Articles + Publications - Troutman Pepper Locke

Published in the American Bar Association, Health Law Section on March 19, 2026. Reprinted here with permission.

Summary

While patient advocacy organizations have traditionally operated as non-profit entities in the healthcare space, private, for‑profit patient advocacy is on the rise.
While such advocates may still deliver real value to patients, the introduction of a profit motive undercuts the financial independence of the advocate and challenges the loyalty owed to patients. This new and growing model introduces significant risk into the relationship between patients, providers, and payors.
This article looks at the origins of patient advocacy and the shift toward a profit-driven approach, explains the business models behind it, and highlights key risk areas that health plans should be prepared to navigate.

Jump to:

Patient advocacy organizations have traditionally operated as non-profit entities in the healthcare space, supporting patients through the complexities of the healthcare system and serving as healthcare experts whose sole loyalty is to the patient. Such advocates were a central part of the early development of the patients’ rights movement, and eventually that role grew into non profit organizations designed to help patients navigate care and coverage.

However, a different model is now on the rise: private, for‑profit patient advocacy. While such advocates may still deliver real value to patients, the introduction of a profit motive undercuts the financial independence of the advocate and challenges the loyalty owed to patients. This new and growing model introduces significant risk into the relationship between patients, providers, and payors, carrying with it misaligned incentives, privacy vulnerabilities, potential conflicts of interest, and increased exposure to litigation and fraud.

For managed care organizations, the rise of for‑profit advocacy can distort care decisions, increase out-of-network utilization, escalate disputes, and complicate compliance and cybersecurity. For patients, it can mean paying substantial fees to entities that are largely unregulated and not always transparent about their incentives. This article looks at the origins of patient advocacy and the shift toward a profit-driven approach, explains the business models behind it, and highlights key risk areas that health plans should be prepared to navigate.

From Patients’ Rights to Organized Advocacy

The concept of patient advocacy emerged prominently in the 1970s as part of the broader patients’ rights movement. Hospitals and physicians held significant informational and structural power over patients’ access to care and understanding of their options. Early proposals for such advocates envisioned a patient representative within the hospital or healthcare facility who would “assist the patient in learning about, protecting, and asserting his or her rights within the health care context.”

Such advocates would serve either as a representative, advocating on a patient’s behalf as to specific healthcare decisions, or as an “ombudsman” who would seek out broad problem areas and propose solutions, without participating in actual decision making. Over time, non-profit organizations developed this vision to provide broader case management and financial aid services to patients. As an example of this model, the non-profit Patient Advocate Foundation (PAF) was founded in 1996 and helps patients with chronic illness navigate denials, appeals, and coverage disputes, as well as offering co‑pay relief and other financial aid. Other non-profits and foundations target specific diseases, populations, or forms of financial need.

These non-profit models often serve particular populations and are donor- or grant‑funded. Their primary “customers” are patients and caregivers, not paying clients or investors. While such organizations are not immune from conflicts of interest or misalignment of goals or incentives, their non-profit status has generally allowed them to retain the traditional patient-centered loyalty that is the hallmark of the early patient rights movement.

The Rise of Private Professional Advocacy

Such non-profit advocacy organizations often cannot serve all patients due to mission or funding limitations, and it was perhaps inevitable that the desire for guidance navigating an increasingly complex healthcare system would outstrip the ability of such organizations to meet that demand. Beginning in the early 2000s, private, professional, for‑profit advocates began to gain popularity. This growth occurred in response to several factors affecting the healthcare industry:

Increasing costs and complexity. Prior authorization requirements, tiered networks, specialized coverage criteria, and member cost sharing rules have made navigating benefits and claims more complex. While payors offer customer service resources to assist members to understand their plans, patients may seek out an “independent” voice, especially when facing life-altering diagnoses or potentially costly services.
Growth of managed care and utilization review. As plans emphasize utilization management to avoid runaway costs and ensure service availability, patients and providers encounter additional scrutiny of referrals, out-of-network authorizations, and the medical necessity of high-intensity or novel services. This friction supports a market for “experts” who promise to “fight the insurance company.”
Conflict of interest concerns. Patients and providers may be skeptical of non-profit organizations that receive industry funding or of hospital-based patient-relations offices they see as aligned with institutional interests.
Demand for intensive, individualized support—for those who can pay. In high-dollar, high-complexity situations, families are willing to pay significant sums for specialized advocacy, particularly where approval of a desired course of treatment is uncertain.

Out of these demands grew for‑profit advocacy businesses, often marketing themselves as insiders who understand how to “work within the system.” And professional advocate network organizations grew up to support these businesses, providing marketing, training, templates, and legal support, and establishing national directories of professional advocates.

Given the realities of modern healthcare systems, the professional advocate is almost certainly a permanent part of the healthcare landscape and potentially an increasing presence in the relationship between patient, provider, and payor. The balance of this article discusses the current state of professional patient advocacy and the potential risks to healthcare payors.

Private Advocacy Cost Models

The key difference between traditional advocates and the professional advocate—and a key driver of risks associated with professional advocacy—is the compensation of the for-profit advocate. How patients compensate professional advocates shapes the pressures on the advocate’s loyalty to the patient’s interest and the risks created by the advocate’s involvement. Common models include:

Hourly billing. Advocates may charge $100–$500 per hour or more. In complex disputes, bills can reach thousands or tens of thousands of thousands of dollars. Patients may not fully understand that they are paying for effort, not a positive outcome.
Flat fees. Fees are to a specific transaction—such as claims submission or assistance appealing a particular claim—or operate on a fee per service, monthly, or hybrid of these models. Fixed fees are often appealing for patients but may incentivize the advocate to cut corners to minimize time spent.
Value based. These potentially troubling arrangements tie compensation to financial results, such as a percentage of reimbursement obtained for out-of-network claims or a fee based on cost savings as compared to billed charges. While these arrangements resemble contingency-fee arrangements, they can create a powerful incentive for the advocate to steer patients toward out-of-network providers and high-cost care where the “savings” and resulting fee for the advocate are larger.

Patients, especially those in crisis, may not be able to fully understand or evaluate these fee structures. This creates risk that financially vulnerable patients may end up paying thousands of dollars for services that do not materially change their outcomes or that expose them to additional risk.

For payors, these models often translate into aggressive, high-volume appeals, pressure campaigns, and litigation strategies potentially driven as much by the advocate’s economic interests as by clinical needs.

Impacts on Healthcare Claims and Litigation

The fee models discussed above pose a risk of several negative impacts on the healthcare claims process.

Increased Out-of-Network Utilization

Advocates frequently market their ability to secure coverage for out-of-network providers or facilities. While there are circumstances where patients genuinely require services that are unavailable in-network, advocates may steer patients to out-of-network providers due to undisclosed referral relationships or financial ties, or simply greater reimbursements available through approved out-of-network coverage as compared to contracted rates, driving higher advocate fees.

Advocates may thus encourage patients to bypass adequate in‑network options on the assurance that the advocate can obtain coverage or negotiate deep discounts, and then aggressively pursue “network gap exceptions” based on highly specialized criteria (which may or may not be genuinely required by the patient) and a narrow interpretation of the adequacy of in-network providers.

Advocates may also take advantage of urgent or emergency requests to compress the timeline in which an in-network provider must be located to increase the likelihood of an out-of-network referral or approval.

For payors, the effect is not just higher out-of-network spend. It can also disrupt network utilization and undermine efforts to manage quality and cost through contracted networks. Over time, this behavior erodes the predictability and integrity of the benefit structure for all members.

Increased Litigation and Settlement/Reimbursement

In high-cost or specialized clinical areas, these advocacy tactics often lead to a marked increase in litigation due to not only an increase in utilization, but also a focus by advocates on building a repeatable playbook. To that end, advocates will often portray denials of benefits in these areas as systemic failures by payors to recognize the efficacy or medical necessity of treatment rather than individualized medical-necessity decisions. These advocates may also have or seek to establish relationships with attorneys who specialize in coverage litigation, facilitating rapid escalation from internal appeal to external review and litigation. And their marketing may highlight “wins” against insurers and high-value reimbursements, reinforcing an adversarial posture from the outset and conditioning the member to expect prolonged litigation and a potential windfall, rather than simply reimbursement of costs incurred.

In addition, patients may seek recovery of advocate fees in addition to medical costs, effectively raising the baseline for any resolution. And depending on the advocate’s fee structure (especially contingency-like models), the advocate may push the patient to seek maximum recovery, even if a quicker or more limited resolution might better serve the patient. The result is a higher likelihood of disputes going to external review, arbitration, or court, even in cases where clinical evidence is uncertain or benefit language is clear. For plans, this can lead to more entrenched disputes, higher settlement amounts in some cases, and reputational risk if advocates publicly frame routine coverage determinations as unjust denials.

