Federal Government Joins Qui Tam Whistleblower Action Against Lance Armstrong

As an update to an earlier post, the United States government has made the important decision to join a whistleblower lawsuit against Lance Armstrong. The suit, filed by Armstrong's former teammate Floyd Landis, revolves around Armstrong's recently admitted use of performance enhancing drugs while racing.

The qui tam whistleblower suit was filed by Landis under the False Claims Act more than two years ago, but has recently been given a major boost after the public revelations by Armstrong during his interview with Oprah Winfrey. The government decided that their case was strengthened enormously by his admissions and decided to join the case.

The theory of the case, now supported by the federal government, is that Armstrong, who was being sponsored by the U.S. Postal Service, was using illegal drugs while racing under contract with the USPS and thus worked to defraud the government. The Department of Justice's decision to join the suit reduces the percentage share that Landis would receive if the case is won, but at the same time increases the overall chances of success.

The government decided to intervene in the case after many months of talks with Armstrong and his legal team about settling their interest in the whistleblower action. Apparently talks fell apart after the two groups could not reach an agreement about how much damage the Postal Service suffered as a result of Armstrong's revelations and subsequent shattered image. Armstrong's attorney, Robert Luskin, says that the government suffered no damage as a result of the revelations, saying that studies have shown the USPS received more than $100 million in benefits over the course of its sponsorship of the team.

Almost everyone agrees that the recent decision by the government is bad news for Armstrong. A case pushed by Landis alone would have had a much harder time gaining traction than a joint action backed by the government. Despite the relatively strong case, the matter is not a sure thing. Some experts believe Armstrong will aggressively fight the charges, saying that his contract never contained explicit terms that prohibited blood doping. Another possible tactic would be arguing that he never personally signed any agreement directly with the USPS that banned blood doping and thus cannot be held liable for defrauding the government.

The case is a serious risk for Armstrong as the cost if he loses could be enormous. The USPS paid Armstrong and his team at least $30 million over the course of their sponsorship, lasting between 1999 and 2004. Under the law, the government could win its permitted treble damages, thus bringing the possible amount of liability up to $90 million.

Sources:
US Department of Justice Joins Lawsuit Against Lance Armstrong by Pete Williams, published at NBCNews.com on February 22, 2013.
Feds Join Whistle-Blower Lawsuit Against Lance Armstrong by Michael Martinez, published at CNN.com on February 22, 2013.

See Our Related Blog Posts:
Whistleblowers and the IRS
Expanding Whistleblower Protections