Lance Armstrong's deal with the US Postal Service could turn into a story about whistleblowers and bounties
WASHINGTON, DC – Back in 2001, the United States Postal Service announced in its year end annual report, under a heading “building brand and reputation,” that its pro-cycling team, led by Lance Armstrong, delivered its third consecutive win at the world’s foremost cycling event, the Tour de France. A dozen years later, what looked like a good idea at the time for a government agency striving to compete with private mail delivery, has turned out to be a disaster. This week, amidst strong revelations of doping, Armstrong was stripped of seven Tour wins.
Interestingly, this blockbuster story about cheating in sports may turn into a tale of whistleblowing and bounties. A United States law, the Federal False Claims Act, provides bounties to individuals who blow the whistle on false statements or conduct that causes the expenditure of US government dollars. The Armstrong case may lead to an application of that law as his US Postal Service team was funded with United States government dollars. Documents show that in just three years, from 2001-2004, the agency spent $31.9 million sponsoring Armstrong's team.
For the Postal Service, the project was all about enhancing its brand and reputation. If Armstrong made representations to the Postal Service about his team’s commitment to comply with the Tour’s rules, engage in a high level of sportsmanship, or to refrain from banned substances, he or his team may have made false statements in furtherance of securing government funding. If a False Claims case can be proven, Armstrong and his teammates could be held liable for three times the actual monies that the Postal Service paid to sponsor his cycling teams. Armstrong and his crew would also be liable for civil penalties of between $5 and $11 thousand dollars for each false statement made in furtherance of securing funding.
The False Claims Act encourages those with first-hand knowledge of wrongdoing to take action. Whistleblowers can generally initiate a lawsuit in the name of the government if their basis for the suit is not in newspaper reports, or government audits or hearings. While a False Claims Suit must be filed in a United States District Court, it need not be filed by a US citizen or even a US resident. Citizens and residents of foreign countries can file suit and secure bounties under the law. The bounties range from between 15 to 30 percent of the recovery. This year alone, the United States will recover well over 6 billion dollars as a result of cases initiated under the False Claims Act. The government will also pay out well over 200 million dollars in bounties to private individuals.
The Government can initiate litigation
False Claims suits are filed under seal, and served on the United States Department of Justice. The government investigates the case while it is under seal and makes a decision about whether to join the whistleblower in the litigation. The law also allows for the government to initiate False Claims litigation even when there is no whistleblower.
Because these cases remain under seal, and thus secret during the government’s investigation, it is only a matter of speculation as to whether an actual suit has been filed against Armstrong and his teammates. Yet, given the facts that have come out already, observers should not rule out the day when a suit is unsealed and the US False Claims Act meets the sporting world.