A Justice Department investigation has found that Virginia is violating the rights of residents with disabilities by keeping them in institutions and the state could face legal action if the situation doesn’t change.

In a letter to Virginia officials earlier this month, Assistant Attorney General Thomas E. Perez accuses the state of violating the Americans with Disabilities Act and the Supreme Court’s decision in Olmstead v. L.C., which favored the option of living in the community whenever possible.

Specifically, Perez cites the state for failing to provide sufficient community living options for people with disabilities who are currently in institutions. The state is also not doing enough to remove barriers to allow residents to move into the community, he said.

Moreover, the Justice Department investigation found that Virginia is not tapping available resources to expand community living and is instead prioritizing spending on institutions, Perez said. As a result, thousands of residents who currently live in the community are at risk of institutionalization.

“Reliance on unnecessary and expensive institutional care both violates the civil rights of people with disabilities and incurs unnecessary expense,” Perez wrote.

The Justice Department is advising the state to establish more Medicaid waivers to allow people with disabilities the option to live in the community. The state should also create plans to move residents out of institutions and “overcome what has become an institutional bias in its system,” the letter indicates.

If changes are not made, Virginia could face legal action, Perez said.