U.S. Government Files False Claims Act Case Against Lance Armstrong

05/17/2013 // Whistleblower Law Firm // Keller Grover // (press release)

(Whistleblower Law Firm News) The U.S. government formally filed its lawsuit against Lance Armstrong on April 23, alleging that the embattled cyclist and his racing team violated the federal False Claims Act — a key whistleblower statute that allows for the recovery of funds obtained via fraud against the government. Specifically, the suit charges Armstrong and the owners of his team with improperly accepting $40 million in sponsorship fees from the U.S. Postal Service while breaching its obligation not to use performance enhancing drugs.

Under the False Claims Act — a Civil War-era statute that has spurred the recovery of more than $30 billion in fraud-tinged funds since it was substantially modified in the 1980s — the government can seek triple damages. In this case — filed in the U.S. District Court for the District of Columbia — that could result in total damages of well over $100 million. Besides Armstrong, the complaint names team manager Johan Bruyneel and team owner Tailwind Sports LLC as defendants.

The whistleblower lawsuit was originally brought in 2010 by Armstrong’s teammate, Floyd Landis, who alleged that riders, including Armstrong, violated the team’s agreements with the USPS by using banned substances. Those agreements, the suit claimed, required cyclists to follow the rules of the sport’s governing bodies, which prohibited the use of certain performance enhancing substances and methods.

Whistleblower lawyers say the case is noteworthy for reasons that go beyond the high profile of Armstrong — who has admitted to using banned substances and has been stripped of his seven Tour de France titles (six of which were won while he raced under USPS sponsorship, which ran from 1996 through 2004).

“Whistleblowers have proven an incredibly potent weapon against fraud in recent years,” says Jeffrey F. Keller, a founding partner at Keller Grover, a nationally recognized labor and employment law firm, and a veteran whistleblower lawyer. “They have inside information and speak out about it, helping to expose a fraud and return money to the government. This case is significant because its visibility will really get the word out that whistleblowers are a powerful way to combat fraud. But what’s also interesting here are the arguments the two sides are making.” If the government’s prevails, Keller notes, it will send an important message about the role of the whistleblower statutes in incentivizing integrity in all government contracts.

“Armstrong’s side is saying, essentially, that there was no damage done,” says Keller. “They’re arguing that the government benefited more than it was harmed — the Postal Service got a lot of visibility from its partnership. But the government is saying that under the False Claims Act, that doesn’t matter — Armstrong’s behavior enabled him to be unjustly enriched, and that wrongful enrichment is what the False Claims Act is concerned with. To put it simply: Where you benefit from your improper conduct, even if the government gets something, you can still run afoul of the False Claims Act.”

“Everyone will be watching this case because it has a world famous defendant,” says Keller, whose firm has offices in Los Angeles and San Francisco. “But the real news here is what the government is saying, that you can violate the law even if the numbers show the government got something in return. It goes to the heart of the public policy behind the False Claims Act. This is about the defendant’s conduct and not what the government got. It’s bad news for cheats but it’s going to be good news for every taxpayer.”

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