Zach Cunha
It's entirely plausible, and I don't want to sound like I am sprouting nothing but gloom and doom. The side risks, or the collateral risks, of a false claims act investigation are substantial, even if at the end of the day you have ironclad defenses that you think are going to prevail in a motion for some reason.
Scott D. Schneider
Hello and welcome to Campus Docket, a Volt podcast about the legal challenges reshaping higher education. I’m Scott Schneider, attorney and adjunct professor at the University of Texas School of Law. And I’m joined by Eric Kelderman, senior writer at the Chronicle of Higher Education. Each episode, we’ll unpack the key legal developments that matter to higher ed leaders from student rights and faculty contracts to DEI lawsuits and government oversight. Let’s get into it.
Eric Kelderman
Hey, welcome to Campus Docket, everyone. I'm Eric Kelderman, senior writer with the Chronicle of Higher Education. How are you doing, Scott?
Scott D. Schneider
I'm doing great, Eric. Good to see you.
Eric Kelderman
Yeah, hey before we start our main conversation, let's dig into a couple of recent developments on the education legal front. What do you got for us?
Scott D. Schneider
It's interesting. This isn't higher ed, but this is one of those issues that I saw come up, I think earlier or maybe late last week, where the Department of Education has opened an investigation into the state of New York, saying that they may have been violating Title IX with a demand for a high school there to discontinue use of the Chief’s mascot.
Eric Kelderman
Title VI.
Scott D. Schneider
Yeah, it's really interesting. You know, the part, here's kind of the big picture thought is, number one, it's not clear to me at all that a mascot issue standing alone would be a Title VI violation, especially on this set of facts. But what again it indicates is a department and administration on culture war issues, and this has obviously been a hot button issue, you're based in DC for what? Two decades. They're going to weigh in on a side that is frankly the opposite of what we've seen in the civil rights space for about 20 years and take pretty aggressive positions in this space. In other words, you know, one of the things we've talked about, I think in previous episodes of this podcast, there used to be a divide politically around folks who were very ardent in their enforcement of various civil rights statutes and Republican administrations, which basically said, hey, we need to be a little more deferential in this space. What you see now is a Republican administration who is saying, no, we're going to take civil rights enforcement, our view of what civil rights enforcement should be very seriously. And we're going to proceed in a fairly aggressive fashion in enforcing that. And again, historically, 50, 60 years is without precedent, I think, in a Republican administration. And it's really interesting.
Eric Kelderman
Yeah, I look at this case and I think it sort of turns on its head everything that we have thought about what was discriminatory behavior in the past. And I wonder how far the administration is going to push that. It's fascinating. I saw a statement from the Secretary of Education, Linda McMahon, talking about how the state had allowed various other mascots like Vikings fighting Irish cowboys to exist, and yet she blamed the state for singling out the Native American heritage to be, in her view, I guess, erased by eliminating this Chief’s mascot. It's going to be hard to look away from this one.
Scott D. Schneider
Yeah, it'll be interesting. It'll be interesting to see how this unfolds. What's going on with international students?
Eric Kelderman
As you know, the administration has sought very hard to cut off the flow of international students from Harvard. A federal district court judge recently extended a temporary restraining order that prevents the administration from revoking Harvard certification in the student exchange visitor information system. But what seems to me is, now, that that's been halted, the administration is clearly looking more broadly. They've tried to shut off the flow of a much larger share of international students to the US. Most recently, the State Department has halted the interview process for all international students who are seeking visas to study in the US. And they've announced that they'll be vetting social media content, which is very interesting. They're going to take sort of a viewpoint, non-neutral view of viewpoints expressed in social media to try and weed out the students that come here. This could be a real economic problem for higher education institutions. It also shuts off really the flow of numerous grad students who engage in really significant research on US campuses and not just at elite, very selective institutions.
Scott D. Schneider
It's fascinating legal times for higher education right now in this space, immigration, and tons of other spaces as well.
Eric Kelderman
Yeah. Well, let's get into it.
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Eric Kelderman
Today we're joined by Zachary Cunha, currently a partner at Nixon Peabody and a member of the firm's litigation department and government investigations and white collar defense practice group. Before that, he had a lengthy career at the U.S. Department of Justice, including as U.S. District Attorney for the District of Rhode Island. Zach, thanks for being with us today.
