Attorney General Ken Paxton Warns CVS of Potential Medicaid Fraud Liability for Unlawful DEI Practices Related to its Supply Chain Processes

AUSTIN, TX -- Attorney General Ken Paxton sent a letter to CVS Health (“CVS”) regarding the company’s potentially unlawful Diversity, Equity, and Inclusion (“DEI”) practices in its supply chain processes.

The Office of the Attorney General sent a letter to the company that warns that CVS’s Supplier Diversity Program—or any other DEI program—may violate state and federal civil rights laws. According to its public statements, CVS reserves a significant portion of its contracts for suppliers that meet certain demographic criteria. Under the program, eligible suppliers must be businesses that are owned and operated by individuals who fall into certain classifications recognized by CVS, including minority and women owned enterprises, and businesses owned by individuals who identify as lesbian, gay, bisexual, or transgender.

“People must be judged on the basis of merit, not the color of their skin,” said Attorney General Paxton. “My office will stand firmly against racist DEI policies. Whether it is found in hiring processes or contract determinations, I will take a sledgehammer to any radical DEI policies that discriminate against Americans.”

The letter notes that Attorney General Paxton has previously warned that discriminatory supplier diversity programs may violate federal law, and earlier this year, he issued a legal opinion detailing the potential liability DEI practices create. In addition to potentially violating state law, the letter notes that CVS’s actions may also conflict with President Donald Trump’s Executive Order 14173, which prohibits federal contractors and subcontractors, such as CVS, from considering race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws.

Violations of state and federal anti-discrimination laws could lead to significant liability under the Texas Health Care Program Fraud Prevention Act (“THFPA”). As a Medicaid pharmacy provider, CVS must comply with all applicable civil rights laws and may not discriminate on the basis of race, color, national origin, sex, age, disability, or religion. As a condition of receiving public funds, CVS must ensure that its programs and activities comply with state and federal law and do not discriminate by using woke DEI frameworks. The letter demands that CVS notify the Office of the Attorney General’s Healthcare Program Enforcement Division of the steps it has taken to comply with state and federal anti-discrimination laws within 14 days of receipt. To read the letter, click here.