).

17 See WilmerHale, WilmerHale Launches False Claims Act Civil Rights Task Force to Help Clients Navigate New DOJ Enforcement Initiative (May 27, 2025).

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