Zach Cunha
Eric, thanks for having me. It's great to be here.
Eric Kelderman
Sure. So before we get into the meat of the discussion, Scott and I like to start with something light, a little icebreaker. And today that topic is, you have spent almost your entire career working for the Department of Justice before your current position. So if you hadn't done that or if you hadn't even been a lawyer, what's something else you might have pursued?
Zach Cunha
You know, it's interesting and it's great that you asked that question given the context that we're here for. I think, if I hadn't gone to law school, I probably would have gone into academia. I always loved history. I was a history major and an English major in college and it was sort of a toss up as to whether I was going to go the law school route or pursue an advanced degree and maybe wind up teaching in one of those fields.
Eric Kelderman
I can tell you, having covered higher ed for about 17 years right now, you made the right choice.
Zach Cunha
I'll tell you almost 25 years in, I have no regrets and I love the work that I do, so it's good to hear that.
Eric Kelderman
Scott, what about you, man?
Scott D. Schneider
It's funny, that was exactly the thought process for me. I was either going to get a PhD in economics and teach at a university, which I've been blessed to do. I just finished one of the most rewarding semesters of my side teaching career at the University of Texas Law School. So I've been able to do that in a little smaller quantity. But it was between law school and PhD in economics. And I'm grateful for the career I've had. The other one, Eric, I swear to God, this is totally true. I was the editor of a very good high school newspaper in New Orleans. And everybody wanted me to be a journalist. And I thought that was the direction I was going to go with my career. And that was before the economic model got completely obliterated by the Internet. But that's my other choice. And I still harbor a bit of a little fantasy about it at some point becoming a journalist. So those are the two for me.
Eric Kelderman
Just as long as you don't plan on making any money doing it, you'll be fine.
Scott D. Schneider
What about you? Did you dream about going to law school?
Eric Kelderman
No. I knew that probably wasn't in the cards for me. I have a very good friend from college who was a lawyer who, at one point, explained to me how my lack of logical thinking capability would be a severe deterrent to that.
Scott D. Schneider
Oh, sir. Sir, you'd be surprised.
Eric Kelderman
You know, but I started my, so my undergrad and my first graduate degrees are in music. So, at one point in my life, I really thought I would be either teaching music at a university or performing professionally or in some capacity as a classical musician. And that's hard. I didn't quite get there. I did it for a while and realized that, you know, at some point that as good as I was and as much as I loved it, it was… I made a good choice, actually. I've had a good career in journalism and I got in before the economic model collapsed and somehow I've managed to stay here. So, luck, persistence, whatever that is, I'm still around.
Scott D. Schneider
We're glad you're around.
Eric Kelderman
Thanks, thanks, I'm too.
Well look, what we really invited Zach to talk about here today is what I think of as a sort of a new legal tactic that the Trump administration is using to investigate and prosecute measures on college campuses that it alleges are discriminatory or anti-Semitic. And what they're doing is threatening to charge and prosecute institutions under the False Claims Act, which imposes civil fines and penalties for things like what they argue would be, violations of this would be like allowing transgender persons to use bathrooms of their choice, or if colleges were using diversity, equity, and inclusion programs that focused on race or ethnicity. So, what I think of as the novelty here is that the False Claims Act is, and Zach will clarify this, right, is generally used to prosecute fraud against the government. And in this case, the Justice Department is basically saying, I think, that the measures that we previously used to address discrimination are fraudulent in their view because they are using federal dollars, like student financial aid, to violate civil rights laws like Title VI and Title VII. So Zach, you'll correct me if I'm wrong on those thoughts, but can you give us an overview of what is the False Claims Act and how is it usually used?
Zach Cunha
Sure. I think, Eric, it's interesting that you used the word “new" in respect to what the administration is doing, given what the False Claims Act is and how it's evolved over time. I'm actually going to take you back for a minute to the middle of the Civil War in 1863, which is when Abe Lincoln signs the False Claims Act into law. And the initial premise is exactly what you described. The context is the Union Army is gearing up for its conflict with the Confederacy, or is in the midst of that conflict, and is engaged in a lot of widespread government procurement in a way that historically the country hadn't been. And with that widespread procurement comes widespread opportunity for fraud. People are selling the Union Army mules that are lame or guns that don't fire or food that is rancid. And so, Congress comes up with this concept of how can we address this fraud in an effective way? And the tool they come up with is the False Claims Act.
