Nov 252013

Cycling and the False Claims Act: Lance Armstrong’s Motion to Dismiss Hearing

Kristin Graham Koehler and Amy Deline
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Cyclist Lance Armstrong argued last week in federal court to have a False Claims Act qui tam suit against him dismissed as time-barred. The lawsuit, filed in June 2010 by Armstrong’s former teammate, Floyd Landis, alleges that Armstrong, his cycling team, the team manager and others defrauded the United States Postal Service of approximately forty million dollars worth of sponsorship fees between the mid-1990s and 2004 as a result of Armstrong and the team’s use of performance enhancing drugs and practices. Armstrong was stripped of his seven Tour de France titles in August 2012 by the United States Anti-Doping Authority, and admitted to using banned substances on national television in January 2013. The United States intervened shortly thereafter in some of the claims alleged by Landis, and now seeks treble damages.

Last Monday, on November 18, 2013, the federal district court for the District of Columbia heard nearly three hours of arguments in which Armstrong asserted that the Postal Service had constructive knowledge of his doping as early as 2000, when the French racing authorities conducted an investigation and allegations of the team’s drug use were widespread. The Postal Service chose not to investigate the allegations a decade before Landis’s lawsuit, and did not investigate in the subsequent years despite continued doping allegations. According to the defense, the Postal Service turned a blind-eye and renewed Armstrong’s contract because it profited from the publicity gained by the cycling team’s success.

The government’s last sponsorship payment to Armstrong’s team was made in 2004. Based on the timing of that last payment, Armstrong argues that the False Claims Act’s six year statute of limitations expired nine days before Landis filed his claim and now prevents the suit from going forward.

The government argues, however, that it was not on notice of Armstrong’s improper conduct before 2010. The French investigation found nothing, and Armstrong and his cycling team vehemently denied doping allegations and went to extreme lengths to cover up their use of steroids and other prohibited substances. As a result, the Postal Service had no way of knowing about Armstrong’s cheating. The government further argues that professional athletes routinely are accused of doping; such allegations do not inherently warrant an investigation, particularly in this case, when Armstrong and others repeatedly assured the Postal Service and the public that the accusations were unfounded.

The presiding district court judge, Judge Robert Wilkins, indicated during Monday’s hearing that he expects to let some claims go forward and plans to issue his ruling within thirty days.
Landis, a former teammate of Armstrong’s, previously admitted to using banned substances and was stripped of his own Tour de France title. He has been a primary source for the Anti-Doping Authority’s investigation of Armstrong. In August, in connection with a federal deferred prosecution agreement, Landis admitted to defrauding donors contributing to his defense fund when he lied about using performance enhancers. He would receive a portion of the recovery in this case if the government succeeds.

The case, United States ex rel Landis v. Tailwind Sports Corp., et al, 10-cv-00976, is pending in the District Court for the District of Columbia.

Kristin Graham Koehler

Washington, D.C.

kkoehler@sidley.com

Amy Deline

AmyDeline@sidley.com

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