Deputy Attorney General launches Civil Rights Fraud Initiative to pursue FCA cases based on alleged discrimination

Related administrative activity

On January 21, 2025, President Trump signed Executive Order 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”), which expressed the administration’s intent to combat DEI initiatives that it deems discriminatory via the False Claims Act (FCA).² In relevant part, Executive Order 14173 directs agency heads to include terms in every contract or grant award requiring the contractor or grant recipient: (A) “to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of [the False Claims Act]”; and (B) “to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”

Following Executive Order 14173, on February 5, 2025, newly sworn-in Attorney General Pam Bondi issued a memorandum to all Department of Justice (DOJ) employees entitled “Ending Illegal DEI and DEIA Discrimination and Preferences” (Bondi Memorandum). AG Bondi directed the DOJ’s Civil Rights Division to “investigate, eliminate, and penalize illegal DEI and DEIA preferences, mandates, policies, programs, and activities in the private sector and in educational institutions that receive federal funds.” She further ordered the Civil Rights Division and Office of Legal Policy to submit a report with recommendations for enforcing federal civil-rights laws and encouraging the private sector to “end illegal discrimination and preferences, including policies relating to DEI and DEIA.”³

The Blanche Memorandum builds on those directives, coupling the Civil Rights Division and the Civil Fraud Section in an effort to utilize FCA enforcement to crack down on so-called DEI initiatives and, more generally, conduct of federal fund recipients that the administration deems to be in violation of civil rights laws.

FCA overview

Under the FCA, 31 U.S.C. § 3729, et seq., any person who knowingly presents, or causes to be presented, false or fraudulent claims for payment or false statements material to the government’s payment decision will be liable for three times the government’s damages plus penalties and costs. The FCA’s qui tam provisions permit relators who possess relevant non-public information to bring suits in the name of the government. Successful relators are eligible to secure a part of the proceeds from the suit.⁴ The FCA includes anti-retaliation provisions to protect whistleblowers.⁵

The elements of an FCA claim are falsity, scienter (knowledge), materiality, and causation. To prove knowledge, the government or a relator may demonstrate that a defendant acted with deliberate ignorance or reckless disregard of the truth or falsity of the information.⁶ Courts look to the subjective belief of defendants, including whether a defendant is aware of “a substantial and unjustifiable risk that [its] claims are false.” ⁷ Materiality requires that the allegedly false statement was material to the government’s payment decision. According to the Supreme Court, this is a “demanding” fact-intensive standard.⁸ Liability often turns on allegations of “legal falsity,” where a defendant allegedly falsely certifies either expressly or impliedly that it complied with a statutory, regulatory, or contractual requirement that is material to the government’s decision to pay the claim. Here, the administration is focused on federal funds recipients’ certification of compliance with federal civil rights laws.

Blanche Memorandum

The Blanche Memorandum cites “vigorous enforcement” of the FCA as one of the most effective ways to ensure compliance with federal civil rights laws and equal protection under the law. Deputy AG Blanche singles out schools, offering an example that “a university that accepts federal funds could violate the False Claims Act when it 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.” The Memorandum asserts that, despite the Supreme’s Court’s decision in Students for Fair Admissions, Inc. v. President & Fellows of Harv. Coll., 600 U.S. 181, (2023)⁹ and Executive Order 14173, “many corporations and schools continue to adhere to racist policies and preferences—albeit camouflaged with cosmetic changes that disguise their discriminatory nature.”

The Blanche Memorandum sets forth a “comprehensive approach” for the Civil Rights Fraud Initiative, including:

• The Civil Division’s Fraud Section and the Civil Rights Division will name a team of attorneys who will aggressively pursue the task force’s initiatives, and who will regularly coordinate meetings and share relevant information about potential violations.
• Each of the 93 United States Attorney’s Offices will identify an AUSA to help facilitate enforcement.
• The Civil Fraud Section and the Civil Rights Division will engage with the Criminal Division, along with other federal agencies that enforce civil rights requirements for federal funding recipients (e.g., the Departments of Education, the Department of Health and Human Services, the Department of Housing and Urban Development, and the Department of Labor).
• The Civil Fraud Section and Civil Rights Division will partner with state attorneys general and local law enforcement to coordinate enforcement.

Finally, acknowledging that the DOJ cannot alone identify all instances of civil rights fraud, the Blanche Memorandum “strongly encourages” whistleblowers to bring FCA lawsuits to protect the public interest and share in any monetary recovery.

FCA considerations and looking forward

Entities that contract with the federal government and/or receive federal funds should expect heightened FCA scrutiny of their activities, including any so-called DEI initiatives, and, more generally, conduct the administration deems violative of civil rights laws. But despite the Deputy AG’s call for vigorous enforcement activity, litigants (including the DOJ) must still prove each element of an FCA violation to establish FCA liability and overcome potential defenses. For analysis on FCA liability hurdles following Executive Order 14173, see Executive Order Seeks to Impose FCA Liability for Contractor and Grantee DEI Programs (Feb. 11, 2025). The untested nature of the administration’s recent legal directives regarding anti-discrimination breeds uncertainty in FCA cases, and courts’ approaches may vary by jurisdiction. Nevertheless, it is clear that the government intends to devote resources to investigating and potentially pursuing FCA claims borne out of DEI related initiatives and other conduct that it believes runs afoul of civil rights laws, whether instigated by private citizens or government personnel.

For assistance navigating this rapidly-evolving landscape, please reach out to the authors identified below or any Hogan Lovells lawyer with whom you work.

Authored by Mitch Lazris, Michele Sartori, Stephanie Yonekura, Matthew Sullivan, Katy Forsstrom, and Sebastian van Bastelaer.