And as you say, the False Claims Act, I'm going to skip ahead or back and forth a little bit. In its modern form, it provides for three times the amount of the false claim that's submitted to the government. It provides for civil penalties on top of that. And we'll talk a little bit more about that in a minute. But the most interesting and innovative thing that it does is, it has a whistleblower mechanism to try and bring people to report these false claims. And the idea is, it's a very old concept in the law, but not very frequently used. It's called Qui Tam. It basically allows a whistleblower, who's known the law as a relator, to come and bring a lawsuit on their own behalf, but also on behalf of the United States. So that's the fundamental mechanism.
Eric Kelderman
Right, I think what I think of as the new thing here is that this isn't a mechanism we've really seen used in the civil rights sort of arena, right? So, tell us what you think the Department of Justice is up to here. They have this thing called the Civil Rights Fraud Initiative. And can you tie that into the False Claims Act here?
Zach Cunha
Sure, absolutely. I mean, first, let's skip forward a little bit from the Civil War to, you know, you're right in a lot of senses that some of the things that this initiative promises to do, or says that it wants to do, are novel. But it's also true that there's been a long standing expansion of what the False Claims Act is used for. Back in the 1980s, 1986, there are amendments to the False Claims Act that make it easier to use. You see a big deployment of the Act against defense procurement fraud. And then, gradually, in the, around the turn of the century, the 2000s, early 2010s, you see the department starting to use the Act aggressively with respect to healthcare fraud and false billings in the medical space. But that's not the only, I mean, one of the things about, I think, that's interesting about the False Claims Act is, it's additive. So all the stuff that previously was the subject of False Claims Act suits continues to be the subject, but then there's inevitably a new frontier of different ways that it's getting used. So, for example, in the current era, you see False Claims Act cases based on alleged inadequate cybersecurity protocols or things like that. And to your point, even before the current administration announcement, you would occasionally see False Claims Act cases based on things like disadvantaged or minority business contracting. So, for example, a company contracts to build a bridge. The work that they do building that bridge is perfectly adequate and conforming. The bridge functions, cars go over it, nobody falls in the river. But one of the provisions of the contract was you're going to use a veteran-owned or a minority-owned or a disadvantaged business in doing the work. And you didn't do that and you falsely certified that you did.
So that's an avenue that historically has seen at least some activity in the False Claims Act space. But what we're seeing right now, in terms of this new initiative, I think is in many ways wholly unprecedented. And I'm happy to unpack some of the reasons why that is.
Eric Kelderman
Yeah, please do.
Scott D. Schneider
Yeah. And, Eric, can I add a little bit of context on the higher ed piece?
Eric Kelderman
Yeah, please.
Scott D. Schneider
And by the way, I'm based in Austin and Zach, correct me if I'm wrong, but Lance Armstrong, if I recall correctly, it was a False Claims Act that he was, there were some pursuit of False Claims Act claims against him, saying that he wasn't doping when, in fact, he was. And I think it was through the United States Postal Service or something, which was one of the more unique applications, if I recall correctly. But in the context of higher ed, and Zach, correct me if I'm wrong, my recollection is, there has been some false claims activity over the years. I mean, there was the for-profits, the alleged violations of the incentive based compensation, the Title IV stuff. There's been False Claims Act related litigation enforcement activity around the certification of grant funds and whether or not data was fabricated. I think there was a case involving Duke many years ago, but to Eric's point, I mean, what has struck me is I don't recall a time, and you can correct me if I'm wrong, where false claims activity has been tethered to civil rights compliance, especially in spaces where it's not entirely clear what the compliance obligations are.
Zach Cunha
Scott, you couldn't have put it better. I think, first, as to context, there has certainly been an ample amount of False Claims Act enforcement in the higher education space just because of the breadth of what goes on in higher education. You have government grants for research. You have government contracts, whether it's with defense or CMS or the Department of Health and Human Services. You have all kinds of situations in which higher educational institutions, or another good example would be universities that operate health systems. All of those are susceptible to False Claims Act suits in all the same ways that a private hospital would be with respect to false billings, upcoding, charging for services that aren't rendered. So the use of the FCA in the higher education context isn't new. Before I talk about what makes this initiative so new. I mean, I think, A, you have the breadth of what's going on in higher education and B, the act is an incredibly versatile tool. So the government potentially can go after a scenario where someone is actually submitting a false claim for payment. I did X, I'm billing the government for it, but I didn't actually do it. That's a false claim for payment. There are also situations where someone is liable because they submitted false documentation in support of a claim to get the claim paid. And then there's finally a third scenario, where you have money that came from the federal government and you're keeping it. And you know, for whatever reason, that you're not eligible to keep some or all of that money because of some condition that you violated. That's called a reverse false claim. So there's an incredibly broad category of conduct that's potentially covered by the act.
