Department of Justice Joins Whistleblower Lawsuit Against Lance Armstrong

03/08/2013 // Whistleblower Law Firm // Jeffrey F. Keller // (press release)

After months of speculation, the U.S. Department of Justice announced on February 22 that it was joining a whistleblower lawsuit against disgraced cyclist Lance Armstrong. The suit — brought under the federal False Claims Act — contends that Armstrong and the owners of his racing team improperly obtained sponsorship money from the U.S. Postal Service (USPS). Specifically, the lawsuit alleges that Armstrong and the other defendants knowingly made false claims to the USPS by regularly employing banned substances and methods to enhance the racing team’s performance, in violation of USPS sponsorship agreements.

For years, Armstrong had denied using banned substances while pursuing, and winning, seven Tour de France victories. Yet in January, during an internationally televised interview with Oprah Winfrey, the cyclist contradicted those denials and admitted that he had, in fact, used such substances throughout his career, starting in the mid-1990s. Armstrong won six Tour de France titles, between 1999 and 2004, as the lead rider of the USPS-sponsored team (the USPS sponsorship ran from 1996 through 2004). Agreements between the team and the USPS required the cyclists to follow the rules of the sport’s governing bodies, which prohibited the use of certain performance enhancing substances and methods.

Floyd Landis, a former rider and Armstrong teammate on the USPS team, originally filed the whistleblower lawsuit in 2010. It was brought in the U.S. District Court for the District of Columbia, and also names Tailwind Sports Corporation, which owned the cycling team, and Johan Bruyneel, the team’s manager. In his suit, Landis the whistleblower alleges that riders on the USPS-sponsored team, including Armstrong, knowingly violated its agreements with the USPS by using banned substances.

The basis for the whistleblower suit, the False Claims Act, imposes liability on those who obtain government funds via fraud. It allows for the recovery of three times the government’s damages, plus civil penalties, and provides a powerful incentive for insiders with knowledge of improper behavior to step forward: Whistleblowers stand to gain a percentage of any recovery the government ultimately obtains. As whistleblower in the Armstrong case, Landis could potentially be awarded many millions of dollars, as USPS sponsorship fees totaled $31 million between 2001 and 2004 alone.

“This is a lawsuit that really shows the power — and the broad applicability — of the False Claims Act,” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized labor and employment law firm, and a veteran whistleblower lawyer not involved in the Armstrong case. “Over the years, the U.S. government pursued multiple investigations against Armstrong, yet this is the only one where there seems to be traction. Why? A big reason is the significance of inside information. And that is exactly the strength of the False Claims Act. It gives those who know of wrongdoing the means, the incentive, and the support needed to shed light on that behavior, and bring about recovery and accountability.”

While the False Claims Act dates back to the U.S. Civil War — when government contracts were rife with fraud — it has seen particular success in recent years, with billions of dollars in taxpayer funds recovered from financial institutions, pharmaceutical companies, defense contractors, and others that have acted improperly with regard to government contracts and programs. The law was substantially modified in the mid-1980s and in its current form has served as a model for many state whistleblower statutes. In a statement announcing the federal government’s participation in Landis’s whistleblower lawsuit, Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice, said that the decision “demonstrates the Department of Justice’s steadfast commitment to safeguarding federal funds and making sure that contractors live up to their promises.”

An amended complaint, adding the government as a party to the whistleblower lawsuit, was filed on February 22. The whistleblower’s original complaint was unsealed just weeks before the DOJ announced its decision to intervene.

“It’s going to be interesting to see how this case unfolds, now that the full might and resources of the government is behind it,” says Keller, whose firm has offices in Los Angeles and San Francisco. “Whistleblower lawsuits have proven a powerful way to get at the heart of wrongful behavior — to find out what really happened, and to provide remedies and justice. It’s ironic, perhaps, that after all the public investigations and debate about Lance Armstrong, it may be a whistleblower — and the not widely known law that supports him — that finally gives us answers.”

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