By: Colin M. Huntley, Sara McLean, Marta A. Thompson, Laura Hill, Caroline L. Wolverton
On April 10, 2026, the U.S. Department of Justice (DOJ) Civil Division announced a $17 million settlement with IBM, marking the first-ever False Claims Act (FCA) settlement under the Civil Rights Fraud Initiative announced in May 2025. The settlement resolves allegations that IBM violated the FCA by failing to comply with anti-discrimination requirements in its federal contracts due to practices the United States contends discriminated against employees and applicants for employment on the basis of race, color, national origin or sex. This is the first time DOJ has identified a company that was the subject of an FCA investigation relating to diversity, equity and inclusion (DEI) practices. The Wall Street Journal reported in December 2025 that DOJ was scrutinizing companies in the telecommunications, technology, automotive, pharmaceutical, defense and utilities industries.
The settlement agreement outlines the specific practices that the government contends violated the anti-discrimination requirements as set forth in Title VII of the Civil Rights Act of 1964, including:
Although on appeal the court distinguished that there was new information in the claim, the court ultimately found the new information was not material, nor was it plead with particularity. The U....