When Lance Armstrong used banned substances to win the Tour de France, he violated the False Claims Act, which imposes legal liability on those who commit fraud against federal programs. The reason his actions violated the False Claims Act is that he had received a $32.3 million sponsorship from the U.S. Postal Service during six of his victorious tours.
As we discussed on this blog at the time, Armstrong settled the False Claims Act case for $5 million, the estimated damage suffered by the USPS. A former teammate who had blown the whistle on the fraud received $1.1 million as a reward for doing so.
Now, a related case against Armstrong’s former team and team manager has been resolved. Tailwind Sports will pay a civil penalty of $369,000. The former team manager will forfeit $1.2 million — the amount he received in salary and bonuses during the period when Armstrong was sponsored by the USPS.
According to the federal judge in the case, “the factual allegations demonstrate that [the manager] knew doping was prohibited under the sponsorship agreement, was nonetheless aware of and encouraged doping, and made public statements to conceal the doping.”
Furthermore, both Tailwind and the former manager knew about the doping allegations and falsely denied them. The USPS relied on that false denial when it agreed to sponsor the team in 2000.
Interestingly, the case was resolved via default judgment, which is usually entered only when one party to a lawsuit fails to appear or provides no defense. In 2014, the former manager and Tailwind filed motions to dismiss the case, but those motions were denied. Neither has offered any further defense since the denials.
With a default judgment in place, the remaining issue was damages. The government asked for maximum penalties against the former manager and Tailwind, but the judge declined to order that, noting that “the amount of damages the government suffered, if any, has been hotly disputed.”
In 2012, the U.S. Anti-Doping Agency stripped Armstrong of his Tour de France titles.
While it is unclear if Armstrong’s whistle-blowing teammate will receive any additional compensation from this case, whistleblowers in successful False Claims Act cases can receive a substantial reward for their service. The reward is typically between 10 and 30 percent of the total amount recovered by the government.