So what's new about this, is, first of all, the partnership between the Department Civil Rights Division, which historically has gone after very different things, like voting rights issues, discrimination in education, the Americans with Disabilities Act, I could go on and on, and the, what's called the Civil Frauds Section of the Department Civil Division, which is, along with the United States Attorney's Offices, the primary entity that goes after false claims act cases. Those are not two entities that normally collaborate on cases. This initiative says that they're going to. And it also targets a much broader swath of conduct, and to Scott's point, a lot of that conduct is undefined. If the rollout that the department has made on this initiative talks about Conduct that violates federal civil rights laws and, quote-unquote, illegal DEI activity, well, what illegal DEI activity is, is an undefined term. We have an executive order that came out of the White House on I think the second day of the new Trump administration that talks about combating, quote-unquote, illegal DEI and actually has a reference to the false claims act in it, which I think we'll talk about it a little bit and why that's important and significant. But the term is undefined. And at the same time that the administration is making these comments, colleges, universities, and everyone else out there still has an obligation to comply with the federal civil rights laws that are on the books, whether it's the Americans with Disabilities Act, or the Age Discrimination and Employment Act, or Title IX, or Title VI. And so, there is a huge unresolved conflict that we're going to see play out in these cases as they go forward.
Scott D. Schneider
Can we talk, in terms of, walk me through kind of the mechanics here on a campus level? I know, look, I work with a lot of institutions. We know, these are very large institutions with tons of employees, some of whom have very different opinions, some of whom, especially around DEI, Title VI. What's the prompt? Could a professor who says, hey, I don't like the way an institution handled an anti-Israeli protest, or I don't like the initiatives of, the campus DEI initiative, I don't like that, could that serve as a trigger here to initiate this sort of review?
Zach Cunha
So that's a very good question, and the answer is it's hard to say. And I want to draw a very important distinction between what could potentially trigger a review and what potentially the goal of this initiative is, versus whether a college or university would actually be found liable for a false claims act violation at the end of the day. So, many of the things you just mentioned, Scott, anti-Semitism on campus. There are existing mechanisms that the department and other federal agencies have used to look at those, like Title VI. You look at whether because Title VI views shared religious or ethnic origin as a potential category of discrimination, if there's widespread anti-Semitic conduct on a campus, you could have the allegation that that's interfering with students' rights to access educational opportunities. There could be an enforcement mechanism. This is different. So the question of whether a Title VI violation or conduct that might be a Title VI violation would make your claim for, say, a grant to do rocketry funding in your physics department, submissions for payment under that grant false, is a very open question. And I would argue, there are many, many reasons to argue that it's not, that that's not a false claim. And part of the reason for that is, without getting too much into piquing the interest of folks who work at university law schools to the exclusion of everybody else, the False Claims Act has elements like every other law. And, so, in order to establish a False Claims Act violation, you have to prove, number one, that the claim was actually false, that there was a knowing submission of the claim, and the falsity has to be material to the government's decision to pay. So, using the example that I gave you earlier about constructing a bridge, the question is going to be, is the diversity requirement, is the notion that you have to use a minority or a disadvantaged business to do that work, material to the government's contract to buy the bridge? At the end of the day, the bridge is conforming and adequate to its purposes. And that actually is an issue that has bubbled up at the Supreme Court several times. There was a case called Escobar that was decided several years ago on the issue of materiality. There was a white collar case decided just a week ago called Consulis, which was in a different context, but again was talking about Escobar and the materiality standard. And so, the question in these cases is going to be what is the administration going to single in on, whether it's a professor's syllabus, that is controversial or a university's policies with respect to transgender issues, or something else that the administration is going to say is, quote-unquote, illegal DEI, and then going to have to establish that that's material to the payment of a government claim.