Privacy, HIPAA, and Security Risks

One of the most significant—and underappreciated—risks is that for‑profit advocates typically operate outside the Health Insurance Portability and Accountability Act’s (HIPAA) core regulatory framework. They are typically not “covered entities” (like health plans or providers) and, in most cases, they are not covered “business associates” because they are retained directly by the patient, not by the plan or provider. This creates several areas of potential risk:

Lack of HIPAA experience. While advocates who offer to handle claims submission or appeals assistance will need access to sensitive private health information (PHI), they may have little to no training or experience in handling PHI. This may result in advocates sharing PHI with third parties—billing firms, marketing partners, attorneys, or other vendors—without appropriate safeguards.
Access through member credentials. Advocates frequently obtain access to PHI via a member’s website or mobile application usernames and passwords, or broad authorizations. Plans may have difficulty distinguishing between the member and an advocate using the member’s credentials, complicating authentication and audit trails.
Violations of patient privacy through advocacy. Advocates may disclose more information than the patient fully appreciates or would freely choose under less vulnerable circumstances.

For payors, improper PHI handling by advocates creates risks stemming from potentially unauthorized or undisclosed access to patient information and subsequent disclosure of that information by the advocate, either intentionally or inadvertently. Even where the advocate discloses his or her involvement, ensuring proper authorization and compliance with HIPAA can present a significant challenge.

Cybersecurity risks exacerbate these concerns. Many advocates are small operations with limited technical resources. Yet they can accumulate extensive PHI across multiple plans and providers. For attackers, they are a high-value, poorly defended target. Advocates may also share this information with third-party vendors and subcontracts, increasing the potential attack surface for a bad actor. Even where the source of such a breach is a third party over whom a payor has no control, the compromise or exposure of member PHI can result in reputational harm, member complaints, increased operational costs to monitor the impact of breaches, and potentially regulatory investigation or litigation alleging non-compliance with the payor’s obligations under HIPAA and other privacy requirements.

Additional Risks and Ethical Concerns

The unregulated nature of for-profit advocacy also creates risks of unethical or fraudulent conduct by advocates. Although advocates frequently lack any clinical expertise or licensure, advocates may recommend treatments or providers to patients. In some cases, the advocate may base these recommendations on their own experiences or review of the patient’s medical records and history—creating concerns about the unauthorized practice of medicine—and in others the recommendation may be driven by the advocate’s own financial incentives. In either case, the advocate may disrupt the physician/patient relationship and steer patients to more costly procedures or providers without the professional credentials necessary to evaluate the propriety of those recommendations for the patient’s health. Additionally, advocate recommendations based on financial relationships with providers may violate state and federal anti-kickback statutes.

The combination of access to PHI, weak oversight, and financial incentives also create fertile ground for outright fraud. Potential fraudulent conduct by advocates in the healthcare context include: (1) misrepresenting clinical information to meet coverage criteria or to establish a need for out-of-network services, (2) submitting appeals or documents using member credentials without the member’s authorization, or (3) encouraging patients to sign broad authorizations that are then used in ways the patient did not understand or anticipate.

While there is little doubt many advocates act in good faith, the structural incentives and lack of oversight create opportunities for bad actors to cause substantial disruption to payors and expose members to significant financial risks.

Managing Advocate Risks

For managed care organizations, for‑profit advocates are not likely to disappear, and their influence on healthcare continues to grow. Payors must proactively manage the risks associated with such advocates to protect members and to preserve plan integrity. The following best practices help mitigate risks associated with patient advocacy involvement in member claims.

Scrutinize out-of-network exceptions on the front end to identify potential trends;
Educate patients and providers about (1) the risks of involving for-profit patient advocates in claims/appeals, and the impact of such involvement on the costs and complexity of litigation;
Monitor clinical areas with high advocate presence, audit utilization management and billing trends;
Develop strategies to address litigation risks and settlement challenges;
Create ways to ensure transparency when advocates are acting on behalf of patients; Implement robust contracts that include HIPAA compliance requirements and security protocols;
Maintain secure access for online claims submission (e.g., multi-factor authentication) to minimize security risks;
Offer training for company employees, members, and special investigations units to spot problematic advocates; and
Report suspected fraud to regulatory and law enforcement agencies, take legal action as needed.

Conclusion

For‑profit patient advocates have emerged as powerful actors in the healthcare ecosystem, filling a need for patients who seek “independent” guidance navigating their benefits and claims. But unregulated, profit-driven advocacy creates substantial risks for members and payors. Collaboration between payors, providers, and patients is essential to mitigate those risks and ensure ethical advocacy practices. Payors must accordingly approach for-profit advocacy with an understanding of those risks and a plan to manage them.

Published by the American Bar Association ©2026. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

On March 31, U.S. Customs and Border Protection (CBP) submitted an update with the U.S. Court of International Trade (CIT) on its development of the “Consolidated Administration and Processing of Entries” (CAPE) functionality in the Automated Commercial Environment (ACE) to calculate and refund duties imposed under the International Emergency Economic Powers Act (IEEPA). CAPE is a new capability within ACE that will allow CBP to receive “CAPE Declarations” from importers, identify affected entries, remove IEEPA-related Harmonized Tariff Schedule of the United States (HTSUS) codes, recalculate duties, and process refunds through what CBP has indicated will be approximately a 45-day review, reliquidation, and refund process once the system is fully operational.

CBP has divided CAPE into four integrated components: (1) Claim Portal; (2) Mass Processing; (3) Review and Liquidation/Reliquidation; and (4) Refund. Phase 1 is expected to cover a substantial share of entries subject to IEEPA duties, but not all of them; more complex categories and finally liquidated entries are expected to be addressed in later phases. Although CBP has now provided more detail on its intended approach, the refund process itself is not yet operational.

CAPE Phase 1 – Status and Coverage

As of March 30, 2026, CBP estimates that development of the four CAPE components is as follows: Claim Portal is about 85% complete, Mass Processing about 60% complete, Review and Liquidation/Reliquidation about 80% complete, and Refund about 75% complete. CBP further estimates that Phase 1, as currently designed, will be able to process roughly 63% of entries on which IEEPA duties were paid or deposited. That percentage reflects only entries that are unliquidated or within the 90‑day voluntary reliquidation period under 19 U.S.C. § 1501. For those entries, Phase 1 will apply the CAPE functionality described above to permit liquidation or reliquidation and issuance of IEEPA duty refunds.

CIT Orders and Finally Liquidated Entries

To comply with the CIT’s March 20 amended order, CBP initially revised Phase 1 so that it does not run through CAPE any entries whose liquidation is already final — that is, entries that, under the usual customs rules, CBP can no longer reopen and change. On March 27, however, the CIT ordered that “[a]ny liquidated entries for which liquidation is final shall be reliquidated without regard to the IEEPA duties,” meaning CBP must ultimately remove IEEPA duties and issue refunds even for those finally liquidated entries. CBP updated its refund plan to state that, in order to keep Phase 1 on schedule, it will exclude finally liquidated entries for now and intends to add functionality to address those entries in a later phase of CAPE. CBP expects to develop the capability to process entries for which liquidation is final in a subsequent phase of CAPE.

Which Entries Are Included and Excluded in Phase 1

CBP has clarified which categories of entries CAPE Phase 1 will accept. Phase 1 will accept CAPE Declarations for unliquidated entries and for entries within the 90‑day voluntary reliquidation period. It will also accept entries whose liquidation status in ACE is “suspended,” “extended,” or “under review,” including antidumping and countervailing duty (AD/CVD) entries that remain under suspension. For those entries, CAPE will remove the IEEPA HTSUS codes and recalculate the duties without IEEPA, but CBP will not liquidate or refund those entries until they liquidate in the normal course, or, in the case of AD/CVD entries, until the U.S. Department of Commerce (Commerce) lifts suspension and issues liquidation instructions. In addition, Phase 1 will accept warehouse and warehouse withdrawal entries; for those, CAPE will remove the IEEPA HTSUS codes, while liquidation and refunds will occur through CBP’s normal warehouse liquidation process.

At the same time, Phase 1 will not accept CAPE Declarations for certain categories. These exclusions are: entries flagged for reconciliation, including Entry Type 09 – Reconciliation Summary; entries designated on drawback claims; entries covered by an open protest; entries not filed in ACE or without a liquidation status in ACE; and entries subject to AD/CVD where Commerce has already issued liquidation instructions and the entries are pending liquidation under 19 U.S.C. § 1504(d). CBP states that the expanded acceptance of suspended, extended, under review, and warehouse entries is not expected to delay Phase 1 delivery.

