Heflin learns from Figgis (one of the less villainous corrupt cops) and through files he steals from NYPD’s Internal Affairs that the mafia financed the construction of Garrison for Lt. Donlan and a bunch of his men at the 37th Precinct in return for being allowed to secretly run millions of dollars in drugs through the precinct. In addition, President Lassaro of the Patrolmen’s Defense Association (PDA) is also in league with the mob, and Donlan masterminded the murder of Officer Tunney three years ago while he was in jail awaiting trial, where he had been planning to tell everyone everything about Donlan and the other dirty policemen. Heflin also discovers that the fire that burned down Figgis’ house was committed by Figgis himself and not by the crooked cops like he believed, and Figgis did the deed in order to collect on the insurance money and then leave both Garrison and New York City behind for a better life elsewhere. As Figgis is about to depart, Heflin curses him for turning his back on him and for not helping Tunney when he had a chance to, but Figgis appears to be unmoved.
Heflin finds Babitch the same night Figgis leaves and takes him into custody, intending to deliver him to Internal Affairs himself since he can’t trust any NYPD cops to do it. Unfortunately, as he and Babitch are about to leave for the city the next morning, they get ambushed by Donlan’s comrades Lagonda and Rucker, and Rucker fires his gun next to Heflin’s good ear and renders him virtually deaf before he and Lagonda put Babitch in their car and take him to Donlan’s house. Despite being barely able to hear anything, Heflin walks to the house and manages to kill Donlan and all of the other dirty cops, during which Figgis after having had a change of heart returns and assists him. He and Figgis then bring Babitch to Internal Affairs.
Figgis ended up striking a plea bargain that saw him give up the connection between Donlan, the PDA, and the mafia, and scores of indictments were made. Heflin also fully recovered his hearing in his good ear and continued on as Sheriff of Garrison.
One night, while Donlan (Harvey Keitel) is having a goodbye party for Babitch (Michael Rapaport) at his house with their fellow dirty 37th Precinct cops Rucker (Robert Patrick), Lagonda (Arthur J. Nascarella), and Crasky (John Spencer) among the attendees, he has a chat on the phone with Lassaro (Frank Vincent), the corrupt president of the Patrolmen’s Defense Association (PDA) who is supposed to set up Babitch with a new identity elsewhere. Lassaro tells him that he will be putting in the call to the mayor’s office tomorrow to suspend Internal Affairs’ investigation into Babitch’s disappearance (and by extension the investigation into Donlan’s whole team), but warns that the case won’t stay cold if his body isn’t found sooner or later. Donlan reluctantly accepts that he needs to kill his nephew, but his wife Rose (Cathy Moriarty) having eavesdropped on Donlan and deduced what he plans to do tips off Babitch by writing a note on a napkin and putting it around a drink she gives him. After he notices it around the time the party ends, he is summoned to speak with Donlan outside, so he hides a gun in the back of his jeans. He meets Donlan, Lagonda, and Rucker next to the above-ground swimming pool, and when they try to drown him in it, he is able to get the gun out and pop off a few rounds to get them to stop. He then flees the property around the time Randone (Peter Berg), another corrupt policeman, shows up and witnesses the escape, and Donlan and company pursue Babitch until they lose him in the woods. The next day, Internal Affairs gets the call saying that the Garrison case is closed, and Lt. Tilden (Robert De Niro) angrily orders his subordinates to box up the files.
At the Four Aces Tavern that night, Donlan and his crew ask Randone if they have his help in taking out Babitch, but Randone isn’t interested in cleaning up Donlan’s mess and challenges him to say something to him while he also, in a roundabout way, asks him if this is about him having sex with Rose in the past (which Donlan got a hint of the day before). He then leaves for his next shift in the city. A little later on, Heflin (Sylvester Stallone) is lounging in his house with Figgis (Ray Liotta) another dirty policeman who is much less nefarious than the others when Figgis explains to him that the mafia had financed Garrison’s construction for Donlan and the others so they could own the 37th Precinct (the cops got this safe community in return for allowing the mafia to run millions of dollars in drugs through the precinct), and he warns Heflin against taking the other dirty cops head-on. Around the same time just across the river, Randone does battle with a violent criminal on the roof of an apartment building, but the criminal manages to throw him over the edge. Though Randone grabs hold of a TV aerial to stop his fall, it is weak and threatens to break. Donlan and Rucker are among the many cops called to the scene, and Donlan is the first to see Randone from ground level, but in an act of vengeance against him over the tryst with Rose, he orchestrates a situation where Randone falls off the roof to his death before he and the other officers can reach him. Shortly after that, Babitch turns up on Heflin’s doorstep seeking his help, saying Donlan and his friends just tried to kill him. However, he runs away when Figgis sees him, and Heflin and Figgis chase after him until they lose him in a wooded area. A confused Heflin asks Figgis why Donlan and his boys would help Babitch disappear and then bring him back to Garrison to kill him, and Figgis replies that Donlan had a plan, but clearly thanks to Rose, it got ruined. Heflin asks why he didn’t try to go into the city to get help, and Figgis replies that Donlan has friends in the state police and in Internal Affairs, so if he wants someone dead, that person will be killed no matter where they go.
