Nebraska insurance company sues Lance Armstrong

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Posted: Friday, March 1, 2013 12:00 am

A Nebraska insurance company has sued cyclist Lance Armstrong, saying he cheated to collect $3 million in performance bonuses paid by the insurer after his team bought a policy that covered the large cash outlays if Armstrong won major competitions.

Acceptance Insurance Co., legally domiciled in Nebraska and based in Council Bluffs, filed the suit late this week in Travis County District Court in Austin, Texas.

Also last month, Armstrong was sued by Dallas-based insurer SCA Promotions in a legal action seeking repayment of at least $12 million. That suit also cites the improper payout of performance bonuses.

The Acceptance suit says the cash payouts covered by the insurance policy were triggered when Armstrong won the Tour de France in 1999, 2000 and 2001 while engaging in blood doping and the use of banned performance enhancers.

The suit says Armstrong was never entitled to the payments because he violated the Tour de France’s rules and because he lied about doping, violating the policy terms. The complaint cites Armstrong’s televised interview this year with Oprah Winfrey in which he admitted using banned substances.

“It is pretty simple: Our policy required Mr. Armstrong to tell the truth, and he didn’t,” said Jim George of the Austin law firm George Brothers Kincaid & Horton, which represents Acceptance Insurance. “Generally speaking, when you get money but didn’t tell the truth when you were supposed to, you have to pay it back.”

The civil lawsuit alleges that Armstrong engaged in fraud and breach of contract. It seeks repayment of the $3million, plus interest, attorney fees and money damages of twice the amount of economic harm caused. The suit also names Tailwind Sports, Armstrong’s cycling team, as a defendant.

Attempts to reach a spokesman for Armstrong were unsuccessful.

The suit says Tailwind’s predecessor company bought the policy that paid out after the Tour de France wins from a company called Redland Insurance, identified in Nebraska Insurance Department records as a wholly owned subsidiary of Acceptance Insurance.

Redland was sold by Acceptance Insurance in 2000, after the sale of the policy that triggered the Armstrong payouts. The lawsuit says Acceptance is still authorized to “administer policies and perform all necessary services” related to Redland Insurance.

Nebraska Department of Insurance Director Bruce Ramge said Acceptance Insurance is operating under court-ordered outside supervision, a status called “rehabilitation” within the industry. That happens when an insurer is in financial trouble, Ramge said, and a judge appoints an outside supervisor.

Insurance Department financial examination records show the company was placed in rehabilitation in 2008 after it was found to be in “hazardous financial condition.” Ramge said Acceptance was a property and casualty insurer, defined as a company offering coverage on homes, vehicles and businesses.

Acceptance filed for bankruptcy protection in 2005, citing losses of $87 million from crop insurance in 2002. Shares of the parent holding company were removed from New York Stock Exchange trading. In 2010, the case was converted from a reorganization to a liquidation, a conversion that rarely leaves any assets for investors.

The 2010 Insurance Department examination said Acceptance is in “run-off” status, meaning it is no longer writing new policies or accepting renewals but rather handling claims on existing policies until they expire.

The company’s finances appear to be on the rebound, according to Insurance Department examination records for 2010, the most recent year for which such figures are available.

Net income was $4.1million, up from $527,904 in 2006. Liabilities for the same period dropped to $37.6 million, from $58.4million. The capital and surplus deficit narrowed to $6.6million, from $8.8 million.

In 2012, Armstrong was stripped of all of his Tour de France titles.

“Lance Armstrong has been considered the greatest cyclist in the history of the sport,” the Acceptance complaint reads. “He won the most grueling sporting event, a record seven times from 1999 to 2005. He did that after surviving cancer. But Lance Armstrong cheated.”

Contact the writer: 402-444-3133,


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