Timing and Processing in Phase 1

CBP has set out specific timing parameters for Phase 1 processing. CBP will take up to 45 days from acceptance of a CAPE Declaration to review and liquidate the validated entry summaries identified on that declaration, unless compliance concerns require further review. In addition, CAPE Phase 1 will accept entries that were liquidated within the preceding 80 days, with the aim that processing and any necessary reliquidation will be completed by the 90th day following liquidation, consistent with the voluntary reliquidation period under 19 U.S.C. § 1501.

Electronic Refund Requirement

CBP now issues refunds electronically, to the importer of record (IOR) or to another party designated by the IOR on CBP Form 4811, consistent with governmentwide electronic payment requirements.

Next Steps

CBP states that it is evaluating more complex scenarios for subsequent phases of CAPE development. It has identified several categories that it expects to address in later phases, including enhanced compliance and validation tools; enhanced financial reporting and security tools; functionality relating to entries that have outstanding non‑IEEPA bills; the capability to process reconciliation entries and entries designated on drawback claims; functionality for complex interest calculations; the capability to process entries for which liquidation is final; and the capability to process certain non‑Automated Broker Interface entries. CBP indicates that it will provide additional information and guidance on these subsequent phases as they are developed.

Practical Considerations for Importers

For importers, this recent update from CBP means Phase 1 will provide substantial but incomplete relief. In light of the declaration and the CIT’s orders, importers may wish to (i) review entries on which IEEPA duties were paid or deposited and identify which are Phase 1‑eligible (unliquidated or within the 90‑day window) versus those that will depend on later phases; (ii) quantify exposure for finally liquidated and other excluded entries, which are now within the potential scope of court‑ordered relief; (iii) ensure electronic refund readiness, including enrollment, banking details, and CBP Form 4811 designations; and (iv) monitor further CBP and court guidance on the rollout and scope of subsequent CAPE phases. Troutman Pepper Locke’s Tariff Task Force is available to assist with these assessments and with planning for both Phase 1 and later phase recovery.

Troutman Pepper Locke attorneys Joseph Kadlec and Douglas Gray recently authored the Reuters Legal News article “Pipeline Gaps Create M&A Opportunities for Deal-Ready Life Sciences Companies,” where they discuss how late-stage biotech and biopharma companies can best position themselves for M&A opportunities in 2026.

Regulatory Oversight Blog

Make sure to visit Troutman Pepper Locke’s Regulatory Oversight blog to receive the most up-to-date information on regulatory actions and subscribe to our mailing list to receive a monthly digest.

Regulatory Oversight will provide in-depth analysis into regulatory actions by various state and federal authorities, including state attorneys general and other state administrative agencies, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission (FTC). Contributors to the blog will include attorneys with multiple specialties, including regulatory enforcement, litigation, and compliance.

Antitrust Updates
Labor + Employment Updates
Tobacco Updates
Prediction Market Updates
SEC Updates
Political Law Updates
Other Multistate Updates

Troutman Pepper Locke Spotlight

Virginia Attorney General Jay Jones Shifts Office Priorities

By Ashley L. Taylor, Jr., Graham Bryant, and Gene Fishel

This article was originally published by Virginia Lawyers Weekly and is republished with permission.

Upon taking office Jan. 17, Democratic Virginia Attorney General Jay Jones issued a series of pronouncements in quick succession that signal his administration’s core priorities, and that are sure to reverberate through Virginia’s legal landscape. They include actions involving consumer protection, health data privac y, immi g ration, education, and environmental issues.

Troutman Strategies and RISE Expand Government Affairs and Regulatory Capabilities With Three Strategic Additions

By Troutman Pepper Locke

Troutman Strategies and Troutman Pepper Locke’s Regulatory Investigations, Strategy + Enforcement (RISE) team announced the addition of three professionals who deepen the firm’s federal, state, and regulatory capabilities: Jason A. Smith with the RISE team in Washington, D.C., and New York, Audra Hill as state affairs coordinator in Georgia, and Brian Mann as a government affairs specialist on the federal team in Washington, D.C.

Troutman Pepper Locke Expands Virginia Appellate and State Enforcement Capabilities

By Troutman Pepper Locke State Attorneys General Team

Graham K. Bryant, former principal deputy solicitor general and director of Virginia Appellate Litigation in the Office of the Attorney General of Virginia, has joined Troutman Pepper Locke’s Regulatory Investigations, Strategy + Enforcement (RISE) practice group and Virginia Appellate team. Graham’s practice centers on Virginia-focused appellate and regulatory matters, drawing on his experience handling high-stakes constitutional and policy litigation in Virginia’s courts and in federal courts, including multiple matters before the U.S. Supreme Court.

Payments Pros Podcast Updates

Beyond the Buzzwords: Building Bank-Fintech Partnerships That Survive Exams
By Carlin McCrory

In this episode of Payments Pros, host Carlin McCrory is joined by Marissa Tartarini of Elliott Davis to explore how banks can build sustainable, scalable fintech partnerships in a shifting regulatory environment. They begin with the foundational risk questions banks should ask before choosing a partner — speed to market, in-house expertise and gaps, strategic fit, and risk appetite — then turn to practical legal and compliance considerations, including staffing, board oversight, and the need for tailored partnership agreements. Marissa and Carlin discuss the challenges of managing multiple fintech programs at once, maintaining up-to-date policies and marketing, and ensuring that growth does not outpace governance and BSA/AML controls. They highlight what separates successful programs from those that fail, lessons from terminated partnerships, and how to prepare for increasingly technical regulatory exams. Carlin and Marissa close the episode with a look at how regulators’ and banks’ views of fintech partnerships have evolved and what that means for the future of bank-fintech collaboration.

Federal Appellate Updates

Eleventh Circuit Upholds Florida’s Lab-Grown Meat Ban Against Preemption Challenge
By Matthew Berns and William LaRosa

On March 23, 2026, the U.S. Court of Appeals for the Eleventh Circuit rejected an effort to preliminarily enjoin Florida’s ban on lab‑grown meat. The Eleventh Circuit held that the Poultry Products Inspection Act (PPIA) does not preempt the state law because the outright ban on lab-grown meat does not regulate poultry facilities, operations, or ingredients.

Privacy + Data Updates

Algorithmic and Surveillance-Based Pricing in State AGs’ Crosshairs
By Troutman Pepper Locke State Attorneys General Team, David Navetta, Karla Ballesteros, and Brianna Dally

On March 16, 2026, New York Attorney General (AG) Letitia James rallied in support of the “One Fair Price Package” — a pair of bills aimed at curbing algorithmic and surveillance pricing in New York. Together, the bills would prohibit the use of personalized algorithmic pricing based on consumer data, ban electronic shelf labels in large food and drug retailers, and create robust enforcement mechanisms and private rights of action. The announcement from New York comes shortly after New Jersey Governor Mikie Sherrill backed legislation to ban what she has called “surveillance” pricing, and after California Attorney General Rob Bonta announced an investigative sweep focused on businesses that use consumer data to individualize prices for their goods or services earlier this year.

Alabama Enacts App Store Accountability Act Requiring Age Verification and Parental Consent
By Troutman Pepper Locke State Attorneys General Team

States including Texas, Utah, Louisiana, and California have begun shifting children’s online safety obligations from individual apps and websites to app stores and operating systems. Alabama has now joined that trend. These laws generally require centralized age checks, parental consent tracking, and tighter coordination between app stores and developers, and they are already generating litigation risk, including a pending First Amendment challenge to the Texas statute.

Federal Judge Holds Generative AI Communications Are Not Privileged in Decision Likely to Impact Litigation and Regulatory Enforcement
By Troutman Pepper Locke State Attorneys General Team and Lauren Hancock Miller

As the use of artificial intelligence (AI) becomes more prevalent in day-to-day life and in the legal field, in particular, thorny questions arise regarding the implications of that use. One such question is whether exchanges with a publicly available generative AI platform in connection with pending litigation are protected by the attorney-client privilege or the work product doctrine. In a matter of first impression nationwide, U.S. District Judge Jed S. Rakoff of the Southern District of New York answered that question in the negative and required a defendant to provide the prosecution documents memorializing litigation-related communications with a generative AI platform.[1] Applying traditional principles governing the attorney-client privilege and the work product doctrine, the court reasoned that the communications did not involve an attorney-client relationship, were not confidential, were not made for the purpose of obtaining legal advice, and did not reflect an attorney’s trial strategy.[2] The ruling will likely impact whether legal protections are afforded to AI communications, prompts, and output in both litigation and regulatory inquiries, including state attorneys general (AG) investigations.

FTC Updates

FTC Revives Negative Option Rulemaking
By Clayton Friedman, Michael Yaghi, Zoe Schloss, and Namrata Kang

On March 11, 2026, the Federal Trade Commission (FTC) issued an advance notice of proposed rulemaking (ANPRM) on negative option marketing. The ANPRM restarts the agency’s effort to regulate subscriptions and automatic renewals after the Eighth Circuit vacated the prior “Click to Cancel” rule, from the Biden administration era, on procedural grounds. Comments are due 30 days after Federal Register publication.

