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Judge Rules Against Guardrail Production Company for Defrauding Federal Highway Administration

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A judgment against Trinity Industries for $663.4 million was made on June 9, 2015 for violations of the False Claims Act. According to whistleblower Joshua Harman, Trinity Industries failed to report a change made to highway guardrails to the Federal Highway Administration (FHWA). The change that Trinity Industries failed to report has caused the guardrails to malfunction. Instead of operating to absorb the impact of a crash, the guardrail heads, or end terminals, have worked almost as spears, piercing through the car and causing several fatalities.

Trinity Industries, headquartered in Dallas, Texas, installs many of the highway guardrail systems used in the United States. Trinity sells the guardrails to state governments that, in turn, receive federal reimbursement. In 2005, Trinity made changes to its guardrail head, resulting in approximately $50,000 worth of annual savings for the company. These changes seemed to be minor, changing the end terminal’s measurements from 5 inches to 4 inches wide. However, these changes are significant enough to change the outcome of an impact with a guardrail. When a car hits a guardrail cap head on, the cap is supposed to absorb the impact of the crash and slow down the vehicle. The railing should be pushed out of the way by the guardrail head, away from the car. By decreasing the dimensions of the cap Trinity caused numerous fatalities and amputations, as the rails cut through the cars.

Trinity’s ET-Plus models (the modified guardrail heads) were nearly three times more likely to be involved in a fatal crash than were the previous models of the guardrail end called the ET-2000. Trinity failed to disclose the changes, did not properly test the modifications and falsely certified that ET-Plus model was approved for federal reimbursement numerous times. Mr. Harman brought this lawsuit on behalf of the government under the qui tam provisions of the False Claims Act. He alleged that Trinity was committing fraud when failing to report the changes to the FHWA.

Harman is not the typical whistleblower, as he works as a competitor of Trinity’s, rather than for the company. He operates as a guardrail installer based in Bristol, Virginia. He brought this case three years ago hoping to make the roads safer for vehicles. The US government declined to intervene in the case on behalf of Mr. Harman. As a result, the full burden was left on the whistleblower to litigate the suit.

On October 15, 2014, the jury unanimously found for Mr. Harman. Trinity was held liable for violating the False Claims Act for making false statements to the government in failing to tell the FHWA about the changes made to the ET-Plus guardrail caps. The jury entered a judgment of $175 million in favor of the whistleblower. As per the False Claims Act statute, this amount was tripled, resulting in Trinity owing $525 million in damages. The US District Judge presiding over the suit, Judge Rodney Gilstrap, ordered the two parties to mediate in an attempt to reach a settlement. However, the parties failed to reach a mutually agreeable number after months of mediation. Judge Gilstrap stepped in and added $138.4 million in civil penalties to the damages owed by Trinity. This additional fine amounted to $8,250 for each of the 16,771 false certifications Trinity made to the government to get payment for the guardrails. The whistleblower will receive a relator’s share of 30% of the damages, along with $19 million in attorney fees. This whistleblower award is one of the largest of its kind.

Since the judgment, Trinity has released a statement, claiming that they do not believe they have done anything wrong. Although they acknowledge that they failed to inform the government of the change, this change did not threaten the public safety. In the company’s opinion, the “evidence clearly shows that no fraud was committed. The judgment is erroneous and should be reversed in its entirety,” indicating that they plan to appeal the ruling.

The malfunctioning guardrail heads are currently installed throughout the country in all 50 states. The ET-Plus is still approved for use on U.S. highways by the Federal Highway Administration. However, more than 30 states have stopped using it for now because of concerns resulting from the outcome of the lawsuit.

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