Dallas-Based Prize Insurer Sues Lance Armstrong for $12M

By Stephanie K. Jones | February 8, 2013

A Dallas-based firm that specializes in insuring promotions and prizes has filed suit against Lance Armstrong seeking to recoup millions in prize money awarded to the former professional cyclist for winning the Tour de France beginning in 2002 through 2004.

Lance Armstrong, AMGEN Tour 2009Armstrong has since had his seven Tour de France winning titles stripped for using performance enhancing drugs during the entire time he competed in the international cycling event.

Now, SCA Promotions Inc. wants Armstrong to return more than $12 million he was paid by the company for winning Tour de France races in 2002, 2003 and 2004.

In a lawsuit filed Feb. 7 in Dallas County, Texas, SCA argues that because a federal investigation found that Armstrong used the performance enhancing drugs during the years that he won the races – and Armstrong, in a nationally televised interview with Oprah Winfrey, admitted using them – the cyclist should return the prize money as it was paid out under fraudulent circumstances.

In a statement released by the company, SCA Promotions President and CEO Robert Hamman said, “Lance Armstrong cheated to win all of his Tour De France victories. He has admitted as much on national TV.

“As a result of Lance Armstrong’s unjustly achieved victories and related activities, SCA paid $12,120,000 to Tailwind Sports Inc. SCA also suffered reputational damage and substantial loss of business.

“At this time SCA seeks to recover the damages it suffered.”

SCA paid Armstrong $12.1 million after he was declared the official winner of the Tour de France for 2002, 2003 and 2004, according to the filed petition.

In 2002, the petition states, SCA was approached by a representative of Armstrong’s management firm, Tailwind Sports Inc., “about the assumption of risk that Lance Armstrong would win prize money (also known as a performance award)” from Tailwind for winning a series of Tour de France races.

The awards increased for each year – 2002, 2003 and 2004 – from $1.5 million in 2002 to $5 million in 2004.

SCA accepted the risk and Tailwind paid a fee.

As early as 2004, SCA said, it was alerted to the possibility that Armstrong was using performance enhancing drugs, and therefore cheating, against the terms of the agreement. It sought to delay the $5 million payment for 2004 while it investigated the doping allegations against Armstrong.

As a result, according to the petition, Armstrong and Tailwind alleged bad faith on the insurer’s part and began a campaign to smear its reputation.

The parties agreed to mediation and SCA eventually paid Armstrong the $5 million based on the fact that he was declared the “official” winner of the race in 2004.

During arbitration, SCA’s petition states, Armstrong and Tailwind agreed that if Armstrong’s Tour de France titles were taken away, he would have to repay the prize money that the insurer paid.

Because he has now been deemed not to be the official winner, SCA wants its money back.

However, CNN reported that Mark Fabiani, an attorney for Armstrong, said the 2006 settlement agreement contains a clause that reads in part that “no party may challenge, appeal or attempt to set aside the arbitration award.”

Tim Herman, an Austin-based attorney for Armstrong, did not immediately respond to Insurance Journal’s request for comment on the petition filed by SCA Promotions.

The U.S. Anti-Doping Agency, which investigated Armstrong’s use of performance-enhancing drugs and banned him for life from professional sports, has given him extra time to decide if he’ll speak with investigators under oath, the Associated Press has reported. The agency has said cooperating in its cleanup effort is the only path to Armstrong getting his ban reduced.

The deadline to cooperate was originally Feb. 6; it has been extended to Feb. 20, the AP reported.

SCA paid out several prizes related to the recent Super Bowl, including one linked to the 108-yard kickoff return by the Baltimore Ravens’ Jacoby Jones at the beginning of the second half of this year’s Super Bowl.

SCA has covered billions of dollars in prize coverage and product promotions, lottery and casino jackpots, radio contests, direct mail, Internet and sports promotions. SCA has offices in Dallas, London, Las Vegas and Calgary.

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