Health Care + Life Sciences Updates

Vermont AG Settles With United Counseling Services Emphasizing Public Safety and Organizational Reforms
By Troutman Pepper Locke State Attorneys General Team

On March 12, 2026, Vermont Attorney General (AG) Charity Clark announced a settlement with United Counseling Service of Bennington County, Inc. (UCS), an organization contracted with Vermont’s Medicaid program to provide services to vulnerable adults in Vermont. The settlement agreement resolves Vermont’s allegations related to service failures that resulted in alleged safety risks to Medicaid recipients and the public, and requires UCS to pay the state $483,464 and implement various “dramatic organizational reforms” to improve oversight and monitoring.

New York AG Settles Ghost Network Investigation
By Troutman Pepper Locke State Attorneys General Team

New York Attorney General (AG) Letitia James reached a $2.5 million settlement with health insurer EmblemHealth following an investigation of the behavioral health provider “ghost networks.” “Ghost networks” are provider networks in which many of the providers listed in the insurer’s directory of “in-network” providers are actually unavailable, not accepting new patients, or not actually participating in the network. The investigation also focused on compliance with state and federal behavioral health parity laws. As part of the settlement, the insurer will pay more than $2.5 million and undertake changes to its policies and procedures.

Antitrust Updates

Federal Approval Is No Safe Harbor: State AGs Redefine Merger Risk in Trump 2.0 as 8 States Sue to Block $6.2B Nexstar-Tegna Merger
By Daniel Anziska, Clayton Friedman, Christy Matelis, and Brad Smutek

On March 19, 2026, a group of eight state attorneys general (AGs) filed a lawsuit to block the $6.2 billion acquisition of Tegna Inc. by Nexstar Media Group, two of the largest American broadcast companies. The suit came after federal regulators cleared the transaction, sharpening an increasing divide between the administration and states’ views on the same transactions.

State AGs Reject Federal Live Nation Deal and Press Ahead
By Chris Carlson, Clayton Friedman, Ashley L. Taylor, Jr., and William LaRosa

State attorneys general (AGs) from across the political spectrum have refused to join the U.S. Department of Justice’s (DOJ) midtrial settlement with Live Nation. The bipartisan multistate coalition vowed to “keep fighting this case without the federal government,” underscoring that state AGs are increasingly prepared to part with the DOJ and take the lead in complex enforcement actions.

Labor + Employment Updates

Trucking and Delivery Company Settles New Jersey Worker Misclassification Allegations
By Troutman Pepper Locke State Attorneys General Team

PDX North, Inc. (PDX), a last-mile automotive parts distribution company, recently settled with the New Jersey Department of Labor and Workforce Development (NJDOL) and New Jersey Office of the Attorney General (OAG) (collectively, the state) to resolve allegations that PDX violated New Jersey’s worker classification laws.

Tobacco Updates

FDA Issues Draft Guidance on Flavored ENDS PMTAs
By Bryan Haynes, Agustin Rodriguez, and Zie Alere

On March 9, the U.S. Food and Drug Administration (FDA) released a draft guidance document describing the agency’s perspective on premarket tobacco product applications (PMTAs) for flavored electronic nicotine delivery systems (ENDS).

North Carolina Court Affirms Sealed Container Defense in Vape Battery Malfunction Case
By Bryan Haynes and Nick Ramos

The North Carolina Court of Appeals recently issued a decision strengthening the “sealed container” defense available to non‑manufacturing sellers in products liability cases. In Weaver v. AMV Holdings LLC, the court found in favor of a vape retailer and distributor after a lithium‑ion battery malfunctioned in a customer’s pocket, causing serious burns. For retailers and distributors — particularly those dealing with lithium‑ion batteries — this decision underscores the continued viability of sealed container defenses.

Changes to California’s Prop 65 Warnings: Four Things Nicotine Product Sellers Should Know
By Bryan Haynes and Michael Jordan

California recently finalized changes to its Proposition 65 (Prop 65) warning rules that included significant changes to short-form warning statements for product labels. These changes directly affect nicotine‑containing products — including e‑cigarettes, e‑liquids, oral nicotine products, and other consumer goods that can expose consumers to nicotine.

Prediction Market Updates

Prediction Markets Company’s Preemptive Lawsuits Aim to Carve Out a Federal Safe Harbor for Prediction Markets
By Stephen C. Piepgrass and Ayana Brown

On March 11, Kalshi filed a lawsuit in the U.S. District Court for the Southern District of Iowa against Attorney General (AG) Brenna Bird and members of the Iowa Racing and Gaming Commission. Kalshi’s complaint asks the court to declare that the Commodity Exchange Act (CEA) and the Commodity Futures Trading Commission’s (CFTC) “exclusive jurisdiction” over trading on designated contract markets preempt Iowa’s gambling and election‑wagering provisions as applied to Kalshi’s event contracts.

Arizona Files First-Ever Criminal Suit Against Kalshi
By Stephen C. Piepgrass and Ayana Brown

Arizona Attorney General Kris Mayes has filed against Kalshi what appears to be the first criminal case in the U.S. against a federally regulated prediction market platform. The state alleges Kalshi is operating an illegal gambling enterprise and facilitating unlawful election wagering by Arizona residents.

CFTC Issues New Guidance for Prediction Markets
By Stephen C. Piepgrass, Zoe Schloss, and Cole White

On March 12, 2026, the Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight issued Staff Advisory Letter No. 26-08 to all designated contract markets (DCMs), signaling a supportive stance toward prediction markets and other event-based derivatives, including contracts based on the outcome of sporting events. While reiterating existing compliance obligations, the advisory emphasizes the agency’s interest in fostering innovation and growth in these markets within the framework of the Commodity Exchange Act. At the same time, the CFTC released an advance notice of proposed rulemaking seeking broad public comment on whether and how to further regulate event contracts.

Tennessee Federal Court Addresses State Authority Over Sports-Event Contracts
By Stephen C. Piepgrass and Ayana Brown

A recent decision from the U.S. District Court for the Middle District of Tennessee marks a significant development in the ongoing dispute over whether sports event contracts offered on prediction market platforms are properly regulated by the Commodity Futures Trading Commission (CFTC) or whether such contracts should be regulated by the states as sports betting. Tennessee officials had issued a cease‑and‑desist order contending that certain sports‑linked event contracts were akin to unlicensed sports wagering under state law. Prediction contract platform provider, Kalshi, responded by filing suit in federal court, arguing that these contracts were “swaps” governed exclusively by the Commodity Exchange Act and subject to the CFTC’s jurisdiction, not Tennessee’s sports‑betting framework.

SEC Updates

DC Federal District Court Confirms Jarkesy Does Not Bar SEC From Seeking Industry Bars in Follow-On Proceedings
By Jay Dubow and Ghillaine Reid

In Sztrom v. SEC, the U.S. District Court for the District of Columbia confirmed that the U.S. Supreme Court’s 2024 decision in SEC v. Jarkesy, which curtailed the Securities and Exchange Commission’s (SEC) ability to seek civil penalties in its administrative forum, does not eliminate the agency’s long-standing ability to pursue industry bars through administrative follow-on proceedings. The opinion underscores that, even after Jarkesy and other recent limits on agency power, the SEC may still use its in-house process to determine whether to bar previously enjoined defendants from the securities industry, with independent review limited to the courts of appeals.

SEC–CFTC ‘Historic’ MOU Signals New Phase of Harmonized Oversight and Innovation-Focused Regulation
By Jay Dubow and Ghillaine Reid

On March 11, the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) signed a memorandum of understanding (MOU) that both agencies describe as “historic.” The MOU is intended to reset the relationship between the agencies by reducing turf battles, avoiding duplicative regulation, and providing clearer, technology-neutral oversight — particularly in markets where securities and derivatives regimes overlap, including crypto. While it does not change either agency’s statutory authority, it creates a formal framework for coordination that will materially affect how policy, examinations, and enforcement play out in practice.

Political Law Updates

Political Law Quarterly – Q1 2026
By Warren F. “Jay” Myers, Sydney Goldberg, and Timothy Shyu

Political activities sit at the intersection of law, policy, and reputation. Companies operating in highly regulated industries cannot avoid political law issues, and it is frequently more complex than expected.

Other Multistate Updates

State AGs Settlement With WeChat Requiring Proactive Anti-Fentanyl Money Laundering Controls
By Troutman Pepper Locke State Attorneys General Team

A bipartisan coalition of seven state attorneys general (AG) reached a settlement with the Chinese-owned messaging and payment platform WeChat under which the company committed to take steps to combat the use of its platform in fentanyl-related money laundering. The agreement focuses on improving law enforcement cooperation, preserving and producing user data in response to law enforcement requests, and proactively detecting illicit activity on the service. The settlement is part of a broader enforcement campaign by state AGs to push online platforms to adopt proactive measures to monitor illicit activity on their services and improve cooperation with law enforcement.

