How Tariffs Can Increase Whistleblower Activity and Associated FCA Liability

Host Jonathan Porter welcomes Husch Blackwell partner Bob Romashko to the show to discuss an emerging area of False Claims Act liability—tariffs. True to his campaign promises to impose additional tariffs on major U.S. trading partners, President Trump has been active early in his second term wielding the threat of tariffs against friend and foe alike.As the tariff regime potentially expands, so do the risks posed by whistleblowers who could benefit from alleging violations of trade law. Jonathan and Bob summarize at a high level the tariff system and how its regulatory framework creates the potential for FCA liability. They explore how allegations of FCA violations often take the form of reverse false claims, which concern efforts to fraudulently withhold monies owed to the government, such as failing to disclose or falsely representing an obligation. In the trade context, these disclosures can be complex, especially as the tariff regime covers general tariffs, product-specific tariffs, and country-of-origin tariffs, each with very different classifications and definitions. Jonathan and Bob explore in depth some issues associated with tariff-related FCA litigation that are unusual and worth considering. More so than the typical healthcare or defense industry FCA litigation, tariff-related FCA cases are often filed by relators who are also business competitors, rather than “insiders” such as employees. This has important implications, especially given that the FCA is not a strict liability statute. Jonathan and Bob discuss recent “textbook” cases to demonstrate how honest mistakes can put a company at risk, as the costs associated with protracted litigation can compel companies to settle, even in the absence of a knowing violation. Jonathan and Bob also explore the federal district court judiciary’s unfamiliarity with some forms of trade-related litigation, as customs penalty cases are typically handled by the U.S. Court of International Trade.Jonathan and Bob conclude the episode with a discussion of what companies that work with importers need to know about FCA enforcement. Drawing from a recent FCA lawsuit, they explore the elements required to defend against relator claims and how those impact third-party participants, including warehousers, shippers, and others involved in the supply chain.Jonathan Porter BiographyFull BiographyJonathan focuses on white collar criminal defense, federal investigations brought under the False Claims Act, and litigation against the government and whistleblowers, where he uses his experience as a former federal prosecutor to guide clients in sensitive and enterprise-threatening litigation. At the Department of Justice, Jonathan earned a reputation as a top white collar prosecutor and trial lawyer and was a key member of multiple international healthcare fraud takedowns and high-profile financial crime prosecution teams. He serves as a vice chair of the American Health Law Association’s Fraud and Abuse Practice Group and teaches white collar crime as an adjunct professor of law at Mercer University School of Law.Robert Romashko BiographyFull BiographyBob is a Washington, DC-based partner at Husch Blackwell and the leader of the firm’s Tax practice group. He routinely handles client matters in connection with government investigations carried out by tax authorities and other government agencies, including the Securities and Exchange Commission, Department of Justice, and Office of Inspector General. Bob has a deep understanding of how government investigators think and act and how they approach potential fraud and compliance issues. He also maintains a litigation practice defending companies against whistleblower claims, specifically against the False Claims Act and allegations of Stark Law violations. Prior to joining Husch Blackwell, Bob spent six years as senior attorney with the IRS Office of Chief Counsel.