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Tuesday, October 21, 2014
Trinity Industries Saves $2.00 Results in Many Injuries--And Now Costs Them $175 MILLION
Trinity Industries, the highway guardrail maker accused of selling systems that can malfunction during crashes and slice through cars, was found by a jury to have defrauded the federal government.
The case was brought under the False Claims Act by Joshua Harman, a competitor who discovered that the company made changes in 2005 to its rail head — the flat piece of steel at the front of the system — without telling the Federal Highway Administration, as is required. The company sold the guardrails to state governments that, in turn, received federal reimbursement.
A Texas jury on Monday awarded $175 million that will, under federal law, be tripled to $525 million. The money will be split between the United States Treasury and Mr. Harman, who, although a competitor to Trinity, is considered a whistle-blower. After discovering the design change during litigation in 2011, he filed the case on behalf of the government.
Beyond the jury verdict itself, the judge hearing the case will determine exactly how many “false claims” apply in the case to Trinity. Statutory penalties for each instance of a false claim range from about $5,000 to $12,000, and Trinity would be responsible for such payments.
At the heart of the dispute was a design change Trinity made in 2005 to its ET-Plus rail head, which could cause a guardrail system to fail, according to some state regulators and the federal lawsuit. Those changes were not disclosed to the Federal Highway Administration for seven years, despite requirements that any such changes be reported immediately. Trinity has said that the failure was inadvertent.
While states are ultimately responsible for their highway equipment, the federal agency plays a crucial role, providing guidance on which products are eligible for federal reimbursement dollars. The agency has continued to approve the ET-Plus even as state officials have raised concerns.
The guardrail system works by collapsing when hit head-on, absorbing the impact of a vehicle and guiding the railing out of its path. The rail head or end terminal, which is often marked with yellow and black stripes, is supposed to slide along the guardrail itself, pushing it to the side.
But the redesigned Trinity product narrowed the channel behind the head, which can cause it to jam instead of sliding along the rail, some state officials said. When that happens, the rail can pierce an oncoming vehicle like a harpoon, endangering occupants.
At least 14 other lawsuits blame the guardrails for five deaths and more injuries. Trinity is a major guardrail supplier nationwide. According to internal company documents, the change was expected to save about $2 on every rail head.
A small saving for a lot of people who were devastated by the faulty rails!