DOJ’s Civil Rights Fraud Initiative Will Trip Over Its Ambitions

The Department of Justice’s new Civil Rights Fraud Initiative proposes using the False Claims Act against any federal funding recipient that operates diversity, equity, and inclusion programs in violation of antidiscrimination laws.

Deputy Attorney General Todd Blanche invited whistleblowers to come forward with evidence of any civil rights violations disguised as DEI programs.

This new approach sounds tough. But it won’t work.

We represent opposite sides in False Claims Act cases: One of us advocates for whistleblowers exposing government fraud, and the other defends contractors or grant recipients accused of defrauding taxpayers. We disagree about much, except this: The Civil Rights Fraud Initiative misunderstands how the FCA works and is destined to fail in court.

The FCA isn’t a Swiss Army knife for the enforcement priority du jour. Enacted during the Civil War to combat war profiteers, the FCA requires proof that the DOJ may struggle mightily to establish in these cases.

First, the government must prove that a funding recipient made false statements or claims. The government can’t unilaterally rewrite existing federal contracts or grants to ban DEI. It must prove that a federal funding recipient certified that it complies with applicable federal civil rights laws when its DEI programs violate those laws. But no court has declared that the specific DEI practices the DOJ now targets—such as employee resource groups, diversity training, or inclusive bathroom policies—actually do.

The Justice Department can’t declare policies illegal by executive fiat and expect courts to salute. In decisions such as Loper Bright Enterprises v. Raimondo, the US Supreme Court has signaled that courts may defer less to executive branch interpretations of the law.

Even if the DOJ could establish falsity, it must prove a funding recipient knew its statements were false when it made them—not that the government later decided to interpret the law differently. That’s a nearly insurmountable hurdle for the department.

Consider a university that has operated diversity programs for decades, with the government’s full knowledge and encouragement. How can the DOJ prove the university “knew” that any compliance certifications it provided were false when federal agencies were simultaneously endorsing such programs at other institutions across the country? The Supreme Court clarified in 2023’s US ex rel. Schutte v. SuperValu Inc. decision that FCA knowledge is measured by a defendant’s subjective understanding at the time of the alleged violation.

A university that disclosed its DEI practices to federal agencies—often in considerable detail—and received continued funding can hardly be said to have knowingly deceived anyone. Transparency is the enemy of fraud claims.

Perhaps most fatally, the DOJ must prove that any false statements were “material” to the government’s payment decisions. That means the government would have to establish that had it known a funding recipient engaged in DEI, it wouldn’t have paid the recipient the federal funds at issue. Put differently, the Justice Department would have to prove a causal connection between any targeted DEI practices and the specific federal funding decisions in question.

How exactly is a university’s all-gender bathroom policy material to the National Science Foundation’s decision to fund cancer research? What does a hospital’s employee diversity training have to do with Medicare’s decision to pay for a senior’s heart surgery? While the Trump administration earlier issued an executive order stating that compliance with anti-discrimination laws is material, DEI-based FCA claims will still likely face rigorous questions on that front, even from courts that may be sympathetic to the administration’s objectives.

“In Government contracting,” Justice Clarence Thomas explained, “the Government’s inclusion of political or regulatory requirements unrelated to the contracts’ core purpose might simply reflect the Government’s attempt to achieve policy goals” rather than being a material element of the arrangement. Courts may well find that to be the case here.

Moreover, if federal agencies continued paying institutions while fully aware of their DEI programs—as they demonstrably did—the Supreme Court has said that may be “very strong evidence” the practices weren’t material to the government’s funding decisions.

Finally, First Amendment issues loom large when the government seeks to penalize public statements about diversity and inclusion. The Eleventh Circuit recently struck down Florida’s anti-DEI restrictions on free speech grounds in Honeyfund.com v. Florida. Similar constitutional defenses await any FCA cases targeting expressive conduct or educational programming.

For all these reasons, the DOJ’s new initiative isn’t principled fraud enforcement. The FCA serves a vital function in protecting taxpayers from genuine fraud—defense contractors billing for services not rendered, medical providers submitting false diagnoses, grant recipients fabricating research results. These cases recover billions annually and enjoy bipartisan support because they address actual deception that harms government interests. The statute’s qui tam provisions are meant to encourage private whistleblowers to expose genuine fraud against taxpayers, not to become enforcers of shifting ideological winds.

We’ve spent our careers on opposite sides of FCA cases. While we may fight about the details, we know legitimate fraud allegations when we see them—and when we don’t. This initiative promises much, delivers little, and misunderstands the law it purports to enforce. Whatever one thinks about diversity programs, the FCA isn’t the right tool to challenge them.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

David Ogden is a former US deputy attorney general and a partner at WilmerHale.

Ari Yampolsky is a founding partner of Whistleblower Partners.

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