On Monday, May 19, 2025, the U.S. Department of Justice (DOJ) announced a new initiative titled the Civil Rights Fraud Initiative, which will use the False Claims Act (FCA) to further the Trump Administration’s stated goals of ending discrimination by federal fund recipients, with an eye towards ending antisemitism and DEI (diversity, equity, and inclusion) programs determined to be unlawful by discriminating against one group in favor of others. The Civil Rights Fraud Initiative plans to harness the power of the FCA to investigate and initiate lawsuits against recipients of federal funds that allow antisemitism within their institutions or implement “divisive” DEI policies. In announcing the Initiative, the Deputy Attorney General actively encouraged private companies and individuals to file private lawsuits alleging FCA violations that, if proven, could provide lucrative whistleblower awards to the plaintiffs.
Specifically, the Civil Rights Fraud Initiative will target universities and colleges that receive federal funds and implement certain student policies the administration views as discriminatory. In announcing the Initiative, DOJ emphasized that any 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” is in violation of the FCA.1
DOJ also highlighted that the Initiative will target federal fund recipients, including companies, “who codify inherently divisive policies like DEI at an unprecedented rate.”2 This follows President Trump’s Executive Order,3 issued the day after his inauguration, that DEI programs are unlawful to the extent they conflict with existing civil rights laws, including those that engage “in racist preferences, mandates, policies” and “inclusion (DEI) programs that assign benefits or burdens on race, ethnicity, or national origin.4
DOJ explained that the Civil Rights Fraud Initiative will be a collaborative effort, employing the assistance of multiple agencies, state partners, and even private citizens. The Initiative will be co-led by the Civil Division’s Fraud Section and the Civil Rights Division and will engage the assistance of the Criminal Division, including a federal prosecutor from each of the 93 United States Attorney’s Offices. Other federal agencies that enforce civil rights laws, including the Department of Education, the Department of Health and Human Services, the Department of Housing and Urban Development, and the Department of Labor, will be partners in DOJ’s efforts. Further, DOJ plans to coordinate with state attorneys general and local law enforcement to pursue the work of the Civil Rights Fraud Initiative.
Significantly, DOJ strongly encourages private individuals with knowledge of discrimination by recipients of federal funds to file qui tam lawsuits under the FCA. A qui tam suit is a litigation device authorized under the FCA wherein a private individual or company may file a civil lawsuit on behalf of the government and earn up to 30% of the potential monetary judgment. DOJ’s explicit encouragement of these lawsuits is bound to generate an uptick in FCA qui tam litigation against businesses and institutions receiving federal funds. More litigation is also anticipated in light of DOJ’s explicit statement that it will “aggressively pursue this work.”5 At a minimum, this may include an increase in the issuance of subpoenas or civil information demands for information and documents from companies and other organizations.
The Civil Rights Initiative will likely have broad and significant implications for federal fund recipients. Government contractors and healthcare-related companies that take Medicare, Medicaid, or other federally funded insurance programs are particularly at risk. As noted by DOJ in its announcement, there are significant penalties associated with FCA cases, including treble damages. Private plaintiffs who file qui tam lawsuits successfully alleging FCA violations stand to receive sizable awards of those damages. These incentives are likely to motivate additional reports.
This new Initiative is just one more reason why contractors and grant recipients, including educational institutions, should be reviewing their programs and policies to determine whether they violate existing civil rights laws. Even if they are compliant, those programs and policies may need to be adjusted to reduce the risk of losing federal funding and lawsuits under the FCA. Of course, this could be easier said than done.
While some of the DEI-related contracting programs have been removed via executive order, there remain other DEI-type programs and requirements that remain in regulations or that are contractually required and continue in place. For example, the Department of Transportation’s Disadvantaged Business Enterprise program, including minority and women-focused programs,6 and the Small Business Administration’s 8(a), Woman-Owned Small Business, and other set-aside programs, are still in place and continue to require compliance, and new awards continue to be made under these programs to perceived and certified disadvantaged businesses. By their terms, these programs mandate that contractors and grant recipients not discriminate, but also often require award recipients to submit both small business subcontracting plans and statistical information relating to ethnic and racial makeups via equal employment opportunity reports (often the EEO-1).
For now, these programs and requirements remain in place, but could be subject to future changes, given continuing programmatic changes and new initiatives being issued by the current administration.
As before, we will continue to monitor changes in these areas. Please feel free to contact the authors to discuss the subject of this alert further.
1 See www.justice.gov/dag/media/1400826/dl?inline=&utm_medium=email&utm_source=govdelivery
2 See www.justice.gov/opa/pr/justice-department-establishes-civil-rights-fraud-initiative
3 See www.whitehouse.gov/presidential-actions/2025/01/ending-illegal-discrimination-and-restoring-merit-based-opportunity
4 See www.justice.gov/opa/pr/justice-department-establishes-civil-rights-fraud-initiative
5 See www.justice.gov/dag/media/1400826/dl?inline=&utm_medium=email&utm_source=govdelivery
6 See the Cozen Client Alert at: www.cozen.com/news-resources/publications/2025/the-end-of-the-small-business-set-aside-programs-dot-issues-new-guidance-letter
