Since no one who actually knows anything has answered, I will throw in a comment.
I wonder if there is some confusion in your units. Is the displacement actually given in m, not mm? This seems quite plausible, given that 0.02m=20mm. SolidWorks actually uses m as its unit for its internal working.
Thanks for the response. I double-checked the units, and they are indeed in mm. It looks like the displacement starting at 0.02mm is just a coincidence, since this value changes depending on the thickness and location of the damping patch. For example, doubling the thickness of the patch reduced the displacement at the first timestep to 4.5e-4mm.