July 10, 2025
By: Roger Handberg
If you are a federal government contractor or grant recipient, the U.S. Department of Justice (DOJ) has a new initiative that you should be aware of.
On May 19, 2025, the DOJ issued a guidance memorandum entitled, “Civil Rights Fraud Initiative.” In that memorandum, the DOJ expresses its intention to ensure compliance with federal civil rights laws through the “vigorous enforcement of the False Claims Act (FCA), . . ., against those who defraud the United States by taking its money while knowingly violating civil rights laws."
What is the False Claims Act?
In general, the False Claims Act exposes recipients of federal funds to potential liability for submitting false claims. Many False Claims Act cases are based on the submission of inflated claims or claims seeking payment for goods or services that were not provided.
False Claims Act liability, however, may also extend to recipients of federal funds that make false certifications regarding their compliance with federal law or contractual requirements. For example, earlier this year, a company and its corporate parent agreed to pay more than $11 million to resolve claims that they falsely certified compliance with cybersecurity requirements in a Defense Department contract. In a 2023 case, a company and its manager agreed to settle False Claims Act allegations that they failed to secure personal information on a federally funded health insurance website in Florida “contrary to its representations in agreements and invoices.”
How will the False Claims Act impact federal recipients?
The DOJ is looking to apply a similar approach to federal recipients alleged to have committed civil rights violations. In particular, the May 19, 2025, guidance memorandum specifically mentions colleges and universities that accept federal funds as being subject to this type of potential investigation or affirmative civil action if a college or university:
- 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.
In short, the memorandum states that "[c]olleges and universities cannot accept federal funds while discriminating against their students." And, on a grander scale, colleges and universities are not the only ones that will be scrutinized for these types of alleged violations.
How do civil rights laws intersect with the False Claims Act?
The guidance memorandum further states that “[t]he False Claims Act is also implicated whenever federal-funding recipients or contractors certify compliance with civil rights laws while knowingly engaging in 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.”
In Executive Order 14173 (Ending Illegal Discrimination and Restoring Merit-Based Opportunity), the President directed the head of each federal agency to include such a civil rights certification in “every” federal contract and grant award. The Executive Order states that every contract and grant must require that the recipient “certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” and agree that its compliance with “all applicable Federal anti-discrimination laws is material to the government’s payment decisions.”
How is the DOJ enforcing the Civil Rights Fraud Initiative?
As part of this effort, the DOJ is establishing a Civil Rights Fraud Initiative. According to the guidance memorandum, "[t]his Initiative will utilize the False Claims Act to investigate and, as appropriate, pursue claims against any recipient of federal funds that knowingly violates federal civil rights laws."
This effort will entail coordination between the DOJ and several other federal agencies that enforce civil rights requirements for federal funding recipients, including the U.S. Departments of Education, Health and Human Services, Housing and Urban Development, and Labor. Every U.S. Attorney's Office will be dedicating an attorney to this effort, and partnerships will be formed with State Attorneys General and local law enforcement to facilitate these efforts.
What is a distinctive feature of the False Claims Act?
The False Claims Act has a provision that many statutes do not. It has a qui tam provision that authorizes private parties, often called “whistleblowers,” to file lawsuits on behalf of the government to pursue recoveries. As set out in the guidance memorandum, the DOJ “strongly encourages these lawsuits” and “encourages anyone with knowledge of discrimination by federal-funding recipients to report that information to the appropriate federal authorities so that the Department may consider the information and take any appropriate action.”
In summary, federal contractors and grant recipients should be aware of the new Civil Rights Fraud Initiative of the False Claims Act. The penalties for violating the federal False Claims Act are significant, including treble damages (equal to three times the amount of damages suffered by the government) and civil monetary penalties. Consultation with counsel is recommended to assess your company’s policies and practices in light of the focus on this new Initiative.
Questions?
Contact GrayRobinson Shareholder Roger Handberg or a member of the Litigation practice.