U.S. JOINS LAWSUIT AGAINST LANCE ARMSTRONG AND OTHERS



FROM: U.S. DEPARTMENT OF JUSTICE

Friday, February 22, 2013
United States Joins Lawsuit Alleging Lance Armstrong and Others Caused the Submission of False Claims to the U.S. Postal Service

The Department of Justice announced today that the government has joined a civil lawsuit alleging that Lance Armstrong, Johan Bruyneel and Tailwind Sports LLC and Tailwind Sports Corporation (Tailwind) submitted or caused the submission of false claims to the U.S. Postal Service (USPS) in connection with its sponsorship of a professional bicycle racing team by regularly employing banned substances and methods to enhance their performance, in violation of the USPS sponsorship agreements.

From 1996 through 2004, the USPS sponsored a professional cycling team owned by Tailwind and its predecessors. Lance Armstrong was the lead rider on the team, and between 1999 and 2004, he won six consecutive Tour de France titles as a member of the USPS-sponsored team. Johan Bruyneel was the directeur sportif, or manager, of the cycling team.

The sponsorship agreements gave the USPS certain promotional rights, including the right to prominent placement of the USPS logo on the cycling team’s uniform. Each of the agreements required the team to follow the rules of cycling’s governing bodies, which prohibited the use of certain performance enhancing substances and methods. Between 2001 and 2004 alone, the Postal Service paid $31 million in sponsorship fees.

The lawsuit joined today by the government alleges that riders on the USPS-sponsored team, including Armstrong, knowingly caused the USPS agreements to be violated by regularly employing banned substances and methods to enhance their performance. The lawsuit further alleges that Bruyneel knew that team members were using performance enhancing substances and facilitated the practice.

The government today notified the court that it is joining this lawsuit against Armstrong, Bruyneel and Tailwind, and will file its formal complaint within 60 days.

"The Postal Service contract with Tailwind required the team to enter cycling races, wear the Postal Service logo, and follow the rules banning performance enhancing substances – rules that Lance Armstrong has now admitted he violated," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division of the Department of Justice. "Today’s action demonstrates the Department of Justice’s steadfast commitment to safeguarding federal funds and making sure that contractors live up to their promises."

"Lance Armstrong and his cycling team took more than $30 million from the U.S. Postal Service based on their contractual promise to play fair and abide by the rules – including the rules against doping," said Ronald C. Machen Jr., U.S. Attorney for the District of Columbia. "The Postal Service has now seen its sponsorship unfairly associated with what has been described as ‘the most sophisticated, professionalized, and successful doping program that sport has ever seen.’ This lawsuit is designed to help the Postal Service recoup the tens of millions of dollars it paid out to the Tailwind cycling team based on years of broken promises. In today’s economic climate, the U.S. Postal Service is simply not in a position to allow Lance Armstrong or any of the other defendants to walk away with the tens of millions of dollars they illegitimately procured."

"The Postal Service conducts business with many different contractors and subcontractors, with a large majority of them providing a much needed service and fulfilling their contractual duties. It is critical that public confidence in contractor performance remains high. When that public trust is compromised, as occurred in this case, the Office of Inspector General will fully investigate," said David C. Williams, Inspector General, U.S. Postal Service, and Office of Inspector General.

"The Postal Service strongly supports intervention by the Department of Justice in this matter and a vigorous pursuit of this case," said Postal Service General Counsel and Executive Vice President Mary Anne Gibbons. "The defendants agreed to play by the rules and not use performance enhancing drugs. We now know that the defendants failed to live up to their agreement, and instead knowingly engaged in a pattern of activity that violated the rules of professional cycling and, therefore, violated the terms of their contracts with the Postal Service. For that reason, the Postal Service fully agrees with the decision by the Department of Justice to seek appropriate damages under the False Claims Act."

For many years, including during the USPS sponsorships, Armstrong and others repeatedly denied that the team used performance enhancing substances or methods. Yet on Oct. 10, 2012, the U.S. Anti-Doping Agency (USADA) issued a report concluding that Armstrong used banned performance enhancing substances starting in at least 1998 and continuing throughout his professional career, and that he pressured and helped his teammates to engage in similar conduct. Accordingly, USADA disqualified all of his competitive results since Aug. 1, 1998, including his seven Tour de France victories, and banned him from sport for life pursuant to the World Anti-Doping Code.

In a recently-televised interview with Oprah Winfrey, Armstrong contradicted his earlier denials and admitted that he used banned substances and methods throughout his career, starting in the mid-1990s. In particular, he admitted having engaged in banned practices during each of his seven Tour de France victories, including the six he won as a USPS rider. Armstrong explained that he avoided detection by anti-doping authorities by carefully timing his use of banned drugs so that they would leave his system prior to his undergoing cycling’s required periodic drug testing.

The lawsuit joined by the United States was filed by Floyd Landis, a former rider and teammate of Armstrong on the USPS sponsored team from 2002 through 2004. The lawsuit was filed under the False Claims Act, which imposes liability on those who submit false claims for government funds, and provides for the recovery of three times the government’s damages, plus civil penalties. The False Claims Act contains a qui tam or whistleblower provision, which permits private parties to sue on behalf of the United States for false claims and share in any recovery. The False Claims Act permits the government to investigate the allegations and intervene, or decline to intervene in the whistleblower’s lawsuit. While the government notified the court that it was joining the lawsuit’s allegations as to Armstrong, Bruyneel, and Tailwind, it advised the court that it was not intervening in the case as to several other defendants named in the complaint.

Principal Deputy Assistant Attorney General Delery and U.S. Attorney Machen commended the coordinated effort of the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the District of Columbia, and the USPS Office of Inspector General and Office of General Counsel, in their investigation of this matter.