A couple of days later, Heflin decides he can no longer stand by and do nothing, so he heads into Internal Affairs to speak with Tilden, who had sought his help before in the investigation but he was too reluctant to betray the unscrupulous cops back then. He barges into Tilden’s office and says that Donlan and his associates tried to do away with Babitch but he fled, and he apologizes for not earlier giving him his aid. Tilden responds by being indifferent about the present circumstances before telling Heflin that the investigation has already been given the axe because he butchered his chance to cooperate. Heflin walks out of the office disappointed, but Tilden informs his subordinate Det. Carson (Malik Yoba) that, if Heflin makes a mess, they have a case again. While Heflin is making his way out of the department, the stacks of files on Garrison catches his eye, so he makes the mess Tilden is looking for by stealing the files on Figgis, Donlan, the other dirty officers, and the murdered officer Tunney (who, on Donlan’s orders, was killed three years ago by a correctional officer while in prison awaiting trial to testify against his comrades). He and his deputies Geisler (Noah Emmerich) and Betts (Janeane Garofalo) pore over the documents in his office and learn the full extent of the corruption going on at the 37th Precinct, and Heflin draws the conclusion that Donlan’s crew killed Tunney because he was going to talk, and they tried to kill Babitch because they knew he would talk one day and earlier torched Figgis’ house and killed his girlfriend Monica (Mel Gorham) in the process because they thought he’d might talk. Geisler and Betts tell Heflin that the mayor closed this case and he can’t use any of these files to make his own case with because they’re purloined, and Betts also says that he doesn’t know for certain if the cops burned the house down. She states that there is just nothing he can do about Donlan or his men, to which he replies that he can find Babitch and bring him in. Betts then tells Heflin that she is quitting and moving back upstate, having tired of the NYPD cops treating Garrison like their own personal fiefdom.
The following day at Garrison’s 4th of July carnival, Rucker intimates to Heflin that he and his pals know of his visit to Internal Affairs, and that night, after Heflin talks to Randone’s widow (and his longtime crush) Liz (Annabella Sciorra) about things pertaining to the bad cops and her husband’s death, he is surprised in his car by Lagonda, who draws a gun on him and orders him to give up Babitch’s location. After Heflin tells him that he has no idea where he is, Lagonda leaves, but warns of a future attack from him and his friends. Heflin returns home to find that Figgis got a $200,000 insurance check for the fire and he is now packing up to leave for a life somewhere else, but Heflin then finds a clue on the gym bag he saw Figgis get from the Bomb Squad agent Berta (Edie Falco) around the beginning of the movie that suggests that the fire was started by Figgis himself. He leaves and goes to the burnt remains of Figgis’ house, but while combing through some of the debris, Figgis suddenly appears and confirms that he did commit arson and he left no evidence of it behind. Heflin tells him that Berta must have given him the materials to pull this off, and he asks Figgis if he knew Monica was going to be here, and he answers that he truly didn’t know, for she told him she was going to a friend’s place plus the fire-starting device was on a timer, and he says this is all B.S. As he heads for his car, Heflin tells Figgis that HE is the B.S. and curses him for turning his back on him like how he turned his back on Tunney when he needed help those three years ago, and he is going to nab Babitch and, for once, people in this town are going to tell the truth. Figgis yells that he is taking his check and starting his life again elsewhere, and he cares not a whit about Garrison or New York City or Heflin’s justice. He then hops in his car and peels off out of Garrison. However, while motoring along the highway sometime later, Figgis’ conscience gets the better of him, so he turns around and goes back.
Heflin visits Rose and tells her that he is looking for her nephew, and after telling her that he is his only chance for survival, she gives up his hiding place: The town’s derelict water tower. Heflin climbs up there, finds him, and takes him into custody, intending to bring him in with Geisler’s help since he can’t trust any NYPD cops to do the job, given the connections Donlan has. However, after having a chat on the phone with his pregnant wife, Geisler tells Heflin that he wants to assist him, but his wife is beyond uneasy about them doing this themselves. Heflin responds by giving him permission to go home and tend to his wife. In the morning, as Heflin is escorting Babitch to his patrol car, Lagonda and Rucker ambush them, and Rucker decides to cripple Heflin by firing his gun next to Heflin’s good ear, rendering him virtually deaf. They then shove Babitch into their car and take him to Donlan’s house.
Now semi-disoriented and very barely able to hear anything, Heflin heads up to the house on foot to take out the villainous cops. He first kills Rucker and Lagonda in the driveway, but then gets shot in the right shoulder by Crasky. Thankfully, Figgis timely appears and blows away Crasky, and he also fires off a shot at Donlan when he appears at the living room window, but misses him. Heflin goes into the house first and makes his way upstairs and finds Babitch with Rose in the latter’s bedroom, but he can’t hear Donlan approaching behind him. Figgis spots Donlan and shoots at him, but though he misses again, Heflin is able to hear the gunshot well enough to whip around and blast Donlan. As Donlan lays dying on the floor, he utters obscenities at Heflin, but Heflin expressionlessly responds with “I can’t hear you, Ray.” Heflin and Figgis then deliver Babitch to Internal Affairs and to Tilden.
Through Tilden’s narration, we learn that Figgis struck a plea bargain and gave up the connection between Donlan, the PDA, and the mafia, and there were scores of indictments given out over the next few months (including one to Tunney’s murderer and one to mob boss Salvatore Terillo, and both were convicted). Heflin also recovered the hearing in his good ear. Tilden also adds that there are people on both sides of the Hudson River who wished Heflin never healed up and cursed the day he took down Donlan, but Heflin figured out something that they didn’t: No one is above the law.
We last see Heflin looking out at the New York City skyline from under the George Washington Bridge before he gets called back to work.