Former cyclist Lance Armstrong has paid the US government US$5 million to settle a lawsuit that alleged that he had defrauded the US government, which could have cost him up to $100 million in damages. The lawsuit (PDF below) was originally launched in June 2010 by Armstrong’s teammate on the US Postal Team, Floyd Landis. It alleged that by accepting money from the US Postal Service (USPS) for sponsorship whilst continuing to dope in violation of the sponsorship contract, defendants were defrauding the US government, as it owns USPS.

The USPS sponsored cycling team competed from 1995 through 2004, and therefore sponsored Armstrong in six of the seven years in which he won the Tour de France. In an interview with Oprah Winfrey on 17 January 2013 (below), he admitted using prohibited substances in all seven victories.

Landis’s lawsuit sought to recover ‘treble damages and civil penalties pursuant to the False Claims Act’. The lawsuit estimated the value of USPS’s contract to sponsor the team between 1995 and 2005 as being worth between $37 million and $46 million.

However, the US government’s claims are based on invoices submitted within the False Claims Act’s Statute of Limitations, which it said (PDF below, page 5) included all invoices submitted under the sponsorship agreement in the year 2000 and a final invoice submitted in 2000, but relating to the 1995 sponsorship agreement. These invoices totalled $32.3 million, which means that total damages could have amounted to $96.8 million.

Qui tam provisions within the False Claims Act allow citizens, such as Landis, to file claims on behalf of the US government under ex-realtor status. The US government can later decide if it wishes to intervene to pursue the case, which it did on 22 February 2013.

Armstrong’s legal team disputed that he had undermined the value of the sponsorship, arguing that USPS benefitted from the team’s – and Armstrong’s – victories during the terms of the deal. A study commissioned by the USPS showed that while it spent $32.27 million on the cycling team from 2001/2004, it realised a marketing benefit of $103.63 million. Any assessment of damages may have had to assess the benefits that USPS received from the deal weighed against the harm that was caused after Armstrong was sanctioned with a lifetime ban by the US Anti-Doping Agency (USADA) on 24 August 2012.

The lawsuit also alleged that Armstrong and defendants submitted false claims to the government for payment. As well as listing a number of alleged doping violations by defendants from 1998 to 2004, the lawsuit listed 19 alleged false statements made by defendants, some of which ‘were designed, in part, to assure the team’s sponsors, including the USPS, that the team was not involved in the use of banned substances or practices’.

On 23 July 2013, the Federal District Court for the District of Colombia heard (PDF below) Armstrong’s legal team argue that the USPS knew about Armstrong’s doping. Armstrong’s legal team argued that USPS chose not to investigate the allegations, made more than a decade before Landis’s lawsuit was filed, and chose not to investigate during the subsequent years, despite continuous doping allegations. Armstrong’s team argued that USPS turned a blind eye and renewed its sponsorship contract due to the publicity gained by the team’s success.

There were also questions as to whether the US government could, in 2010, launch a False Claims Act claim for damages relating to agreements signed in 2000, as the Statute of Limitations under that Act is six years. As such, Armstrong’s legal team argued that any contract prior to 10 June 2004 should have been excluded from the lawsuit.

These two above points may explain why the US government was prepared to settle the lawsuit for the comparatively low figure of $5 million. Floyd Landis, who admitted that he had engaged in using prohibited substances whilst part of the USPS team, will receive $1.1 million as his share of the settlement. ‘The claims against Armstrong contained in the complaint are allegations only and do not constitute a determination of liability’, said the Department of Justice (DoJ) in a settlement statement.