The lawsuit, filed in the U.S. District Court for the District of Columbia, is captioned United States ex rel. Landis v. Tailwind Sports Corporation, et al. The claims made in the complaint are only allegations and do not constitute a determination of liability. Trial Attorney Robert Chandler of the Department of Justice’s Civil Division and Assistant U.S. Attorneys Darrell Valdez and Mercedeh Momeni of the U.S. Attorney’s Office for the District of Columbia are representing the government.

W.W. GRAINGER PAYS U.S. $70 MILLION TO RESOLVE FALSE CLAIMS ALLEGATIONS

FROM: U.S. DEPARTMENT OF JUSTICE

Wednesday, December 26, 2012
Illinois-based Hardware Distributor W.W. Grainger Pays US $70 Million to Resolve False Claims Act Allegations

W.W. Grainger Inc. has agreed to pay the United States $70 million to resolve allegations that it submitted false claims under contracts with the General Services Administration (GSA) and the U.S. Postal Services (USPS), the Department of Justice announced today. Grainger is a national hardware distributor headquartered in Lake Forest, Illinois.

Grainger entered into a contract to sell hardware products and other supplies to government customers through the GSA’s Multiple Award Schedule (MAS) program. The MAS program provides the government and other GSA-authorized purchasers with a streamlined process for procurement of commonly-used commercial goods and services. To be awarded a MAS contract, and thereby gain access to the broad government marketplace, contractors must agree to disclose their commercial pricing policies and practices to assist the government in negotiating the terms of the MAS contract.

Today’s settlement resolves issues discovered during a GSA post-award audit of Grainger’s MAS contract. The GSA Office of Inspector General learned that Grainger failed to meet its contractual obligations to provide the GSA with current, accurate and complete information about its commercial sales practices, including discounts afforded to other customers. As a result, government customers purchasing items under the Grainger MAS contract paid higher prices than they should have.

In addition, today’s settlement resolves allegations that Grainger failed to meet its contractual obligations to provide "most-favored customer" pricing under two USPS contracts for sanitation and maintenance supplies. The USPS contracts required Grainger to treat USPS as Grainger’s "most-favored customer" by ensuring that USPS received the best overall discount that Grainger offered to any of its commercial customers. Agents and auditors from the USPS Office of Inspector General (OIG) investigated Grainger’s pricing practices and discovered that Grainger did not consistently adhere to this requirement, causing USPS to pay more than it should have for purchases made under the two contracts.

"Misrepresentations during contract negotiations undermine the integrity of the government procurement process," said Stuart F. Delery, Principal Deputy Assistant Attorney General for the Civil Division. "The Justice Department is committed to ensuring that government purchasers of commercial products receive the prices to which they are entitled."

"The substantial payment by Grainger reflects the Justice Department’s focused and productive work in the economic interests of our citizen constituents," commented United States Attorney James L. Santelle of the Eastern District of Wisconsin. "This settlement shows that we are committed to ensuring that false claims are investigated fully and pursued effectively so that government monies are used properly and the integrity of our contracting system is upheld."

"This case is another demonstration of the value of the work performed by Inspectors General ," said GSA Inspector General Brian D. Miller. "Our auditors and agents worked tirelessly to reach this critical settlement."

"The U.S. Postal Service Office of Inspector General aggressively pursues instances of contracting improprieties that negatively impact the Postal Service and cause unnecessary expenses. We appreciate the partnership of the Civil Divisions of the Department of Justice and the United States Attorney’s Office for their support in this case," said Joanne Yarbrough, Special Agent-in-Charge of the OIG’s Major Fraud Investigations Division.

This settlement was the result of a coordinated effort by the Commercial Litigation Branch of the Justice Department’s Civil Division; the U.S. Attorney’s Office for the Eastern District of Wisconsin; the GSA Office of Inspector General; and the USPS Office of Inspector General and Office of General Counsel. The claims settled by this agreement are allegations only, and there has been no determination of liability.

OSHA CITES U.S. POSTAL SERVICE FOR WORKER'S DEATH

FROM: U.S. DEPARTMENT OF LABOR
Dec. 17, 2012

US Labor Department's OSHA cites US Postal Service
for worker's heat-related death in Independence, Mo.

INDEPENDENCE, Mo. – The U.S. Department of Labor's Occupational Safety and Health Administration has cited the U.S. Postal Service Truman Station in Independence, Mo., with a willful violation for failing to protect employees working in excessive heat. OSHA initiated an inspection in July after a mail carrier developed heat-related illness symptoms, collapsed while working his route and was taken to the hospital where he died as a result of his exposure to excessive heat.

"This tragedy underscores the need for employers to take proactive steps to keep workers safe in extreme heat," said Charles Adkins, OSHA's regional administrator in Kansas City. "If this employer had trained workers in recognizing the symptoms of heat stroke, and taken precautions to ensure workers had access to water, rest and shade, this unfortunate incident may have been avoided."

The willful violation addresses the hazard of multiple employees who were required to work during periods when excessive heat advisories and warnings were issued by the National Weather Service. The employer did not have procedures in place to address worker concerns during times of excessive heat. A willful violation is one committed with intentional, knowing or voluntary disregard for the law's requirements, or with plain indifference to worker safety and health.


Penalties of $70,000 have been proposed. The Postal Service has 15 business days from receipt of the citations and penalties to comply, request an informal conference with OSHA's area director in Kansas City, or contest the findings before the independent Occupational Safety and Health Review Commission.

Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA's role is to ensure these conditions for America's working men and women by setting and enforcing standards, and providing training, education and assistance. For more information, visit http://www.osha.gov.