The Justice Department Joins the Fight Against Lance Armstrong

A False Claims Bulletin

In last month’s article we touched on a whistleblower lawsuit filed by Tour de France competitor Floyd Landis under the False Claims Act. The lawsuit alleges that Lance Armstrong and former team managers submitted false claims to the United States Postal Service (USPS).

From 1996 through 2004, the USPS sponsored a professional cycling team owned by Tailwind Sports. Landis and Armstrong were members of the Tailwind team. The false claims, according to the Justice Department press release, are that the team, including Armstrong, "regularly employ[ed] banned substances and method[s] to enhance their performance" in violation of the sponsorship agreement.

On February 22, 2013, the Justice Department announced it has joined the lawsuit against Armstrong and will file its official complaint within 60 days. See Second Amended Complaint in United States ex rel. Landis v. Tailwind Sports Corp. et al..

In the Justice Department announcement, Ronald C. Machen Jr., U.S. Attorney for the District of Columbia, stated that “Lance Armstrong and his cycling team took more than $30 million from the USPS based on their contractual promise to play fair and abide by the rules – including the rules against doping.” USPS General Counsel and Executive Vice President, Mary Anne Gibbons, stated that “[t]he Postal Service strongly supports intervention by the Department of Justice in this matter and a vigorous pursuit of this case.”

If the suit is successful, Landis stands to claim a sizable share of the proceeds, perhaps millions of dollars, because he initiated the action pursuant to the qui tam (whistleblower) provision of the False Claims Act.

Although the government has entered the fight against Armstrong and the other defendants, this does not mean that the case is all but decided. The defendants have several defenses which may help to eliminate or at very least limit potential liability. For example, the statute of limitations for a qui tam action, found in Title 31, Section 3731(b) of the United States Code, is not more than 6 years after the date on which the violation is committed, or not more than 3 years after the date when facts material to the right of action are known or reasonably should have been known, but in no event more than 10 years after the date on which the violation is committed, whichever occurs last. Armstrong will likely argue that the claims should be dismissed because the Tailwind agreement with the USPS expired in 2004.

In addition, the government must suffer an injury as a result of the fraudulent payment. Currently the parties disagree as to whether the USPS was damaged by the sponsorship. Robert Luskin, Armstrong’s attorney, stated that “the Postal Service’s own studies show that the service benefited tremendously from its sponsorship, benefits totaling more than $100 million.”

What is important to recognize is that the False Claims Act with its humble beginnings in 1863 when government officials were concerned that suppliers to the Union Army during the Civil War could be defrauding them, now can touch nearly every aspect of government contracting. Although many of lawsuits that make the headlines involve healthcare or mortgage fraud, anyone or any company that accepts funds from the government can potentially open themselves up to a false claims lawsuit. We will continue to monitor developments in this case and what impacts the government’s entrance into the lawsuit has on the defendants.