United Technologies told to pay $473 million to U.S. in lawsuit

Tue Jun 18, 2013 11:35am EDT

(Reuters) - A federal judge has ordered United Technologies Corp (UTX.N) to pay $473 million plus interest for manipulating costs to win U.S. Air Force jet engine contracts in the 1980s.

The ruling by U.S. District Judge Thomas Rose in Dayton, Ohio, was issued Monday for a 1999 lawsuit in which the Department of Justice sought reimbursement for overcharges by United Technologies subsidiary Pratt & Whitney.

Interest on parts of the award, with rates ranging from 6 percent to 8 percent a year and dating as far back as 1986, could add hundreds of millions of dollars to the judgment.

Ian Race, a spokesman for United Technologies, said the company would appeal.

"We strongly disagree with the court's opinion concerning the Fighter Engine Campaign from the 1980s," Race said in a statement.

Representatives for the Justice Department did not immediately respond to requests for a comment.

Rose found United Technologies liable in 2008 under the False Claims Act, a Civil War-era law that allows the federal government to seek reimbursement from companies that submit inflated claims for payment.

At that time, the judge found the U.S. government suffered no damages during the period in question. He also found that administrative proceedings before the Armed Services Board of Contract Appeals had precluded the Justice Department from pursuing so-called common law claims of breach of contract, payment by mistake and unjust enrichment.

In November 2010, the 6th U.S. Circuit Court of Appeals upheld the liability finding but sent the case back to Rose to determine damages.

In his ruling on Monday, Rose awarded $109 million in common law damages plus annual interest. He also awarded more than $364 million, largely under False Claims Act authority that allows him to award triple damages.

"The government should not have paid the amounts that the government proved it paid as a direct result of United Technologies' fraud," Rose wrote.

United Technologies shares gained 87 cents to $95.87 in morning New York Stock Exchange trading.

The case is U.S. v. United Technologies Corp, U.S. District Court, Southern District of Ohio, No. 99-00093.

(Reporting by Nate Raymond in New York; additional reporting by David Ingram in Washington; Editing by Maureen Bavdek)

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