Eric Kelderman
Yeah, interesting, because I don't know, I'm just thinking out loud here a bit, but students pay tuition. How much of that tuition goes into the programming that might be considered illegal by the administration? State appropriation dollars at public universities. Will there be a difference between how this might play out at public and private institutions?
Zach Cunha
So I think there may well be. I mean, you also, that raises an interesting point in that colleges and universities, particularly public colleges and universities, don't just answer to the federal government. They also have responsibilities under state law. And state law requirements with respect to diversity, or transgender issues, or any number of other particular topics, that may fall within the administration's focus on DEI, may conflict with the federal government. And so, colleges and universities are going to have to make decisions about what is the risk that we run relative to federal enforcement versus our state enforcers. And this comes back to, when I talked about the distinction between what kind of liability colleges and universities may face, and Scott's question, about is this going to give rise to a claim or investigation? And I think that's part of the point. I think that's part of what the administration is trying to do here. Because remember, number one, the False Claims Act is a whistleblower driven statute. So, part of this announcement, in my view, is a demand signal to potential whistleblowers out there. Bring a case, because the way this works, the whistleblower files a case. The case is filed under seal. The government has an opportunity to review it, has an opportunity to decide if the government is going to get involved in the case or not, or is going to let it go and let the whistleblower litigate it on their own.
So, if art of the idea here, and this is very consistent with the way the administration has been trying to use every lever at its disposal to change behavior, is to get people to bring these cases, so that universities are under scrutiny and are looking at these policies, using the False Claims Act as one potential method of doing that. Even if you're not looking at just whistleblower claims, the government has the ability to bring freestanding False Claims Act allegations all on its own, without a whistleblower. And they can do that. And all of the things I talked about, about materiality, about falsity, about knowing submission of a false claim, those are all good legal defenses to an FCA case. But many of them are very factually based. They're going to be decided on a summary judgment motion after a long period of investigation. The filing of a public complaint, discovery, all of these things cost hundreds of thousands, if not millions of dollars for a university to defend. And that may be part of the point. The government has incredible power, under the False Claims Act, to probe and investigate. There's a tool called the Civil Investigative Demand, which is not dissimilar from what happens in the criminal context with the grand jury subpoena. And so the government may elect to crawl through university practices and records where they think that there's a potential type of conduct of concern, and whether or not that ultimately leads to a judgment in a false claims act case, it puts enormous pressure on universities along the way.
Scott D. Schneider
Can I focus on that for a second? One of the more interesting, and you see the administration and the Dear Colleague letters around DEI, talk about the SFFA case. And SFFA is a very specific plaintiff. I mean, it was one of the issues, and it's been a while since I looked at the case, and front of the Supreme Court was, did SFFA, as an advocacy organization, even have standing to bring the suit? And one of the more significant pieces of that case, in my opinion, was the court coming back and saying yes. And with that as backdrop, I mean, it seems to be this initiative is an open invitation from the Trump administration for advocacy groups, like Edward Bloom's, SFFA, or other advocacy groups, to bring these types of lawsuits. Number one, am I wrong about that? And then number two, are we starting to see any activity in this space?
Zach Cunha
So, I'll answer your second question first.And the answer to that is, it's too soon to tell. Because even if we are seeing that activity, even if people are picking up that demand signal from the department and filing those lawsuits, those lawsuits are all still under seal. They're under seal for at least 60 days. That's what the statute says. In reality, that extension period often goes on much longer while the government is investigating. So it's too soon to tell, if that's already happening, but it may well be.
To your second point, or your original point, I think that's exactly one of the reasons why the False Claims Act is appealing to the administration in this particular initiative, because you don't have to worry about the standing problem in the same way. All you need is somebody, who's a whistleblower, who is suing in the name of the United States. That's the aggrieved party. And so, although, historically, a lot of whistleblowers are insiders, you see something going on at the company, you are displeased, or you feel that what's going on is wrong. You want to blow the whistle, but the statute doesn't require that. So if you are an outsider and you perceive, or you think you know about some conduct that's allegedly violated with the False Claims Act, you can bring a case and the government can evaluate that case. And so, it is entirely possible that you can have, whether it's because of ideological motivation or otherwise, groups and individuals that are incentivized to bring these claims. I think that's part of the reason why the administration is putting the focus on the False Claims Act.
