Justice Department Launches Civil Rights Fraud Initiative, Increasing False Claims Act Liability for Discrimination

In a significant expansion of the government’s approach to civil rights enforcement, Deputy Attorney General Todd Blanche has announced the creation of the Department of Justice’s Civil Rights Fraud Initiative. The new program, unveiled on May 19, 2025, directs DOJ attorneys to leverage the False Claims Act (FCA) to combat civil rights violations by entities receiving federal funding.

The initiative represents a strategic shift in how the Justice Department will pursue allegations of discrimination, creating new risks for educational institutions, federal contractors, and other recipients of government funds who may now face substantial financial penalties under the FCA for civil rights violations.

Under the FCA, violators can be liable for treble damages plus penalties that currently range from $12,537 to $25,076 per false claim. This powerful enforcement tool, originally designed to combat fraud against the government, will now be applied to organizations that certify compliance with civil rights laws while allegedly engaging in discriminatory practices.

“This initiative combines two critical priorities for the Department – protecting civil rights and safeguarding taxpayer dollars,” a Justice Department spokesperson explained. “When organizations accept federal funding, they commit to following civil rights laws. Those that violate these commitments while continuing to receive government money are essentially defrauding taxpayers.”

The move significantly raises the stakes for institutions that receive federal funding. While civil rights violations have traditionally been addressed through administrative remedies or injunctive relief, the FCA introduces the possibility of substantial monetary penalties and damages.

Educational institutions appear to be a primary focus of the initiative. Colleges and universities receive billions in federal funding annually through research grants, student financial aid, and other programs. These institutions regularly certify compliance with various civil rights statutes, including Title VI of the Civil Rights Act, Title IX, and the Americans with Disabilities Act.

Federal contractors represent another key target. Government contractors often must certify compliance with anti-discrimination requirements as a condition of receiving and maintaining contracts. Under the new initiative, contractors found to have falsely certified compliance could face FCA liability in addition to traditional contract remedies.

Legal experts note that the initiative significantly expands potential plaintiffs. The FCA includes qui tam provisions allowing whistleblowers, known as relators, to file lawsuits on behalf of the government and receive a portion of any recovery. This creates financial incentives for employees, students, or others with knowledge of alleged discrimination to initiate FCA actions.

“This essentially deputizes private citizens as civil rights enforcement agents,” said Eleanor Barnes, a partner at a national law firm specializing in government enforcement matters. “Organizations now face potential exposure not just from government investigators, but from anyone with knowledge of potential violations who might be motivated by the FCA’s whistleblower rewards.”

The initiative builds on previous DOJ efforts to expand FCA enforcement into new areas. In recent years, the Department has increasingly applied the FCA to areas like cybersecurity compliance and grant fraud.

Industry groups have expressed concern about the initiative, arguing that it could lead to increased litigation costs and uncertainty for organizations operating in good faith. “Civil rights laws often involve complex interpretations and good-faith disagreements about compliance,” said James Wilson, president of a federal contractors’ association. “Using the FCA in this context risks imposing draconian penalties for what may be honest mistakes or reasonable policy differences.”

Legal observers recommend that organizations receiving federal funding review their civil rights compliance programs, strengthen internal reporting mechanisms, and ensure proper documentation of good-faith efforts to comply with applicable laws.

The initiative is expected to result in increased coordination between the DOJ’s Civil Division, which typically handles FCA cases, and the Civil Rights Division. This collaboration signals the Department’s commitment to using all available tools to address discrimination allegations.

As the initiative takes shape, federal fund recipients should anticipate heightened scrutiny of their civil rights compliance and prepare for potential whistleblower complaints that could trigger costly investigations and litigation.