In the long-running False Claims Act case against Lance Armstrong and Tailwinds Sports, Corp., this summer the District Court for the District of Columbia granted default judgment against Tailwind Sports. United States ex rel. Landis v. Tailwind Sports, Corp., et al., No. 1:10-cv-00976-CRC (D.D.C. Aug. 22, 2018) (ECF No. 605).
Of interest to practicing False Claims Act lawyers, the Court’s Order discusses factors affecting the amount of civil penalties awarded against Tailwind.
This intervened qui tam suit was brought in 2010 to recover money paid by the U.S. Postal Service “to sponsor a professional cycling team featuring Lance Armstrong.” Id. at 1. Relator Landis and the United States alleged that Lance Armstrong and his associates, including Tailwind Sports, “defrauded the Postal Service by misrepresenting and concealing the team’s use of performance enhancing drugs.” Id.
After years of litigation and a number of settlements, Tailwind and its owner were the only remaining defendants. Since neither had participated in the case since 2014, the court granted the Government’s motion for default judgment against both. Id. at 4.
The Government asked that the maximum civil penalty of $11,000 for each of 41 false claims be awarded against Tailwind and its owner. Id. at 8. The Court instead ordered a slightly smaller penalty of $9,000 per false claim (about 82% of the maximum penalty). Id. at 9.
Factors weighed by the court included the sophisticated nature of the scheme, the Government had paid Tailwind a lot of money, there was evidence (though disputed) that the Government received substantial value from media coverage, the defendants took some steps to cover up the fraud (but not intricate and complex steps), and there were no particularly vulnerable victims. Id. at 8-9.
For false claims submitted after January, 2018, the maximum civil penalty per false claims is $22,363. James B. Helmer, Jr., False Claims Act: Whistleblower Litigation at Ch. 14.VI (2018 Supp.) If these false claims had been submitted today, 82% of the maximum civil penalty would equate to over $18,000 per false claim.
In addition to civil penalties, the court awarded the Government damages for its unjust enrichment claims against Tailwind’s owner. Landis, at 11-12. Actual damages were not awarded because the Court determined that Relator Landis failed to substantiate damages. Id. at 10-11.
While we do not represent any party to the Landis case, the lawyers at Helmer Martins represent relators in False Claims Act cases and are available to consult on potential damages available in these cases.
The attorneys at Helmer Martins have a wealth of experience litigating False Claims Act cases, including prosecuting such cases at trial. For more information, or to discuss a potential case, please contact us.