Scott D. Schneider
Can I just follow up on that? One of the things, I've always heard, is to participate in the Title IV federal financial assistance programs. We agree to a program participation agreement, where we make representations about institutional compliance with a variety of civil rights laws. Would that be the potential trigger to bring a false claims act to say, I represent a group of, you know, there was a lawsuit, I think, out at Northwestern around the law school's hiring practices. I represent a group of white male law professors. The university to participate in the federal financial aid program made a certification that they are complying with Title VII, Title VI, they're not. I'm bringing this Qui Tam lawsuit. Does that theory make any sense?
Zach Cunha
Well, again, I want to draw that distinction between is that theory likely to succeed at the end of the day in terms of securing a judgment, versus is that going to be the kind of theory that the government is going to be interested in seeing and/or is trying to incentivize here? I think the answer to the second part of that question is yes. I think the answer to the first part of that question goes back to what I was talking about in terms of that core issue of materiality. Without getting too far afield, the Escobar case, the Supreme Court seminal case on materiality, talks about this long running debate about, that was a healthcare case. And the question was whether a bunch of Massachusetts state regulatory requirements about providers for mental health services in an institution were ultimately conditions of payment of the healthcare claims that were at issue. And the Supreme Court says we don't want to talk about whether something is a condition of participation or a condition of payment. We want to focus on whether it's material to the ultimate bargain that's reached here, and the government's payment of the claim. So the question under your scenario is, are those certifications that are being made about Title VII compliance or any other species of diversity compliance, material to what ultimately is being paid under the grant or the contract or otherwise?
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Scott D. Schneider
I think that's great. And what I hear you saying, and tell me if I'm off, I mean, there aren't a lot of barriers to entry to bring these sorts of claims. Whether or not they succeed on the merits, we have a lot of really straightforward defenses. But, especially when you have a Department of Justice that's aligned with a certain ideological view on this, getting to that point, where you get a judgment on the merits is expensive, it's time consuming.
Zach Cunha
Well, and not only that, I think it's important to keep in mind, particularly given the enforcement landscape that we're seeing come out of this administration. When I talked about using every lever that's available, that definitely seems to be the MO. So, it's entirely plausible that you could have a scenario where something prompts a false claims act investigation, whether it's a whistleblower or whether the government has a particularized focus on an individual college or university because of an incident, or a practice, or otherwise. And as a result of that, the government demands hundreds of thousands of pages of documents, conducts depositions under oath of professors and faculty members and staff and students. And even if some of that material doesn't ultimately form the basis for a successful false claims act suit, or get to a judgment, because you have some of those defenses that I talked about, the government may decide to share that material with another federal regulatory entity. And that may be the basis for Title VI enforcement, or it may be the basis for concluding that there's a Title IX violation here, depending on the issue, or any number of, or, we haven't even spoken about, the government is a massive contractor. The government has rights, as a contracting party, that include terminating contracts for convenience.
So, it's entirely plausible, and I don't want to sound like I am sprouting nothing but gloom and doom. The side risks, or the collateral risks, of a False Claims Act investigation are substantial, even if at the end of the day you have ironclad defenses that you think are going to prevail in a motion for some reason.
Eric Kelderman
Given all that, Zach, what should council for these campuses be doing right now to, I guess, prevent any of these possible cases? It seems hard to know because, as you mentioned, so much of this is unprecedented, this approach. So is there something that campus general counsel can do to prepare themselves or their institutions?
Zach Cunha
Well, there's no ironclad guarantee that you can, there's no set of steps that you can take that will guarantee that you're not gonna be the subject of a federal inquiry, but I certainly think there are things that general councils can and should prudently be doing. First of all, reviewing their federal contracts and grants, reviewing the conditions that are imposed with respect to those, thinking thoughtfully about what the response is going to be if the government comes calling and asks to impose new conditions on grants and contracts. Both, what the university's response to that is going to be relative to how vital is this particular stream of funding to our operations, and, also, what potentially are we saying with respect to this grant certification or this contract certification that is going to be used against us in some other context. In other words, if we're making representations about what the university's practices are relative to diversity goals, diversity initiatives, or particular practices. I think similarly, looking at what the universities have been that have been targeted thus far by the administration, what the administration has been focusing on, looking at whether those issues are present in a particular institution, assessing where they came from, why they're there, whether, if at all, they can be tethered to other existing federal statutory mandates. In other words, not an executive order, not a Dear Colleague letter, not some sub-regulatory guidance, but there's a statute that is out there that justifies why our university is doing X, Y, and Z. So, I think a lot of it is risk assessment. A lot of it is preemptively understanding where the potential pressure points are at a given university, what the impact of these funding streams is at a particular university, which may inform the university's willingness or enthusiasm to either try and reach an accommodation if there's an investigation, or to fight. And so there are a lot of things short of waiting for the arrival of that CID, or the knock of an agent at the door asking questions, that I think institutions can and prudently should be doing even now.
