Throughout 2014, we posted articles and blog discussions of the nearly $100 million False Claims Act case that the United States is pursuing against disgraced cyclist, Lance Armstrong. While the FCA case presses forward, Armstrong faces legal issues on multiple fronts related to his use of performance-enhancing drugs (“PEDs”) while riding for the U.S. Postal Service’s professional cycling team from 1996 to 2004.
On Monday, an arbitration panel handed down a $10 million penalty against Armstrong, the second major financial repercussion resulting from Armstrong’s admittedly-false statements regarding PED use. (He was ordered to pay back $3 million in race bonuses in 2013.)
In the 2-1 ruling, the arbitration panel condemned Armstrong’s continuing, seemingly-intentional deception, saying he had likely carried out “the most devious sustained deception ever perpetrated in world sporting history.” The panel ordered that Armstrong pay the $10 million to SCA Promotions, an insurance company responsible for paying bonuses based on Armstrong’s Tour de France wins.
In 2006, Armstrong and SCA had settled a legal dispute over the race awards, which resulted in SCA paying Armstrong $7.5 million. But, during those negotiations, Armstrong testified under oath that he had not used PEDs. SCA re-opened the litigation in 2012 after Armstrong was stripped of his race titles and permanently banned from professional cycling. Armstrong has indicated that he will not comply with the arbitration award, so SCA filed a lawsuit in Texas state court to try to recover the money.
Just four days before the arbitration decision was released, Armstrong lost a fight in the False Claims Act case as well. Judge Christopher Cooper of the U.S. District Court for the District of Columbia threw out six of Armstrong’s affirmative defenses, since some were vague and lacked clarity. Judge Cooper also threw out an affirmative defense seeking dismissal of the case because fellow-cyclist-turned-relator Floyd Landis may also face criminal sanctions for his conduct, noting “Landis has entered into a deferred prosecution agreement, he has not been convicted.” The Judge concluded that these facts were not sufficient to require the dismissal of Landis’ claims.
Armstrong did retain six other affirmative defenses, most of which argue that the United States did not suffer or failed to mitigate any harm caused by Armstrong’s conduct. The court also did not strike an affirmative defense related to the federal government’s public disclosure of the case while a seal order was in place.
Reports that Armstrong has issued broad subpoenas to other former cyclists indicate that the case is progressing through the discovery phase. Landis and the United States will surely face another round of motions aimed at ending the False Claims Act case at the end of discovery. If the case survives those motions, a trial could be held shortly thereafter.
We will continue to monitor the myriad of issues that Armstrong is facing and post updates of any major events in the False Claims Act case.