Virginia AG Joins Multistate Suit Over CFPB Funding Signaling More Aggressive Enforcement in the Commonwealth
By Troutman Pepper Locke State Attorneys General Team

Virginia Attorney General (AG) Jay Jones has joined an ongoing lawsuit by 23 Democratic AGs challenging Consumer Financial Protection Bureau (CFPB) Acting Director Russell T. Vought’s interpretation of the CFPB’s statutory funding mechanism that would leave the agency without operating funds.

Stephanie Kozol, Senior Government Relations Manager – State Attorneys General, also contributed to this newsletter.

Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.

This article was originally published in Tax Notes Federal on March 16, 2026 and republished here with permission.

In this article, David Gair and Gibson Odderstol examine President Trump’s unprecedented lawsuit against the IRS for the unauthorized disclosure of his tax return information.

President Trump’s tax returns have been a hot topic since he failed to release his returns during the 2016 presidential campaign. This bucked a decades-long tradition in which every major party candidate for president since 1980 had released their tax returns during the campaign. Trump said he would release his returns once his IRS audit was completed.¹ The exhaustive coverage of this saga has evolved once again: Trump’s recently filed suit against the IRS presents a new chapter of controversy not only for him and his tax returns, but also for the law that protects taxpayer privacy rights.²

I. Background

In April 2019 the chair of the House Ways and Means Committee, Rep. Richard E. Neal, D-Mass., made a request to the IRS for then-President Trump’s tax returns for the years 2013 to 2018. The committee’s first attempt was rejected by the Treasury Department, at the time led by Trump appointee Steven Mnuchin, who said there was no legitimate legislative basis for the request.³

Later that year, Charles Littlejohn, an employee of Booz Allen Hamilton and an IRS contractor (more on that later), stole the tax records of many notable and wealthy individuals.⁴ Included in that theft were 15 years of Donald Trump’s tax returns, which Littlejohn leaked to The New York Times between August and October 2019, with the story released in a series of articles in September 2020.⁵

At a White House briefing on September 27, 2020, Trump denied the New York Times story and called it “a total fake,” claiming that he pays “a lot” in federal income taxes, saying, “I pay a lot, and I pay a lot in state income taxes.”⁶

Neal made an updated request in 2021 seeking Trump’s 2015 to 2020 tax returns and related information, and the Treasury Department’s Office of Chief Counsel determined that the IRS was required to comply.⁷

Trump then sued to block the disclosure of his tax returns to the committee, arguing that it lacked a legitimate purpose and that the real motive was to expose Trump’s finances and gather evidence for a criminal case. Trump lost at both the federal district court level and at the D.C. Circuit. The legal battle lasted over three years, and on November 22, 2022, the Supreme Court refused to block the Ways and Means Committee’s request for Trump’s tax returns, with no noted dissents.⁸ The Treasury Department complied with the decision and transferred the records on November 30, 2022.⁹ On December 20, 2022, the Ways and Means Committee voted 24 to 16 along party lines to release redacted versions of Trump’s tax returns. The committee released six years of Trump’s personal and business returns, ending years of legal wrangling and speculation.

Meanwhile, on December 13, 2022, the billionaire CEO of the hedge fund Citadel LLC, Ken Griffin (one of the individuals whose information was stolen by Littlejohn), filed a suit against the IRS in the U.S. District Court for the Southern District of Florida over the unauthorized disclosure of his tax information.¹⁰ Griffin was alerted to this breach when ProPublica published an article on “America’s top 15 earners” on April 13, 2022.¹¹ On October 12, 2023, Littlejohn pleaded guilty to disclosing tax return information without authorization in violation of section 6103.¹² The following day, Griffin amended his complaint to identify Littlejohn as the source of the IRS leak and to address the attendant legal complications that a conviction would bring.¹³ Griffin and the IRS settled this suit on June 25, 2024, after the court ruled on the IRS’s motion to dismiss partially in favor of Griffin. In exchange for dropping the suit, the IRS issued a public apology for the leak and committed to a greater focus on information security.¹⁴

On January 29, 2026, Trump, his sons Donald Jr. and Eric, and his corporate entities filed a lawsuit against the United States, seeking billions in damages for the unauthorized disclosure of his tax return information. The suit, filed in the U.S. District Court for the Southern District of Florida, alleges that an IRS employee illegally leaked years of confidential tax data to news organizations, leading to their widespread publication.¹⁵ This case places a spotlight on the civil remedies available to taxpayers under section 7431 and the Privacy Act of 1974, presenting significant legal hurdles for the plaintiff, particularly concerning the statute of limitations, the defendant’s employment status, and the fundamental requirement of proving damages.

II. The Basic Elements of an Unauthorized Disclosure Claim

To succeed in a civil action for damages under section 7431, a plaintiff must prove several key elements. The statute provides a cause of action if “(1) any officer or employee of the United States (2) knowingly, or by reason of negligence (3) inspects or discloses any return or return information with respect to a taxpayer (4) in violation of any provision of section 6103.”¹⁶

The lawsuit also brings a claim under the Privacy Act, which has similar standards for proving damages.¹⁷ While the leak itself is not in dispute, the plaintiff faces a difficult path to satisfy all the required elements and overcome the government’s defenses.

III. The Challenge of Proving Damages

A central challenge for the plaintiff is proving damages. The complaint seeks two forms of relief: actual damages or statutory damages, and punitive damages.

A. Actual Damages

Under section 7431(c)(1)(B)(i), a plaintiff can recover “the actual damages sustained by the plaintiff as a result of such unauthorized inspection or disclosure.” The code does not define actual damages, leaving courts to interpret the term. As established in cases like Castillo,¹⁸ a plaintiff must demonstrate that the unauthorized disclosure was the actual and proximate cause of the harm they suffered. Courts often look to general tort principles, including the “but for” test for factual causation and foreseeability, for proximate causation, as articulated by the Supreme Court in Paroline.¹⁹

For the Trump plaintiffs, quantifying actual damages will be exceptionally difficult. Allegations of reputational harm are hard to translate into a specific monetary figure, especially when, by some measures, the former president’s net worth has reportedly increased since the disclosures.²⁰ While some damages, such as legal fees incurred in related litigation, might be demonstrable, they fall far short of the amounts claimed.

The case of Jones²¹ provides a rare example of a successful section 7431 suit in which a plaintiff proved actual damages. In Jones, an IRS agent told a confidential informant, out of concern for the informant’s safety, that the plaintiff’s workplace, Jones Oil, was going to be subject to a raid. In turn, the informant leaked news of the raid to the local press, which was present for coverage of the IRS raid on the plaintiff’s business. The raid did not result in charges against the plaintiff. Even so, the negative coverage that resulted from it caused the company to lose contracts and sales opportunities, which ultimately resulted in bankruptcy for Jones Oil.²² The court determined that these lost contracts were quantifiable, as was the emotional distress that plaintiffs suffered as a result of the news coverage. The plaintiffs employed convincing expert testimony that quantified the impact of the news coverage on both the financial health of Jones Oil and their own physical health.²³ Moreover, the court found the leak of the raid to be the proximate cause of that harm. In making that determination, the court held that the government lacked any “meaningful evidentiary foundations” for disputing proximate cause.²⁴ The plaintiffs in Jones were able to point to concrete examples of the negative impact of the IRS leak; the harm in Trump is far more attenuated and less quantifiable. If there is meaningful evidence of the significant economic harm alleged by the plaintiffs in Trump, it does not exist in the public record and would need to be elicited in discovery.

B. Statutory and Punitive Damages

In lieu of actual damages, section 7431(c)(1)(A) allows for statutory damages of “$1,000 for each act of unauthorized disclosure.” The plaintiff’s complaint advances a novel theory that “each act” refers to every individual who read the information published by news outlets, leading to a claim for at least $10 billion.²⁵ However, this interpretation is not supported by precedent. Courts in cases like Mallas²⁶ and Minda²⁷ have held that damages are calculated based on the number of discrete acts of disclosure from the leak, not the number of people who ultimately receive the information downstream. An act of disclosure is the unauthorized communication between the government employee and the unauthorized party. Some courts have ruled that it would go against congressional intent to extend statutory damages to the communications resulting from an unauthorized disclosure.²⁸ The narrow interpretation of “each act” of disclosure severely limits the potential for a large statutory damages award, forcing plaintiffs who seek substantial compensation to prove actual damages, however difficult that may be.