Eric Kelderman
We've heard a lot about complaints from folks about universities sort of pre-compliant with things, with the EOs, for instance. But in this case, would policy changes or disclosures now that the university feels for things that might be at risk, is that some sort of shield for future complaints?
Zach Cunha
I'll give you the lawyer's answer, which is it depends. Because, you know, obviously, I think there are significant challenges. And again, this is talking about the legal merits as opposed to the risk of an investigation. But I think there are significant challenges to trying to apply some of the standards that the administration is articulating now, retroactively, because of that materiality issue. And because that goes to the course of dealing between the parties, it's very hard to argue that a university policy that was in compliance with what the federal government previously wanted or articulated, or that the course of dealing was the federal government keeps paying these claims over many years, notwithstanding the fact that we have program X or policy Y, that's going to make it very hard to do a retrospective look back under this standard at some of those contracts and payments. But, I think universities and colleges need to be very careful to the extent that they're making policy changes now, articulating why those changes are happening, and thinking thoughtfully through by making this change, are we in some way signaling a problem, or that there is something that we view as inappropriate about what we were doing before.
Eric Kelderman
It seems to me like this approach by the administration, I don't want to use a term that's been overused maybe, but it feels like they have the potential to sort of weaponize this to a certain extent, to go on a fishing expedition inside a university administration for a case that, you know, as you mentioned, you know, it might not stand on its merits, but it's very costly. I wonder, you know, do you see the potential for abuse here?
Zach Cunha
Well, it's not only very costly, but you and I can sit here and talk very sanguinely about the downside risk of proceeding to summary judgment. But of course, there's always the risk that the judge disagrees with the position that the university is taking on materiality. There's always the risk that the case goes to trial. And that's the scenario where post-judgment, the university is looking at trouble damages plus penalties on one of these claims. So, the leverage that this particular legal tool affords the government is huge. And obviously, as with any tool that the government has at its disposal, you hope that it's going to be used prudently and with restraint and on the merits based on the facts and circumstances. But, there is enormous concern, I think, that this is going to be used as a cudgel to secure compliance with the administration's preferences for colleges and universities.
And again, that's particularly troubling when, to the point that we talked about at the beginning, many of the things that the administration is targeting here are undefined, in terms of what constitutes illegal DEI in the view of this Justice Department. Is it a policy on transgender issues that may have accorded with the Supreme Court's decision in Bostock a couple of years ago, but does not accord with the view that the administration is currently taking? Is it something else? And so in the absence of clarity, there is concern, I think, on the part of many people that this may turn into a roving expedition and to a lot of issues that the administration has concerns with, but that doesn't have a lot of clarity to colleges and universities about really where are the guardrails here.
Scott D. Schneider
Hey, can I put you on a spot for a second? And this has been really interesting for me. When we go back to the Obama administration, at OCR, there was this really aggressive and unprecedented pivot, certainly around Title IX and sexual misconduct issues to do these broad program compliance reviews of institutions. And the impact of that was really profound and still felt to this day around Title IX compliance. I did a training not that long ago for a university system of Title IX professionals, which included 400 people. I asked them prior to 2012 how many of them worked in Title IX and three hands went up. And so much of that was in response to, it was the broad scope of the reviews that were being done by OCR, the kind of public relations things that were being done, that list of shame and all that sort of stuff. But it really led to some significant concrete changes, which then all, you know, there was a backlash and we had all the litigation. How is this both different, or similar, to what OCR was doing with respect to Title IX?
