This post is authored by Stacy Morris, a partner in LDM’s litigation department.
By Stacy Morris
Recently, we had written several blog posts about the expanding reach of the False Claims Act, and, in particular, of the whistleblower provisions which allow citizens to bring private actions against those suspected of making false or fraudulent claims to the government. The False Claims Act has become an increasingly hot topic over the past week following Oprah Winfrey’s widely anticipated interview of Lance Armstrong, in which he admitted to doping. Oprah’s interview happened to coincide with the government’s deadline to decide whether it wished to intervene in a False Claims Act lawsuit that had reportedly been filed in 2010 by Armstrong’s former teammate, Floyd Landis.
In his suit—which was required to be filed under seal—Landis reportedly alleges that Armstrong defrauded the government by accepting approximately $30 million in funds from his sponsor, the U.S. Postal Service, while violating the contractual prohibition against doping. The government was supposed to have through the end of last week to make its decision, but is believed to have requested an extension of time so that it can consider whether intervening would be in the best interests of the United States. Because of the mandatory treble damages provision in the False Claims Act, Armstrong face more than $90 million in damages, along with penalties for each false claim. Armstrong could try to mitigate damages by, for example, arguing that the Postal Service financially benefited from the arrangement, but any credit for such amounts would likely be applied only after the damages are tripled. Meanwhile, if the government intervenes in the case, Landis’ stands to receive between 15% and 25% of any recovery as a reward for bringing the fraud to the government’s attention. His potential recovery would increase to up to 30%, however, if the government decides not to join the case.
Forbes contributor, Erika Kelton, explains what is at stake for Armstrong—and Landis—in her article entitled: “The Whistleblower Lawsuit Against Lance Armstrong: What to Expect Next.”