The path to punitive damages is also complicated. While section 7431 waives sovereign immunity to allow for punitive damages in cases of willful or grossly negligent disclosures, the Ninth Circuit in Siddiqui²⁹ held that an award of punitive damages is contingent upon a successful demonstration of actual damages. The court reasoned that any ambiguity in the government’s waiver of sovereign immunity must be construed in its favor. This is not settled law, however; the court in Mallas held that punitive damages could be awarded even if the plaintiff’s actual damages were zero.³⁰ So, the application of punitive damages in section 7431 cases is a matter of dispute. Courts would be skeptical of the punitive damages the plaintiffs are seeking in either approach outlined above.

IV. Critical Legal Hurdles

Beyond damages, the lawsuit faces at least two potentially fatal threshold issues.

A. Employee or Contractor?

A claim under section 7431 requires the disclosure to have been made by an officer or employee of the United States. Littlejohn was an employee of an IRS contractor, Booz Allen Hamilton — not a direct employee. If the court determines that he was a mere contractor without sufficient government control over his work, the claim against the United States will fail. The government would not be vicariously liable because the waiver of sovereign immunity does not explicitly provide for that liability. For there to be a valid claim against the government in Trump, the plaintiffs need to sufficiently allege that Littlejohn was more than a contractor.

This issue was a central point of contention in the lawsuit filed by Griffin. In Griffin, the government moved to dismiss on these grounds. It argued that Littlejohn’s confession served as a factual basis for his status as a contractor.³¹ The court, however, denied the motion, finding that the plaintiff had plausibly alleged that the degree of supervision and control the IRS exercised over Littlejohn could render him a de facto employee for liability purposes.³² The court did not get to consider the principal-agent analysis as applied to the facts of Griffin. The parties never even completed discovery. The complaint in Trump borrows heavily from the reasoning in Griffin, but this remains a significant factual dispute that must be resolved.

The courts have considered the principal-agent relationship in the context of section 7431 in a case brought against the IRS by Hunter Biden. In that case, Biden alleged that IRS employees acted through their personal attorneys to unauthorizedly disclose his tax return information. The court emphasized that the common law approach to principal-agent relationships governs the analysis of whether an actor for the IRS is an employee or a contractor.³³ Moreover, the court ruled that employees could violate section 6103 through intermediaries and that, in this case, a lawyer was a clear agent of the IRS employees.³⁴

The ruling in Biden does not have a direct bearing on the analysis that will apply to the facts of Trump. However, it does provide a basis to understand the balance that must be struck when applying common law principles to the waiver of sovereign immunity in section 7431. When Congress is ambiguous on how a waiver of sovereign immunity should be applied, courts use common law principles to fill in the gaps.³⁵ Section 7431 does not provide a framework to differentiate an employee from a contractor, so, as in Biden, the court in Trump will look to the common law of principal-agent relationships to determine Littlejohn’s status. That analysis is fact intensive and unlikely to be resolved in a motion to dismiss. So, these common law principles will be vital in considering Trump.

B. Statute of Limitations

The lawsuit also faces a formidable statute of limitations defense. Under section 7431(d), a plaintiff must bring an action within two years from the date they discover the unauthorized disclosure. The Ninth Circuit’s decision in Aloe Vera³⁶ established that this two-year period is jurisdictional, meaning it is an absolute limit on the government’s waiver of sovereign immunity and is not subject to equitable tolling.³⁷

The key question is when discovery occurred. News stories based on the leaks were published as early as September 2020. The government will almost certainly argue that discovery does not require knowledge of the leaker’s identity, only knowledge of the unauthorized disclosure itself, which occurred upon publication in 2020. The plaintiffs will counter that they could not have discovered a claim against the IRS until they had reason to know the source was an IRS employee or agent, which they claim was not until they received official notification.

Under section 7431(e), the government must notify taxpayers if an unauthorized disclosure of their information occurs. The concept of notification is not tied in any way to the discovery that begins the tolling of the limitations period. So, it is not given by the statute that the plaintiffs in Trump discovered the unauthorized disclosure when they were notified by the IRS. The limitations period for Trump is further complicated by the public filing of Griffin in December 2022. Griffin alleged the same leak by an IRS actor and may undermine the argument that the source of the leak was unknowable before that time. The government can point to multiple moments when the plaintiffs could have discovered the leak. The original reporting by The New York Times, the complaint in Griffin, and the confession of Littlejohn are all discrete moments that would have tolled the limitations period before the plaintiffs’ complaint was filed. There is no precedent for the deductive reasoning expected from a plaintiff in a case such as this, so it is difficult to say how a court would rule if asked when the plaintiffs should have filed. If this case were to proceed to discovery, the defense would surely seek information from the plaintiffs regarding any communications they had speculating on the source of the leak. Because any ambiguity in the statute of limitations must be resolved in favor of the government, this defense poses a serious threat to the entire case.

V. Conclusion

The Trump tax returns are in their 10th year of public controversy. In that time, Trump has staunchly advocated for his privacy rights as a taxpayer. This advocacy has metastasized into Trump, which at its core is a valid enforcement of those rights against an unauthorized disclosure of taxpayer information. That lawsuit is clouded by issues such as unrealistic damages and significant legal hurdles. It also raises a host of ethical and constitutional questions that deserve dedicated analysis. Ultimately, if Trump’s goal is to enforce taxpayer privacy rights, this may prove a fraught method of doing so. But on a positive note, this lawsuit has brought attention to the important confidentiality rights we all have as taxpayers.

Gibson Odderstol, an associate with Troutman Pepper Locke, co-authored this article. He is not licensed to practice law in any jurisdiction; application pending for admission to New York Bar.

Footnotes

1. Richard Rubin, “In Break From Tradition, Donald Trump Rules Out Releasing Tax Returns Ahead of Election,” The Wall Street Journal, May 11, 2016.
2. Complaint, Trump v. IRS, No. 1:26-cv-20609 (S.D. Fla. Jan. 29, 2026).
3. Nicholas Fandos, “House Ways and Means Chairman Subpoenas Trump Tax Returns,” The New York Times, May 10, 2019.
4. Justice Department, “Former IRS Contractor Sentenced for Disclosing Tax Return Information to News Organizations,” 23-103 (Jan. 29, 2024).
5. Russ Buettner, “The President’s Taxes: Long-Concealed Records Show Trump’s Chronic Losses and Years of Tax Avoidance,” The New York Times, Sept. 27, 2020.
6. Allan Smith, “Trump Lashes Out at New York Times Report Alleging Years of Tax Avoidance,” NBC News, Sept. 27, 2020.
7. Letter from Neal to Secretary Janet Yellen and Commissioner Charles Rettig (June 16, 2021).
8. Andrew Chung, “U.S. Supreme Court Clears Way for Lawmakers to Get Trump’s Tax Returns,” Reuters, Nov. 22, 2022.
9. Katelyn Polantz, “House Committee Receives Donald Trump’s Federal Tax Returns From IRS,” CNN, Nov. 30, 2022.
10. Complaint, Griffin v. IRS, No. 1:22-cv-24023, at para. 1 (S.D. Fla. Dec. 13, 2022) (ECF No. 1).
11. “America’s Top 15 Earners and What They Reveal About the U.S. Tax System,” ProPublica, Apr. 13, 2022.
12. Justice Department, “IRS Contractor Pleads Guilty to Disclosing Tax Return Information to News Organizations,” 23-1127 (Oct. 12, 2023).
13. Second Amended Complaint, Griffin v. IRS, No. 1:22-cv-24023, at para. 1 (S.D. Fla. Nov. 13, 2023) (ECF No. 55).
14. IR-2024-172.
15. Complaint, Trump, No. 1:26-cv-20609, at para. 1.
16. Section 7431(a)(1).
17. Privacy Act of 1974, 5 U.S.C. section 552a.
18. Castillo v. United States, No. 1:21-cv-00007 (S.D.N.Y. 2022).
19. Paroline v. United States, 572 U.S. 434 (2014).
20. Dan Alexander and Kyle Khan-Mullins, “Here’s How Much Donald Trump Is Worth,” Forbes, Sept. 19, 2025.
21. Jones v. United States, 9 F. Supp. 2d 1119 (D. Neb. 1998).
22. Id. at 1127.
23. Id. at 1144-1148.
24. Id. at 1143.
25. Complaint, Trump, No. 1:26-cv-20609, at para. 104.
26. Mallas v. United States, 993 F.2d 1111 (4th Cir. 1993).
27. Minda v. United States, 851 F.3d 231 (2d Cir. 2017).
28. Castillo, No. 1:21-cv-00007.
29. Siddiqui v. United States, 359 F.3d 1200, 1204 (9th Cir. 2004), holding that “the award of damages under section 7431 is allowed only pursuant to an express waiver of the Government’s sovereign immunity, ambiguity as to whether section 7431(c)(1)(B) authorizes a punitive damages award absent proof of actual damages must be resolved in favor of the Government.”
30. Mallas, 993 F.2d at 1126, finding that a taxpayer may recover punitive damages under subsection (1)(B)(ii), even when their actual damages are zero under subsection (1)(B)(i), provided that those damages together exceed the amount of the subsection (1)(A) statutory damages.
31. United States’ Motion to Dismiss Second Amended Complaint, Griffin v. IRS, No. 1:22-cv-24023, at 10 (S.D. Fla. Nov. 27, 2023) (ECF No. 58).
32. Order Denying in Part and Granting in Part Motion to Dismiss, Griffin v. IRS, 730 F. Supp. 3d 1312, at 5 (S.D. Fla. Apr. 22, 2024) (ECF No. 108).
33. Biden v. IRS, 752 F. Supp. 3d 97 (D.D.C. 2024).
34. Id. at 110.
35. Id. at 108, citing Allen v. District of Columbia, 969 F.3d 397, 402 (D.C. Cir. 2020) (quoting Astoria Federal Savings & Loan Association v. Solimino, 501 U.S. 104, 108 (1991)).
36. Aloe Vera of America Inc. v. United States, 580 F.3d 867 (9th Cir. 2009).
37. Id. at 873 (citing John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (2008)).

