Content as published in World Sports Law Report (March 2013)

Doping: Armstrong, Landis and the US False Claims Act

On 22 February, the US Department of Justice (DoJ) elected to intervene in a

‘whistleblower’ case brought under the False Claims Act by cyclist Floyd Landis. The suit
alleges that as the US Postal Service team was sponsored by a governmental organisation,
Lance Armstrong violated the team contract and defrauded the government through
accepting sponsorship money whilst continuing to dope. John T. Holden and Ryan M.
Rodenberg, of Florida State University, explain details of the Landis lawsuit and the
amended suit following DoJ intervention.

In the hours before Lance Armstrong’s two-night interview with Oprah Winfrey on 17-18
January 2013, a lawsuit filed by former team-mate Floyd Landis was leaked to the public 1. The
suit, which had been previously sealed, alleges that Armstrong and several associates
fraudulently solicited funds from prior sponsor United States Postal Service (USPS) while
engaged in systematic doping and other conduct in violation of the cycling team’s USPS
sponsorship contract 2. The suit was brought under the False Claims Act (FCA), which allows for
the US government to recover against an individual who knowingly submits a false claim
through a government agency, contractor, or grantee 3. Landis was able to bring this suit initially
as ex relator via the qui tam provisions of the FCA that deputise citizens as potential plaintiffs.
Ex relator status allows a citizen with undisclosed firsthand knowledge to place himself in the
position of the government and bring a claim on the government’s behalf.

On 22 February 2013, the Department of Justice (DOJ) issued a press release stating that they
had elected to intervene in the Landis suit as permitted under the FCA. The DOJ has 60 days to
file its formal complaint. In its press release, the DOJ noted that it would only intervene as it
applies to three defendants – Armstrong, associate Johan Bruyneel, and corporate entity
Tailwind 4. Other defendants previously sued by Landis do not appear to be part of the DOJ’s
case moving forward.

1
. Teri Thompson and Michael O’Keeffe, ‘Exclusive: Inside the Secret Whistleblower Case against Lance
Armstrong – Former Teammate Floyd Landis’ Lawsuit Nails Cycling Cheat’. NY Daily News, 17 January, 2013.
www.nydailynews.com/sports/i-team/landis-case-lance-wet-whistle-tune-90m-article-1.1241686.
2
. See Complaint, United States ex rel. v. Tailwind Sports Corporation et. al. Case No. 1:10-cv-00976 (D.C. 10 June
2010).
3
. See 31 USC § 3729-3733 (2013).
4
. Press Release: Department of Justice, ‘United States Joins Lawsuit Alleging Lance Armstrong and Others Cause
the Submission of False Claims to the U.S. Postal Service’. 22 February, 2013.
www.justice.gov/opa/pr/2013/February/13-civ-224.html.

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Qui Tam actions

The FCA has its origins in the time of the US Civil War and President Abraham Lincoln, first
passed by Congress in 1863. The Act has been revised multiple times over the years in an effort
to stay current 5. The drafters recognised that limited government resources would prevent federal
authorities from intervening in every false claim, and thus instituted a qui tam provision, which
authorises a private citizen to sue on behalf of the government (and recover on behalf of the
government), with the potential to treble damages 6. The qui tam provisions provide a means to
achieving dual goals. According to noted scholar Beverly Cohen, the provisions provide a
pecuniary incentive for private citizens to detect and prosecute fraud, while at the same time
discouraging private citizens from prosecuting fraud where the government has prior knowledge
and resources to litigate on its own behalf 7.

The FCA has a requirement that the plaintiff possess knowledge not known by others 8. The US
Supreme Court confirmed that the allegations must make up the independent basis of the
complaint, and therefore any individual cannot bring a complaint based on publicly disclosed
allegations 9. The seminal case interpreting the FCA was the 2008 Supreme Court decision in
Allison Engine Co., where the Court ruled that the FCA required the specific intent to induce the
Federal government to directly pay a fraudulent claim and did not encompass payments by
government contractors 10.

The Allison Engine Co. case led the US Congress to legislatively overrule the Supreme Court
with the passage of the Fraud Enforcement and Recovery Act of 2009 (FERA) 11. FERA
specifically stated that the FCA applies to government programs paid with Federal funds 12. The
US Congress, with the passage of FERA, posited that they sought to expand the scope of
citizens’ rights to litigate against fraudulent claims against the government.

