Mark Fabiani, an attorney for the disgraced cycling champion Armstrong, told CNN the legal team received an email from the Justice Department informing them that the department was joining the case brought two years ago by former teammate Floyd Landis.
Landis, who previously admitted cheating, alleges he saw Armstrong inject himself with performance enhancing substances and Armstrong twice gave him banned hormones prior to races, NBC News reported.
The suit accused Armstrong of using performance enhancing drugs in the Tour de France. The Justice Department said Armstrong defrauded the government by violating the rules and using the substances while on the U.S. Postal Service team.
Robert Luskin, another lawyer for Armstrong, told NBC that talks with government lawyers had collapsed.
"Lance and his representatives worked constructively over these last weeks with federal lawyers to resolve this case fairly, but those talks failed because we disagree about whether the Postal Service was damaged," Luskin was quoted as saying. "The Postal Service's own studies show that the Service benefited tremendously from its sponsorship -- benefits totaling more than $100 million."