Reprinted with permission from the April 2026 issue of Alternatives to the High Cost of Litigation, the newsletter of the International Institute for Conflict Prevention & Resolution. (Vol. 44, No. 4).

This year, I have a secular Four Questions in addition to the ones my family and I discuss at Passover. As with the Passover Questions, they all begin with the same opening. Not “Mah Nishtanah … Why is this night different from all other nights?” but rather, “Why hasn’t the Supreme Court decided [fill in the open arbitration subject] yet?”

Read full article here.

Albert Bates, Jr. and Zachary Torres-Fowler, partners in Troutman Pepper Locke’s Construction Practice Group, were published in the March 2026 MEALEY’S® International Arbitration Report for their article, “International Arbitration Experts Discuss The Major Challenges For Arbitration In 2026.”

Jennifer Kenedy and Jorden Rutledge, a partner and an associate in Troutman Pepper Locke’s Business Litigation Practice Group, were published in the February 12, 2026 Chicago Lawyer for their article, “A Crack in the Shield.”

The Supreme Court’s February 20, 2026, decision in Learning Resources, Inc. v. Trump upended the legal basis for billions of dollars in tariffs on imports imposed by the Trump administration. The Court held that the International Emergency Economic Powers Act (IEEPA) did not authorize the sweeping tariff regime, but it did not address how past collections should be refunded, leaving refund mechanics and timing to be worked out through U.S. Customs and Border Protection (CBP) in coordination with the U.S. Court of International Trade (CIT). While the ruling opened the door for importers to seek substantial refunds from the federal government, including through developing CBP refund procedures and related CIT orders, it also created a new front of litigation risk for companies that passed tariff costs through to consumers.

Under U.S. import laws and regulations, any refunds will be paid to the importer of record, not to downstream purchasers or consumers. Companies now face contract, consumer protection, and corporate governance questions about who should ultimately benefit from any IEEPA duty refunds. Plaintiffs’ firms have begun recruiting plaintiffs and filing putative class action lawsuits aimed at capturing a share of any refunds or refund opportunities.

Troutman Pepper Locke’s Tariff and Trade Task Force has been monitoring these tariffs since they were first enacted, tracking their implementation, escalation, and the litigation culminating in Learning Resources. We are now helping companies navigate the intersection of tariff refunds and the associated consumer class actions and shareholder risk.

CIT Refund Litigation: The Backdrop for Consumer Claims

Since the Supreme Court agreed to hear Learning Resources, more than 2,000 importers have filed refund-related actions in the CIT. Public CBP and U.S. Department of the Treasury data indicate that IEEPA duty collections reached roughly $133 billion by mid‑December 2025, with some observers estimating that total collections potentially subject to refund could approach $175 billion once entries through early 2026 are included — a figure that underscores the stakes for both the government and private actors.

In a March 4, 2026, order (as later amended) in Atmus Filtration, Inc. v. United States, the CIT directed CBP to liquidate or reliquidate affected entries without IEEPA duties and to return those duties (plus interest) through the ordinary liquidation and reliquidation process. CBP has responded by developing a new Automated Commercial Environment (ACE) module, the Consolidated Administration and Processing of Entries (CAPE), which will allow importers or their brokers to upload lists of affected entries and trigger mass recalculation and refunding of IEEPA duties. CAPE is not yet live, and the CIT has temporarily suspended its requirement of immediate refunds while CBP completes and deploys this process. As we discussed in our recent client alert, CBP reported that, as of March 19, 2026, development of the CAPE claim‑portal component was approximately 73% complete, the mass processing component 25% complete, the review and liquidation/reliquidation component 80% complete, and the refund component 63% complete. CBP is scheduled to provide a further status update on its refund implementation plans at a March 31, 2026, hearing before the CIT in the Atmus litigation. This continuing uncertainty around how and when refunds will be paid matters for class action defendants: many consumer complaints are premised not only on refunds already received, but also on companies’ eligibility to pursue refunds and their alleged duty to seek and share those refunds.

Emerging Consumer Class Actions: New Risks for Companies That Passed Through Tariffs

As refund litigation proceeds in the CIT and CBP continues to build out the CAPE refund process, a second wave of litigation is building downstream. Plaintiffs’ firms are recruiting consumers and filing putative class actions in state and federal courts targeting companies that paid IEEPA tariffs and then incorporated those costs into consumer-facing prices. The core allegations are that the companies:

Passed tariff burdens through to consumers (via explicit surcharges, fees, or higher prices);
Are now in a position to seek or receive refunds from the government, particularly in light of the CIT’s refund order and CBP’s development of the CAPE portal; and
Have an obligation to share those refunds or refund opportunities with consumers rather than retaining the full benefit.

Plaintiffs are advancing a familiar mix of claims and legal theories:

Consumer protection claims under state unfair and deceptive practices statutes, focusing on how tariff-related charges were described, whether their contingent or refundable nature was disclosed, and whether pricing was adjusted after the tariffs were invalidated and refund avenues became available;
Contract claims asserting that provisions allowing pass-through of “duties, taxes, or governmental charges” did not cover charges later deemed unlawful, or that the contracts implicitly required the return of unlawfully collected amounts; and
Restitution and unjust enrichment claims contending that companies would receive a windfall if they keep refunds funded by consumer payments.

These theories are likely to be refined and replicated across industries, particularly for retailers, manufacturers, and distributors that adopted tariff surcharges or related fees during the life of the IEEPA tariffs and are now positioned to pursue IEEPA duty refunds.

Potential Defenses for Companies Facing Consumer Class Actions

Although the cases are still at their very early stages and the contours of this litigation are still developing, there appear to be a number of potential defenses that companies will be able to raise in response to tariff-related consumer claims.

1. Standing and Ripeness

Many consumer suits rely on speculative harms — for example, the idea that a company might recover refunds in the future and then choose not to share them. Where no refund has yet been paid and no obligation to refund has been established, companies can argue that:

The alleged injury is not concrete or imminent; and
Claims based on hypothetical future refunds are not ripe for adjudication.

These justiciability arguments may provide a basis for early dismissal or narrowing of claims.

2. Contract and Pricing Theories

Companies can also look to the nature of their consumer transactions. In many instances:

Retail sales are governed by a contract for a specific price at the time of purchase, when the tariffs were valid and enforced as a matter of law; and
Contracts and terms of sale give sellers discretion to adjust pricing and recover “taxes, duties, or governmental charges” without promising to revisit those charges if the legal landscape later changes.

These features can undercut efforts to recast ordinary pricing decisions as contractual promises to rebate future tariff refunds.

3. Restitution and Unjust Enrichment

Restitution-based claims may be vulnerable where:

Tariff surcharges or fees were clearly disclosed and paid voluntarily;
Plaintiffs rely on generalized “price inflation” theories without identifying specific tariff-related line items; or
The economic incidence of the tariff is diffuse, making it difficult to trace a direct enrichment from individual class members.

4. Consumer Protection and Disclosure

Consumer protection statutes will be a central battleground. Key potential defenses include:

Demonstrating that tariff-related charges and pricing were accurately described at the time of sale;
Emphasizing that companies generally have no duty to predict or disclose the possibility that a tax or tariff will later be invalidated; and
Showing that the company responded to Learning Resources in a consistent and transparent fashion.

Arbitration and Class Action Waivers

Many companies rely on arbitration provisions and class action waivers embedded in online terms of use or point-of-sale agreements. Early motion practice may focus on enforcing individual arbitration requirements and class waivers that significantly limit aggregate litigation risk. The enforceability of these provisions will often turn on state law doctrines and the robustness of assent mechanisms (e.g., clickwrap versus passive browsewrap).