FCA claims remain under judicial seal for a minimum of 60 days, while concurrently the
complainant must serve a disclosure statement - containing a summary of the evidence - on the
US Department of Justice (DOJ). The DOJ is obligated to investigate the alleged FCA violations.
Following the investigation, the DOJ can elect to intervene, not intervene, or have the citizen’s

5
. Beverly Cohen, ‘Kaboom! The Explosion of Qui Tam False Claims under the Health Reform Law’, 20 Penn. St. L.
Rev. 77 (2010).
6
. Id.
7
. Id.
8
. Id.
9
. Rockwell International Corp. v. United States, 549 U.S. 457 (2007).
10
. Allison Engine Co. v. Unites States ex rel. Sanders, 553 U.S. 662 (2008).
11
. 18 USC §27 (2013).
12
. Id. at section 4.

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complaint dismissed. There are no explicit criteria to determine intervention, only a decision
from the DOJ that the matter is of significance requiring government action 13.

Landis 2010 complaint

The complaint filed by Landis on 10 June 2010 details the nature of the sponsorship contract
entered into by Lance Armstrong and the USPS. Language included ‘violation of a contract
clause concerning the maintenance of a drug-free workplace’ and ‘commission of…falsification
of or destruction of records, [or] making false statements’ 14. The contract also provided a
prohibition on employees ‘drinking intoxicating beverages in a public place while in uniform,
and provided that the use of illegal drugs is grounds for dismissal’ 15. Landis alleges that
Armstrong and others were obligated to comply with these contractual provisions in return for
USPS’s sponsorship16.

Landis also alleges that Armstrong and others knowingly submitted claims for payment to the
USPS while engaged in ‘doping and other wrongful conduct in violation of the terms of the
sponsorship contracts’ 17. The complaint details numerous specific examples of Armstrong
doping himself and distributing performance-enhancing drugs to other riders on the USPS team.
Landis also alleges that Armstrong told him to vehemently deny all doping allegations after he
(Landis) tested positive following the 2006 Tour de France 18.

Landis 2013 second amended complaint

On 22 February 2013, Landis filed a second amended complaint. Amongst the additional details
in the amended complaint are the payment schedules associated with the USPS sponsorship of
Armstrong’s team and the USPS rider agreements, which states: ‘Rider understands it is
imperative he refrains from the use of drugs, intoxicants, alcohol, narcotics or any other
controlled substance or stimulant while training, travelling or competing for the Team’ 19. The
second amended complaint also makes reference to the numerous public denials Armstrong
made to the press, including his 2005 interview on the Larry King Live television show where he
vehemently denied ever doping or using performance enhancing drugs 20. Landis also details the

13
. False Claims Act Cases: Government Intervention in Qui Tam (Whistleblower) Suits.
www.justice.gov/usao/pae/Documents/fcaprocess2.pdf
14
. Supra note 2 at paragraph 26.
15
. Id. at paragraph 28.
16
. Id. at paragraph 32.
17
. Id. at paragraph 34.
18
. Id. at paragraph 100.
19
. See Second Amended Complaint, United States ex rel. v. Tailwind Sports Corporation et. al. Case No. 1:10-cv-
00976 (D.C. 22 February 2013).
20
. Id. at paragraph 128.

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 Content as published in World Sports Law Report (March 2013)

circumstances under which he elected to reveal his knowledge of doping to the US government
and the US Anti-Doping Agency, one event that likely contributed to USADA concluding that
‘the USPS Pro Cycling Team ran the most sophisticated, professionalised and successful doping
program that sport has ever seen’ 21.

Implications

Landis’s lawsuit, coupled with Armstrong’s own admissions during the Oprah Winfrey
interview, provide a plethora of details about the doping regimen of Armstrong and his USPS-
sponsored team. The DOJ’s intervention in the case is significant, not only for seeking to expose
Armstrong’s alleged governmental fraud, but because of the potential application to other areas
of sports governance and anti-corruption efforts. In particular, FCA litigation could be used in
the future to recoup money lost by governments who (in)directly fund the sports industry via
stadium construction, tax breaks, antitrust exemptions, and other mechanisms where fraud may
be subsequently discovered.

The qui tam provisions of the FCA are interesting as they provide a strong financial incentive to
whistleblowers. The provision is a powerful one, particularly in the context of sport, as it allows
a variety of individuals to come forward with their inside knowledge. While the FCA has been
largely used to combat medical and government contracting fraud in the US, it is now evident
that it has some untapped potential application in adding another arrow to sports governance’s
quiver in combating corruption.

Ryan M. Rodenberg

John T. Holden

Florida State University, Tallahassee

21
. Id. at paragraph 224.

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