DOJ Civil Rights Fraud Initiative: FCA Enforcement Expanding Into Alleged Discrimination

On May 19, 2025, the U.S. Department of Justice (DOJ) announced a new Civil Rights Fraud Initiative that will leverage the federal False Claims Act (FCA) to investigate and litigate against universities, contractors, health care providers, and other entities that accept federal funds but allegedly violate federal civil rights laws.

The initiative will be led jointly by the DOJ Civil Division’s Fraud Section and the Civil Rights Division—with support from the Criminal Division, federal civil rights agencies, and state partners. 

The initiative implements President Donald Trump’s Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (January 21, 2025), directing agencies to combat unlawful discrimination through the FCA, and complements Attorney General (AG) Bondi’s February 5 memorandum, “Ending Illegal DEI and DEIA Discrimination and Preferences.”

How DOJ Plans to Use the FCA to Combat Discrimination

DOJ signaled it will rely on the FCA’s “false certification” theory of liability: When a funding recipient expressly or implicitly certifies compliance with statutes such as Title VI or IX of the Civil Rights Act of 1964 (CRA) to obtain payment, any knowing violation that is “material” to the government’s decision to pay can trigger treble damages and statutory penalties under the FCA.

Deputy AG Todd Blanche issued a memorandum the same day (the “Blanche Memo”) underscoring that the FCA is implicated when a federal contractor or recipient of federal funds knowingly violates civil rights laws—including Titles IV, VI, and IX of the CRA—and falsely certifies compliance with those civil rights laws. The Blanche Memo, however, notes that liability does not attach to all diversity programs per se, but only when race, ethnicity, or national origin determines the allocation of benefits or burdens. This is significant because, even if an antidiscrimination false certification claim is assumed to meet the materiality standard, a diversity, equity, and inclusion (DEI) program should not be deemed improper if it does not “assign benefits or burdens on [the basis of] race, ethnicity or national origin.”

Enforcement Dynamics

Unlike many FCA matters, which often originate with whistleblowers (also known as qui tam relators) filing suit, we expect DOJ to initiate early cases itself, limiting defendants’ ability to oppose intervention or invoke typical qui tam defenses (e.g., first-to-file rule, public disclosure bar, and original source rule). DOJ nevertheless “strongly encourages” whistleblowers to come forward to report “instances of such discrimination”—a reminder that suspected violations may quickly morph into FCA investigations.

Courts will ultimately decide whether civil rights violations pass muster under the U.S. Supreme Court’s “rigorous” and “demanding” Escobar materiality standard.^[1]

Key Takeaways

DOJ’s Civil Rights Fraud Initiative is poised to test the outer limits of the FCA. Whether courts embrace this expansion—or cabin it—is yet to be seen. In the meantime, entities receiving federal funds should assume heightened scrutiny and ramp up compliance efforts.

The Blanche Memo draws an uncertain line between “diversity” and “religion,” and even suggests that DOJ may apply the terms “race” or “racist” differently today than they were understood when Congress enacted the CRA. Courts, however, have yet to endorse the FCA as a generalized antidiscrimination vehicle, largely because the statute’s “rigorous” materiality standard remains a high hurdle. One district court observed that if the FCA is not an “'all-purpose antifraud statute,” it is “surely not an all-purpose antidiscrimination statute” either.^[2]

When DOJ unveiled its Civil Rights Fraud Initiative, The New York Times predicted the program was “all but certain” to face immediate legal challenges. Even so, DOJ can bring FCA cases with relative ease and without many of the hurdles that slow private whistleblower suits: The government’s own complaints are immune from first-to-file and public disclosure bar defenses, and defendants cannot oppose DOJ intervention like they can in qui tam cases.

Implied certification cases are also unlikely to disappear. As we have advised previously, organizations that contract with—or receive funds from—the federal government should rigorously re-examine their contract terms and scrutinize DEI policies with counsel to ensure they would not be branded as “illegal DEI” under the FCA.

Importantly, DOJ’s new civil rights focus is one of several avenues through which the Trump administration can wield implied certification theories (e.g., compliance with cybersecurity requirements and Anti-Kickback Statute compliance, among others). Health care entities are squarely in the cross-hairs: We expect to see FCA investigations tied to Medicare and Medicaid reimbursement conditions, price-transparency obligations, and quality-of-care metrics—all areas where the administration argues that noncompliance fuels escalating federal costs. Because reining in health care spending enjoys strong bipartisan support, defendants should expect vigorous enforcement and limited political appetite to scale back those efforts.

Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this blog post.

ENDNOTES

[1] See Universal Health Services, Inc. v. United States ex rel. Escobar et al., 579 U.S. 176, 194 (2016). And while the government’s decision to expressly identify a provision as a condition of payment is relevant, it is not automatically dispositive under Escobar.

[2] U.S. ex rel. Lee v. Northern Metropolitan Foundation for Healthcare Inc., 2021 WL 3774185 (E.D.N.Y. 2021).