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United States to Sue Lance Armstrong, Join False Claims Case

February 22, 2013

Media outlets report that the United States has elected to join a False Claims Act case against beleaguered cyclist Lance Armstrong.

A few weeks ago, Armstrong ignited a media and water-cooler frenzy through his nationally televised interview with Oprah Winfrey, in which Armstrong dryly admitted to a sophisticated doping program spanning his entire career.  Whetting the nation’s appetite for the drama and adding somewhat to the debate was a January 14, 2013 Wall Street Journal report that the Department of Justice was deliberating over intervening in a False Claims Act case filed against Armstrong and his former cycling team by Armstrong’s former teammate and fellow disgraced doper, Floyd Landis (though Landis evidently still denies culpability).

Shortly thereafter, on January 17, the New York Daily News leaked a copy of the sealed complaint, available here.  Readers of this blog will be familiar with the False Claims Act (FCA), which allows private citizens – in this case Landis – aware of fraud against the federal government to file suit on the government’s behalf.  In his suit, Landis alleged that Armstrong and his team defrauded their sponsor, the U.S. Postal Service (USPS), by knowingly violating terms in the sponsorship agreement that required compliance with the anti-doping rules.  In other words, Landis alleged that Armstrong lied to the USPS about his doping and, had the USPS known what he was doing, it would never have paid him sponsorship money.  Under the “treble damage” provision of the FCA, that would mean Armstrong could owe the United States three times the amount he and his team had received – around $100 million, according to the Wall Street Journal.

One of the major questions raised by the timing of this revelation and the Oprah interview was why Armstrong would choose to make a public confession now, particularly with this lawsuit pending.  According to information reportedly derived from sources close to the DoJ investigation, the Department had closed the inquiry at one point in February 2012 – apparently only to revive it later.  Even in the days before the interview, WSJ and the Daily News reported that DoJ was on the fence about intervention.  So why would Armstrong tug on Superman’s cape at this point by admitting the substance of the factual allegations in Landis’s complaint?   Having ardently and consistently denied the fact of his doping for years, why stop now and expose himself to massive liability?

Many – including writers of this blog – speculated that Armstrong might have already been negotiating a settlement with DoJ and that his lawyers were confident the confession would not materially alter those negotiations.

It now appears that is not the case.  USA Today reports that the United States has elected to intervene in Landis’s case and pursue a judgment against Armstrong.  Based on the comments offered by Armstrong’s legal representatives, it appears he plans to rely on somewhat technical legal arguments in attempting to evade liability.  This only seems to deepen the mystery of why Armstrong chose January 2013 as the time to come clean about his activities and, in the process, concede the factual basis for what could be a crippling federal lawsuit.

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Frohsin & Barger represents whistleblowers nationwide under the False Claims Act and the IRS and SEC whistleblower programs.  To report fraud against the government, contact Frohsin & Barger.

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