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Monday, October 22, 2012
Insurer seeks $7.5 million

By Darren Rovell
ESPN.com

A Texas insurance company said Monday it is demanding the return of $7.5 million in bonus money paid to dethroned cyclist Lance Armstrong.

On Monday, after the International Cycling Union announced that it would strip all seven Tour de France titles from Armstrong based on the report of his use of performance-enhancing drugs by the U.S. Anti-Doping Agency, a representative for SCA Promotions confirmed to ESPN.com that it would now ask for the money back.

"The bonus that was owed was based on the premise that Lance Armstrong was the winner of the Tour de France," said SCA's lawyer, Jeffrey Tillotson. "He is no longer the official winner, so it would be improper for him to keep those funds."

Tailwind Sports, which owned the U.S. Postal Service team, offered Armstrong bonuses for winning Tour de France titles and paid premiums on policies covering those bonuses. To give Armstrong an incentive to stay with the team, bonuses were put into his contract, including one bonus that would award him $10 million if he won six straight Tours.

Insuring bonuses and salaries in contracts is standard practice in the sports business, so that those who offer the bonuses don't have to pay in full if an unlikely event tied to a bonus occurs, such as winning a sixth straight Tour de France.

Tailwind secured the insurance policies through a variety of companies, including SCA, which was responsible for paying out previous bonuses as well as half of the $10 million after Armstrong won his sixth straight title in 2004.

After SCA paid out $4.5 million for Armstrong's wins from 2001 through 2003, the company balked at paying another sum as claims of Armstrong using performance-enhancing drugs surfaced. Lacking any concrete evidence in February 2006, SCA paid the $7.5 million, which represented the $5 million bonus, plus a year and a half of interest and other costs.

The settlement agreement, obtained by ESPN.com, does say that "no party shall challenge, appeal or attempt to set aside the arbitration award," but Tillotson contends the recent circumstances allow his client to reopen the settlement.

"If you make a bet on the Super Bowl and you lose because the referees didn't see that the guy who caught the ball had his foot out of bounds, you can't argue with the bookie," Tillotson said. "But if the referees decision were one day overruled, you'd have a legal claim to get your money."

Getting the money back won't be that easy, though.

A clause in the contract states that "no promise or representation of any kind has been made to any party or to anyone acting for a party, except as is expressly stated in this settlement agreement."

One can interpret that to mean that anything that Armstrong said in the past, including that he never used performance-enhancing drugs -- which he still to this day maintains -- isn't material because Armstrong's testimony that led to the settlement is not included in the agreement.

An executive assistant for Tim Herman, Armstrong's longtime lawyer, said the firm would not be commenting on SCA's intended actions.

Per the settlement agreement, any appeal of the settlement must be heard by the same three arbitrators who heard the original case.