On June 11, 2025, Assistant Attorney General Brett A. Shumate issued an internal memorandum (the “Shumate memo”) to all Civil Division employees of the U.S. Department of Justice (“DOJ”), describing the Division’s enforcement priorities.

The four-page Shumate memo promises an aggressive investigation and use of the federal False Claims Act (“FCA”) against “entities that receive federal funds but knowingly violate civil rights laws.” The Shumate memo follows the announcement on May 19, 2025, of a new Civil Rights Fraud Initiative (the “May 19 announcement”), which shares similar aims. The May 19 announcement cited, in particular, universities and federal contractors engaging in discriminatory conduct (see our related blog posts here and here).

As we wrote in February, Executive Order 14173 of January 21, 2025, entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (“EO 14173”) indicated that the Trump administration was eyeing the FCA as an anti-discrimination tool, though the statute has not traditionally been used as such. The Shumate memo prioritizes FCA investigations and enforcement actions against those who receive federal funds but knowingly violate federal civil rights laws, particularly by participating in or allowing antisemitism. The DOJ strongly indicated its intent to use the FCA to combat antisemitism and other instances of discrimination when it announced the Civil Rights Fraud Initiative.

The FCA will now also be used as a means to target unlawful gender-dysphoria treatment with respect to minors (those under 19 years of age). The Shumate memo promises aggressive use of the FCA to pursue health care providers that bill the federal government for “impermissible services”—citing, for example, providers that attempt to evade state bans on gender-dysphoria treatments by knowingly submitting false claims to state Medicaid programs. The Civil Division will also investigate and pursue those submitting false claims in connection with drugs or services—including puberty blockers, hormones, or surgery—used to facilitate a child’s gender transition.

This follows Attorney General (“AG”) Pam Bondi’s direction to the Civil Division in a memorandum of April 22, 2025, entitled “Preventing the Mutilation of American Children,” to pursue FCA investigations for “false claims submitted to federal health care programs for any non-covered services related to radical gender experimentation.”

The Shumate memo further states that the Civil Division will “prioritize investigations of doctors, hospitals, pharmaceutical companies and other appropriate entities consistent with these directives”—and will use the federal Food, Drug, and Cosmetic Act (FDCA) as an enforcement tool: the DOJ’s efforts “will include, but not be limited to, possible violations of the [FDCA] and other laws.” The targets of such investigations could include both manufacturers and distributors: “pharmaceutical companies that manufacture drugs used in connection with so-called gender transition” and “dealers such as online pharmacies suspected of illegally selling such drugs.” Specifically mentioned in the Shumate memo are “puberty blockers, sex hormones, or any drug used to facilitate a child’s so-called ‘gender transition.’” AG Bondi noted in her April 22nd memo that the promotion of such treatments could run afoul of the Food and Drug Administration’s prohibitions on misbranding and mislabeling.

Takeaways

Both the Shumate memo and the April 22nd Bondi memo make clear that the DOJ is actively encouraging whistleblowers to come forward with information about potential FCA violations in these areas, particularly in the health care sector. The DOJ’s stated willingness to partner with qui tam relators underscores the importance of proactive compliance and internal oversight. For entities engaged in the provision of care to minors, the manufacture or distribution of pharmaceuticals used in gender-affirming care, or the administration of federally funded programs, compliance with the FDCA (and other potentially applicable laws), as well as the FCA, will be critical. A strong compliance program in these areas, preferably approved by counsel, is essential in light of the vigorous enforcement that we may certainly expect going forward.

Compliance with respect to civil rights laws will also involve careful scrutiny, as allegedly discriminatory conduct is apparently being interpreted in ways that entities may not have considered illegal before 2025. The Civil Rights Fraud Initiative will be guided by another Bondi memo, dated February 5, 2025, and entitled “Ending Illegal DEI and DEIA Discrimination and Preferences,” which encompasses “programs, initiatives, or policies that discriminate, exclude, or divide individuals based on race or sex.” Anyone receiving federal funds should conduct a careful review, with counsel, of their contract terms and diversity, equity, inclusion, and accessibility initiatives to ensure that they are not construed by the DOJ as unlawful under these policies.

These new positions in the latest DOJ memos will likely be challenged in litigation, given their significant departure from prior DOJ interpretations of the coverage of the FCA and questions about whether some of the challenged actions are sufficiently material to a government contract to provide a justiciable basis for such claims. As we noted earlier this year, EO 14173 promised to end “illegal discrimination,” in part through the FCA—an action that was challenged in court. One month later, the U.S. District Court for the District of Maryland issued a preliminary injunction—partly because EO 14173 failed to explain what constitutes illegal DEI. The U.S. Court of Appeals for the Fourth Circuit, however, granted the government’s motion for a stay pending appeal on March 14, 2025.

Federal contractors and entities in the health care and life sciences industries should be aware that their potential exposure to FCA liability is expanding in non-traditional ways, and whistleblower allegations will likely be taken seriously by the DOJ. Maintaining a robust compliance program, conducting internal audits, and consulting legal counsel specific to these evolving risks are crucial.