How Lance Armstrong's Confession To Oprah May Cost Him $100 Million
Lance Armstrong is being sued by the United States Government under the False Claims Act for over $120 million to recover the money that the United States Postal Service paid to sponsor Lance Armstrong's cycling team. The False Claims Act allows recovery of three times (3x) the $41 million that the USPS paid under false pretenses.
Armstrong won seven Tour de France championships, dogged the entire time by allegations that he used illegal performance enhancing drugs (PEDs). As part of his sponsorship deals with the USPS, Armstrong was required to certify his compliance with cycling's rules against use of PEDs. Up until 2013, Armstrong steadfastly denied using PEDs and he never failed a drug test. In January 2013, Armstrong admitted to Oprah Winfrey that he had used PEDs since the 1990s and his prior denials were lies.
Armstrong's confession may cost him $100 million. Immediately after Armstrong's appearance with Oprah, the United States government announced that it would intervene in litigation previously filed against Armstrong. Up until that point, the litigation against Armstrong had been pursued only by his disgruntled former teammate, Floyd Landis, who sued in the name of the United States. Under a ruling http://prawfsblawg.blogs.com/files/armstrong_ruling_06192014.pdf late last week, Landis can only obtain damages based for payments made after June 2004 - a paltry $68,000 - but the United States can recover for all payments made after June 2001 - $32,321,821.94 (which, if tripled, would rise to $97 million).
Follow below the fold for the details
Floyd Landis Filed Suit In June 2010
In June 2010, Floyd Landis filed suit against Lance Armstrong (among others) in the name of the United States. Landis filed a qui tam complaint as a "relator", as the False Claims Act expressly permits. Under the FCA, the United States was permitted to investigate Landis' complaint and decide whether to intervene. If the United States did not intervene, Landis would solely be in charge of the litigation (and its costs) and be entitled to keep between 25-30% of any recovery he obtained on behalf of the United States. If the United States intervened, Landis would only be entitled to 15-25% of the United States' recovery.
Armstrong Stripped Of His Titles In October 2012
In October 2012, following a lengthy investigation by the United States Anti-Doping Administration (USADA), the International Cycling Union (ICI) found that Lance Armstrong had engaged in pervasive cheating and stripped him of all seven of his Tour de France titles. Armstrong had sued to stop the USADA investigation, but when that lawsuit failed, he declined to participate in the arbitration to contest the USADA's findings. Armstrong continued to protest his innocence, but claimed that he was simply not willing to engage in the fight anymore.
January 2013: Armstrong's Confession To Oprah
Three months after Lance Armstrong insisted that he was being wrongfully stripped of his titles by the USADA and ICI, Lance Armstrong agreed to be interviewed by Oprah Winfrey. In response to stark "yes or no" questions, Armstrong admitted that he had engaged in forbidden PED use and blood doping starting in the 1990s, that he knew what he was doing was against the rules, that he had participated in a covering-up his drug use and that he had used PEDs during each of his seven Tour de France victories. “I view this situation as one big lie that I repeated a lot of times.”
February 2013: US DOJ Intervenes
Immediately after Armstrong admitted his years of lying, cheating and coverups, the United States announced that it would intervene in the lawsuit initially filed by Landis. On February 22, 2013, the US DOJ filed court papers and made a public announcement that it would be intervening. Two months later, on April 23, 2013, the United States filed its complaint against Lance Armstrong.
The $100 Million Difference
Because Lance Armstrong is now being pursued by the United States (and not merely Floyd Landis in the name of the United States), he is potentially liable for years of additional fraudulently obtained payments.
The statute of limitations for the False Claims Act provides:
A civil action under section 3730 may not be brought--
(1) more than 6 years after the date on which the violation of section 3729 is committed, or
(2) more than 3 years after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances, but in no event more than 10 years after the date on which the violation is committed,
whichever occurs last
Because Landis filed suit in June 2010, prong (1) of the statute of limitations prevented recovery for any payments made before June 2004 (6 years earlier). In last week's ruling, the Court held that Landis could not expand the time frame of his claims to the ten (10) years permitted under prong (2) of the statute of limitations. The court found that because prong (2) refers to the knowledge of "the official of the United States charged with responsibility to act in the circumstances", only the United States itself could have the benefit of that rule. So, if the United States had not intervened, Armstrong faced (at most) liability for the $68,000 in payments received after June 2004 (which could be trebled to $208,000). The court held that it would be particularly inappropriate for Landis to be able to expand the time-frame of his recovery based upon the United States' lack of knowledge of Armstrong's scheme because Landis had full contemporaneous knowledge of Armstrong's doping as a co-conspirator.
The court held that the United States, on the other hand, was entitled to seek recovery for all payments made up to ten years before suit was filed. The court further held that those ten years would be measured from when Floyd Landis filed suit on behalf of the United States in June 2010, not from April 2013 when the United States filed its own complaint.
The court also rejected Armstrong's argument that the United States could not expand the statute of limitations to ten years because the United States knew in 2000 that France was investigating allegations that Armstrong and his teammates were using PEDs. Armstrong had foiled that investigation by engineering a coverup and false testimony. The court held that there was no apparent reason for the United States to question France's conclusion in 2000, and unless Armstrong could produce evidence at trial that the United States knew better than France at that time, the United States would be entitled to recovery back to June 2000.
The United States has represented to the court that the USPS paid over $32 million to Armstrong and his team during the 10 years from June 2000 through June 2010. Tripling that figure leads to a potential recovery against Armstrong of nearly $100 million.