On May 19, 2025, Deputy Attorney General Todd Blanche issued a Memorandum establishing a new Civil Rights Fraud Initiative at the Department of Justice that will “utilize the False Claims Act to investigate and . . . pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws.”
Background on the False Claims Act
The False Claims Act (“FCA”), 31 U.S.C. § 3729, et seq., was enacted in 1863 during the Civil War, as an effort to combat rampant fraud in Civil War defense contracts. In the modern era, it continues to be utilized to pursue government contracting fraud; however, its use has expanded to other areas, most notably health care fraud, which comprises the majority of FCA enforcement throughout the country. The FCA is the government’s most powerful civil tool when combating fraud affecting federal programs. It provides for the recovery of treble damages (i.e., three times the government’s actual damages), plus penalties that currently range from $14,308 to $28,619 per claim. In Fiscal Year 2024, the government’s recoveries under the FCA exceeded $2.9 billion.
The FCA also provides the Department of Justice with pre-litigation investigatory power consisting of Civil Investigative Demands that may require document production, interrogatories, and sworn testimony. As a result, even investigations that do not result in recoveries are expensive and burdensome prospects for those involved.
Further, the FCA is a whistleblower statute, and it permits individuals with knowledge of potential fraud affecting government programs to file cases under seal in federal district court, triggering a mandatory investigation by the government, after which the government determines if it will intervene and pursue the case. Even in cases the government elects not to pursue, the whistleblower (known as a relator) may pursue the case on the government’s behalf. Relators recover up to 30% of the government’s recovery in declined cases, and typically between 15 to 25% in intervened cases, creating a strong incentive for such filings.
Civil Rights Fraud Initiative
The newly announced Civil Rights Fraud Initiative (“the Initiative”) targets recipients of federal funding—including colleges and universities—that knowingly violate civil rights laws such as Title IV of the Higher Education Act of 1965, Title VI of the Civil Rights Act of 1964, and Title IX of the Education Amendments of 1972, and that falsely certify compliance with those laws. For example, according to the Memorandum, a university that “encourages antisemitism, refuses to protect Jewish students, allows men to intrude into women’s bathrooms, or requires women to compete against men in athletic competitions” could violate the FCA.
The Memorandum also highlights potential FCA claims against schools and institutions that knowingly employ “racist preferences, mandates, policies, programs, and activities, including through diversity, equity, and inclusion (DEI) programs that assign benefits or burdens on race, ethnicity, or national origin.” Following on President Trump’s Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025) (read more here), the Memorandum notes that “many corporations and schools continue to adhere to racist policies and preferences—albeit camouflaged with cosmetic changes that disguise their discriminatory nature.”
The Initiative will be co-led by the Civil Division’s Fraud Section and the Civil Rights Division and will coordinate with other federal, state, and local law enforcement agencies to “ensure a comprehensive approach,” including engaging with federal agencies that enforce civil rights requirements for federal funding recipients, such as the Department of Education and the Department of Health and Human Services.
Additionally, the Memorandum also “strongly encourages” whistleblowers to come forward and file lawsuits under the FCA.
Implications
The Memorandum sets out an aggressive application of the FCA to civil rights enforcement, increasing pressure on educational institutions by providing an avenue to impose significant damages and penalties, in addition to denial of federal funding for violations.
However, the Memorandum raises more questions than it answers. For instance, under what circumstances would this administration view a certification of compliance with Title VI or Title IX as false? What happens if a court’s interpretation of these statutes differs from the administration’s view? Further, even if there were a knowingly false statement, calculation of damages will be hotly contested, as well as the materiality of such a statement in the context of education grants.
Given this administration’s pattern of seeking to withdraw funding from higher education, including for “illegal DEI initiatives,” universities and other institutions that receive federal funding should exercise caution in this area and stay alert for further developments. Proactive diligence is also important to counter a later claim that the university or other institution acted with the requisite intent to violate the FCA, which can be established through reckless disregard, deliberate ignorance, or actual knowledge.
We encourage universities and other institutions to consult with counsel before signing certifications of compliance with civil rights laws or with more general compliance certifications. At Potomac Law, our team includes attorneys with deep expertise in Title VI, Title IX, and the FCA, and we are well positioned to help our clients assess and mitigate risk in connection with this novel Initiative.
