Nathan A Adams IV is a Partner in Holland & Knight's Tallahassee office
In United States ex rel. Barrick v. Parker-Migliorini Int'l, LLC, 878 F. 3d 1224 (10th Cir. 2017), the court affirmed dismissal of the qui tam relator's lawsuit against his former employer, a meat exporter, alleging it avoided paying an obligation owed to the government in violation of the False Claims Act (FCA) when it illegally smuggled beef into Japan and China. The U.S. Department of Agriculture (USDA) charges an hourly rate for the process of inspecting and certifying meat for export to a country if the country has higher standards than the U.S. In order to smuggle beef into Japan and China, the defendant gave sham destinations for countries that have import standards equal to or less than the U.S. As a result, the USDA provided a free inspection rather than a heightened inspection of the beef. If the defendant had accurately reported the destination countries, the government should have been paid for the inspections that would have occurred were the exports lawful. The court ruled that the defendant had no "established duty" to pay the government for inspection of beef it allegedly smuggled into China or Japan. This is significant because "there is no liability for obligations to pay that are merely potential or contingent." The defendant never would have paid the inspection fees because it never wanted the meat inspected. The court observed that "the whole point was that the meat would not have passed inspection under the applicable standards. And the beef headed to China could not have been inspected, since China banned all U.S. beef. So there would never have been an obligation to pay inspection fees."
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