Zach Cunha
Well, if I'm thinking of the same history that you just referenced, I mean, there's a Dear Colleague letter in the Title IX space. There's a radical change in the way that universities investigate and adjudicate a lot of these sexual misconduct cases. There's an almost 180 degree reversal of that set of policies under the first Trump administration. And so, there's a lot of back and forth with respect to the guidance that is coming out of Washington as to what colleges and universities ought to do in this space. So, there's a similarity in that you see government regulatory and investigative institutions trying to leverage their funding and their oversight power to change behavior. That's nothing new. Government and administrations of all stripes do that all the time. I think what's different about this is, one, it's scope. You're not just talking about Title IX, you're talking about the entire gamut of federal contracting and grant making and all of these other payment functions that are out there. And so the scope for changing behavior is significantly larger. If you're talking about contracts and grants that make up a third of a university's budget, sometimes these are potentially life or death decisions that are on the line. I'm not saying that Title IX compliance under the Dear Colleague letter, or the proposed regulations that came out under Secretary DeVos, were not significant levers to change behavior on the part of higher education institutions, but this is significantly larger. And again, one of the things that I think we have to keep our eye on is, what exactly is the administration trying to leverage here? Because in the Title IX context, it's fairly clear what issue you're talking about, the scope of the policies and procedures that are in play. With this particular initiative, the field is much, much broader and it remains to be seen exactly where the administration and the whistleblowers, who were incentivized under this policy, choose to focus their fire.
Scott D. Schneider
Zach, as a lawyer, I just want to tell you how much I appreciate what you've shared with us. I will say this. I know your colleague, Steven Richard, is a great lawyer in this space. I've read some bulletins you all have put out about this, and it's been really eye-opening, and this has been really helpful, as a lawyer, for me to kind of clarify my thoughts on this. So I appreciate you making time with us.
Zach Cunha
It's been an absolute pleasure. I mean, I'll tell you, number one, it's terrific to have a chance to work with a leader in higher education, one that likes the, and two, everything else into the bargain, this is a lot of fun. Before I was a US attorney, I spent most of my DOJ career dealing with False Claims Act issues. And one of the great things about it is there's always a new frontier. This is it at the moment, and it's great to have the chance to chat about it with you.
Eric Kelderman
Well, before we let you go, Zach, we'd like to wrap up with a little closer here. We'd like to talk a little bit about something good, something good you're looking forward to in the next week or so, something you're planning to do. Send us out on something positive here.
Zach Cunha
I try to stay positive. You know, I actually am a pretty optimistic person. You know, both of my kids are coming to the end of their school year, and I'm looking forward to watching them move on and finish what they have going on with their respective grades and start the summer. And there's always that feeling of enthusiasm and excitement that comes with that. And so that's what I'm focusing on at the moment is keeping me happy.
Eric Kelderman
Scott?
Scott D. Schneider
Well, we just finished, I think I've told you this, we hosted an exchange student from Poland for a year.
Eric Kelderman
Well, I didn't know that.
Scott D. Schneider
Yeah. And he just left this morning. So was very, what a wonderful young man he was. And I got really into, I understand Polish politics, which I never thought in a million years. So that has been very bittersweet, but tomorrow we're driving to Houston, Texas to go see the great Tyler Childers, who has actually a new album coming out that was produced by Rick Rubin. So I'm both looking forward to seeing Tyler, who's one of my favorite performers and songwriters, but I am really interested to hear the new album. How about you, Eric?
Eric Kelderman
This weekend, I’m gonna drive up to Philly and see my nephew, Davin, graduate from high school up there, and see my sister, and have a little family time. So I think that'll be a lovely, lovely celebration for Davin, who, as I understand it, is gonna be a freshman at the University of Colorado at Boulder next year. So good for him.
Zach Cunha
That’s great.
Eric Kelderman
That's it, man.
Scott D. Schneider
All right. Hey, Zach, it was so nice meeting you in person.
Zach Cunha
Likewise, really appreciate you taking the time.
Scott D. Schneider
Alright boss.
Eric Kelderman
Take care.
Scott D. Schneider
There you go. Well, look, thanks for tuning into Campus Docket. You’ll find links to everything we discussed today, including related cases, articles, and a full transcript, and the show notes, and on voltedu.com. Be sure to follow Campus Docket wherever you get your podcast. And while you’re there, check out Trusted Voices and Higher Voltage, two more podcasts in the Volt lineup that look at higher ed through different lenses. On behalf of the Volt team and my friend, Eric Kelderman, thanks again for listening. We’ll see you next time.
