The civil False Claims Act (FCA) prohibits entities from fraudulently inducing the Government to contract, take or refrain from taking action, or make payment.  Under the FCA, contractors that falsely certify their compliance with contract specifications can be assessed a civil penalty for each false claim in addition to treble damages.  In USA v. Honeywell International Inc., the Court of Appeals for the District of Columbia Circuit was asked to determine the appropriate measure of damages arising from allegedly false claims made about the ballistic performance of Z Shield material made from Zylon fiber purchased from third parties and sold by Honeywell to Armor Holdings for the production of bullet proof vests, which were then sold to the federal Government and federally-funded state and local government entities. In the case, the Government sought approximately $35 million in damages for the full amount paid for the vests, trebled.  During the proceedings, the Government recovered $36 million in settlements with Armor Holdings and the Zylon providers for their role in the manufacturing and supply of the vests. Honeywell, which had not settled, moved for summary judgment to apply a pro tanto approach to the calculation of damages that would be owed in light of these settlements. Specifically, Honeywell argued that since the Government only sought $35 million in damages, its recovery of $36 million in settlements should preclude the Government from recovering any damages from Honeywell even if the facts alleged in the case were true.  The Government sought to recover a proportionate share of damages from Honeywell under its proposed offset standard, which would allow for the Government to recover more than the $35 million sought in the case.
Continue Reading DC Circuit Sets FCA Offset Standard to Limit What the Government Can Recover in USA v. Honeywell International Inc.