What Companies Should Do Now

Companies that paid IEEPA-related tariffs and could be targeted in consumer class actions should move quickly to assess their posture and mitigate risk. The following steps can help:

1. Understand Your Tariff and Pass-Through Profile

Begin by mapping your exposure:

Which products and time periods were subject to IEEPA tariffs?
How were those costs passed through — explicit surcharges, fees, or embedded price changes?
What internal analyses or board-level discussions exist around tariff strategy and pricing?
Which entities in your supply chain were the importer of record on IEEPA duty entries, and whether the entity that may receive CBP refunds is the same entity that contracted with consumers or other counterparties.
Whether your customs and finance teams can generate a CAPE-ready CSV file of all entries with IEEPA duties (including entry numbers, dates, Harmonized Tariff Schedule of the United States classifications, duty amounts, and brokers) so you can act quickly once CBP’s portal opens.

This baseline will be vital for both defense strategy and potential settlement negotiations.

2. Review Contracts, Terms of Sale, and Dispute Resolution Provisions

Companies should closely examine:

Contract language on “taxes, duties, and governmental charges,” including whether refunds are addressed, and whether the parties expressly allocate ownership of any government duty refunds (including refunds obtained through CBP’s CAPE process);
Risk-allocation provisions that bear on who ultimately absorbs tariff-related costs; and
Arbitration clauses and class action waivers, along with the mechanisms by which consumers agreed to them.

Where appropriate, companies may also want to consider whether updates to standard terms are warranted on a go-forward basis, including clarifying how any future tariff or duty refunds will be handled between the parties.

3. Evaluate Tariff-Related Disclosures and Marketing

Review how tariff-related charges were described in:

Receipts and invoices;
Online FAQs and customer communications; and
Advertising or promotional materials that referenced tariffs or “government surcharges.”

Identify statements that plaintiffs might try to characterize as misleading now that the tariffs have been invalidated, and consider whether any remedial disclosures or clarifications are appropriate. Any new customer communications concerning potential IEEPA duty refunds should be carefully aligned with your strategy for pursuing refunds through CAPE and responding to consumer or shareholder claims.

4. Align Refund Strategy With Litigation and Governance Risk

Decisions about whether, when, and how to pursue government refunds should be made with an eye toward both consumer and shareholder exposure. Companies should:

Model the economics of various scenarios (e.g., pursue refunds and share some portion with consumers versus forgo refunds and defend litigation);
Ensure that board and management deliberations are well documented to reflect a reasoned business judgment;
Coordinate positions across trade, litigation, and investor relations teams; and
Distinguish among unliquidated entries, entries within the 180-day protest window, and finally liquidated entries, as each category may be treated differently under current CIT orders and CBP refund procedures.

5. Prepare for Litigation and Discovery

Even before a complaint is filed, companies should preserve transaction‑level data that could be critical to class certification and damages arguments, as well as the entry-level customs data that will support or rebut allegations about IEEPA duty incidence and refund eligibility. Companies should reach out to a member of Troutman Pepper Locke’s Tariff and Trade Task Force.

How Troutman Pepper Locke’s Tariff and Trade Task Force Can Help

Troutman Pepper Locke’s Tariff and Trade Task Force — working alongside our Class Actions team — has been engaged on these tariffs since they were first enacted. We have followed their development, the challenges brought in the CIT and other courts, and the Supreme Court’s ruling in Learning Resources, as well as the CIT’s subsequent refund orders and CBP’s evolving CAPE refund process. We are assisting companies with:

Designing and executing IEEPA refund strategies, including CIT litigation and related administrative proceedings, and advising importers of record and affiliated entities on how to structure, pursue, and allocate CBP refunds, (including refunds obtained through CAPE);
Assessing and defending against consumer class actions and shareholder claims tied to tariff pass-through and refunds;
Updating contracts, disclosures, arbitration agreements, and class action waivers to address tariff-related risks going forward, including specific provisions allocating the benefits and burdens of any IEEPA duty refunds; and
Advising on data mapping, entry reconciliation, and documentation to support CAPE submissions, potential CBP audits, and parallel consumer or shareholder litigation.

If you have questions about your company’s exposure or potential strategies in light of Learning Resources, please contact a member of Troutman Pepper Locke’s Tariff and Trade Task Force.

State attorneys general increasingly impact businesses in all industries. Our nationally recognized state AG team has been trusted by clients for more than 20 years to navigate their most complicated state AG investigations and enforcement actions.

State Attorneys General Monitor analyzes regulatory actions by state AGs and other state administrative agencies throughout the nation. Contributors to this newsletter and related blog include attorneys experienced in regulatory enforcement, litigation, and compliance. Also visit our State Attorneys General Monitor microsite.

Contact our State AG Team at StateAG@troutman.com.

Prediction Market Updates

Prediction Markets Company’s Preemptive Lawsuits Aim to Carve Out a Federal Safe Harbor for Prediction Markets

By Stephen C. Piepgrass and Ayana Brown

Arizona Files First-Ever Criminal Suit Against Kalshi

By Stephen C. Piepgrass and Ayana Brown

Multistate AG News

Federal Approval Is No Safe Harbor: State AGs Redefine Merger Risk in Trump 2.0 as 8 States Sue to Block $6.2B Nexstar-Tegna Merger

By Daniel Anziska, Clayton Friedman, Christy Matelis, and Brad Smutek

Single State AG News

Alabama Enacts App Store Accountability Act Requiring Age Verification and Parental Consent

By Troutman Pepper Locke State Attorneys General Team

Trucking and Delivery Company Settles New Jersey Worker Misclassification Allegations

By Troutman Pepper Locke State Attorneys General Team

AG of the Week

Russell Coleman, Kentucky

Russell Coleman was elected Kentucky’s 52nd attorney general on November 7, 2023.

He has spent most of his career in public service, including as U.S. attorney for the Western District of Kentucky, where he served as the chief federal law enforcement officer for 53 counties.

He previously was a partner at a law firm, a prosecutor in the Oldham Commonwealth’s Attorney’s Office, and legal counsel to a U.S. senator.

A former FBI special agent, he was assigned to multiple field offices, and served a temporary assignment in Iraq.

Coleman was raised in Graves, Daviess, and Logan counties, graduating from Logan County High School. He earned both his undergraduate and law degrees from the University of Kentucky.

He lives in Oldham County with his wife, Ashley, and their three children.

Kentucky AG in the News:

Coleman announced that, following his leadership of a multistate effort, the DEA and Trump administration have classified the dangerous “Designer Xanax” drug bromazolam as a Schedule I controlled substance, creating a nationwide ban to help law enforcement combat its lethal impact.
Coleman’s Office of Consumer Protection obtained a court order shutting down “Your Hometown Heroes, Inc.” for falsely posing as veterans to solicit donations, imposing $421,000 in contempt fines, permanently barring the organization from charitable or fundraising activities in Kentucky, and revoking its authority to do business in the state.
Coleman announced that the Kentucky Court of Appeals unanimously upheld the General Assembly’s 2023 ban on “gray machines,” affirming the law’s legality.

Upcoming AG Events

April: NAAG | Annual Meeting | Charleston, SC
April: AGA | International Delegation | TBD
May: RAGA | ERC Retreat | Sea Island, GA

For more on upcoming AG Events, click here.

Troutman Pepper Locke’s State Attorneys General team combines legal acumen and government experience to develop comprehensive, thoughtful strategies for clients. Our attorneys handle individual and multistate AG investigations, proactive counseling and litigation, and manage ancillary regulatory issues. Our successful approach has been recognized by Chambers USA, which ranked our practice as a leader in the industry.

Energy

Financial Services

Health Care + Life Sciences

Insurance + Reinsurance

Private Equity

Real Estate

Innovation

plus

Pro Bono

Alumni Network

Emerge

The Pepper Center

Learn + Connect

BLOG, Microsite + Podcast HUB

ACHIEVEMENTS

Regulatory Oversight Blog

In This Issue:

Troutman Pepper Locke Spotlight

Payments Pros Podcast Updates

Federal Appellate Updates

Privacy + Data Updates

FTC Updates

Health Care + Life Sciences Updates

Antitrust Updates

Labor + Employment Updates

Tobacco Updates

Prediction Market Updates

SEC Updates

Political Law Updates

Other Multistate Updates

Prediction Market Updates

Multistate AG News

Single State AG News

AG of the Week

Upcoming AG Events

Smarter in your world deeper in your sector

Energy

Financial Services

Health Care + Life Sciences

Insurance + Reinsurance

Private Equity

Real Estate

Innovation

plus

Pro Bono

Alumni Network

Emerge

The Pepper Center

More than your voice in government. Your ally.

Troutman Pepper Locke’s program for Startup and Early-Stage Entrepreneurial Development

Market leading eDiscovery and data management services.

What We Think

Learn + Connect

BLOG, Microsite + Podcast HUB

ACHIEVEMENTS