In brief
On August 30, 2022, the DC Circuit ruled in United States v. Honeywell International, Inc. that the pro tanto rule applies to damages in cases under the False Claims Act (FCA). This means that, at least in the DC Circuit, damages in FCA cases will be subject to dollar-for-dollar reduction by other settlement offsets in cases involving multiple jointly and severally liable defendants. The ruling clarifies the settlement offset rule applied to FCA cases and effectively prohibits the government from obtaining windfall gains in such cases.
Background on the False Claims Act
The FCA punishes any person who knowingly submits false claims to the government, including statements that fraudulently induce the government into a contract or misrepresent the specifications of the items sold to the government.[1] Damages in FCA cases can be significant, as each false claim triggers treble damages in addition to civil penalty.[2] Many FCA cases involve multiple parties, to which courts apply joint and several liability without a right to contribution.[3]
Since the passage of the Bipartisan Budget Act in 2015, civil monetary penalties have increased significantly to account for annual inflation. In fiscal year 2021, the DOJ obtained more than $5.6 billion in settlements and judgments from FCA civil cases. Settlement and judgments since 1986, when Congress substantially strengthened the FCA, now total more than $70 billion.[4]
In Depth: The Honeywell Decision
Honeywell...
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