By: Matt Foree
The 100th running of the Tour de France, the legendary cycling race through the picturesque countryside and mountains of France, concluded this summer. It is difficult to discuss the sport of cycling without mentioning Lance Armstrong, who is handling his own issues in the aftermath of being stripped of seven Tour de France victories. Among the issues Armstrong is dealing with is defending a False Claims Act lawsuit recently filed by the United States.
The False Claims Act is a powerful federal statute that imposes liability on those who defraud the government. The statute permits severe penalties, including treble damages. It also permits whistleblower claims filed on behalf of the U.S. government by private individuals ("relators"), who can receive a share of the proceeds of a government settlement or judgment. In an interesting twist, the relator in the suit involving Armstrong is Floyd Landis, another controversial cyclist who was stripped of his Tour de France victory in 2006 after testing positive for performance enhancing drugs.
In the suit against Armstrong, the government is seeking damages based on alleged false claims submitted to the United States Postal Service, the sponsor of Armstrong's former cycling team. The government alleges that the sponsorship agreements required the team to follow the rules of cycling's governing bodies, which prohibited use of certain performance enhancing substances and methods. The government alleges that riders on the USPS team caused violations of the sponsorship agreements by employing banned substances and methods to enhance their performance. As a result, the government alleges, Armstrong and others submitted or caused to be submitted to the U.S. false or fraudulent invoices for payment.
Armstrong recently filed motions to dismiss the lawsuit, arguing that the court lacks personal jurisdiction over him and that the claims are barred by the statute of limitations. The court has set a hearing for argument on the motions for November 18, 2013.
The False Claims Act can be used against private companies who engage in government contracts or are involved in government projects, including those selling goods or services to the government. A typical claim under the False Claims Act includes a company overcharging the government for goods and services. Private companies who provide goods or services to the government would do well to ensure complete compliance with the False Claims Act to avoid its severe penalties.