A Sign of What’s to Come? Court Dismisses FCA Retaliation Complaint Based on Alleged Discriminatory Use of Federal Funding

On November 7, 2025, in Thornton v. National Academy of Sciences, No. 25-cv-2155, 2025 WL 3123732 (D.D.C. Nov. 7, 2025), the District Court for the District of Columbia dismissed a False Claims Act (FCA) retaliation complaint on the basis that the plaintiff’s allegations that he was fired after blowing the whistle on purported illegally discriminatory use of federal funding was not sufficient to support his FCA claim. This case appears to be one of the first filed, and subsequently dismissed, following Deputy Attorney General Todd Blanche’s announcement of the creation of the Civil Rights Fraud Initiative on May 19, 2025, which “strongly encourages” private individuals to file lawsuits under the FCA relating to purportedly discriminatory and illegal use of federal funding for diversity, equity, and inclusion (DEI) initiatives in violation of Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025). In this case, the court dismissed the FCA retaliation claim and rejected the argument that an organization could violate the FCA merely by “engaging in discriminatory conduct while conducting a federally funded study.” The analysis in Thornton could be a sign of how forthcoming arguments of retaliation based on reporting allegedly fraudulent DEI activity will be analyzed in the future.

In Thornton, the plaintiff alleged that the National Academy of Sciences managed a study of Indigenous work in a racially discriminatory manner, and that he was retaliated against for blowing the whistle on those improper practices. The plaintiff also alleged that the purported discriminatory management of the study, which relied on federal funding, rose to the level of fraud against the United States under the FCA. The court disagreed and concluded, among other things, that the plaintiff’s internal complaint about the management of the study was not “protected conduct” under the FCA. Specifically, the court found that the plaintiff’s internal complaint regarding his former employer’s “racist study” did not constitute an investigation into conduct that could reasonably have violated the FCA. The court also rejected the plaintiff’s theory “that engaging in discriminatory conduct while conducting a federally funded study necessarily constitutes the misuse of federal funds in violation of the False Claims Act.” Instead, the court held that a viable FCA retaliation claim “must include some evidence of ‘false certifications . . . in connection with funding claims,’” which was absent in Thornton’s filed complaint.

This case is an early example showing that a complaint about discrimination alone, even associated with a federally funded program, may be insufficient to support an FCA claim. However, the funds issued in Thornton were disbursed before Executive Order 14173 directing recipients of federal funding to certify that they do not operate any programs promoting DEI in violation of federal anti-discrimination laws. Where a certification has been made, which the Thornton court held was a prerequisite for a viable FCA retaliation claim, a court might evaluate allegations of internal reports of discrimination—like those alleged in Thornton—differently. Several additional takeaways from this case are below.

Key Takeaways:

• The certification required by Executive Order 14173, and the DOJ’s recent encouragement for whistleblowers to file DEI-related discrimination lawsuits under the FCA, have led to new legal challenges, which are likely to continue as more federal contracts and grants are awarded subject to the DEI compliance certification.
• Courts will likely look for more than mere discriminatory practices to constitute an FCA violation, requiring plaintiffs and relators to connect the alleged discriminatory practices with fraudulent claims for payments to state a valid claim or to confer retaliation protections.
• Allegations of FCA liability based on discrimination against companies that receive federal funding should be carefully reviewed and investigated given the FCA’s provisions for treble damages and civil penalties, as well as potential collateral consequences.