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Monday, July 20, 2015
Update on Trinity Industries
A Texas federal judge tripled a $175 million False Claims Act verdict against Trinity Industries Inc. on June 9 and assessed more than $138 million in penalties. This comes after a jury verdict in October finding that the company defrauded the U.S. government by selling it defective guardrails. U.S. District Judge Rodney Gilstrap entered final judgment of $663.4 million against Trinity, including a $199 million to whistleblower Joshua Harman. Since the U.S. did not participate in the trial and left the defense solely to the whistleblower, he was awarded the 30 percent commission along with more than $16 million in attorneys’ fees, $2.3 million in expenses and $177,830 in taxable costs, for a total award of $218 million. The government was awarded $464.4 million.
We’ve been perplexed by the government’s position from day one in this case. We pursued this case without any help from the government. In fact, we pursued this case in the face of the government’s hostility.
The judgment stems from an October verdict finding Trinity liable for changing the design of the guardrails without getting approval from the U.S. Federal Highway Administration (FHWA), then misrepresenting them as the earlier, approved version even though they were more dangerous. Harman filed his original False Claims Act (FCA) complaint in 2012, alleging that Trinity falsely claimed its modified ET-Plus guardrail was properly crash-tested.
Trinity contended that the government cannot be defrauded because it was fully aware of the facts at the time the representations in question were made. But Harman argued that Trinity intentionally withheld information about the modifications from the government. Trinity says the FHWA has confirmed that the ET-Plus is fully compliant with federal safety regulations, and has always been eligible for reimbursement under the federal aid highway program. It’s certain that, after post-judgement motions, Trinity will appeal to the Fifth Circuit.
Agents from the U.S. Department of Transportation Inspector General’s office and from the FBI’s Boston office have opened a criminal investigation into Trinity and its relationship with the FHWA, according to Bloomberg and ABC News. The original ET-Plus was designed to absorb and dissipate a collision’s impact by flattening the guardrail and pushing it out into a ribbon that is deflected away from the collision, reducing the impact force felt inside a crashing vehicle.
The FHWA approved that device in 2000. But Harman claimed the company changed that design sometime between 2002 and 2005 and that the new design locks up, folds over and protrudes into the crashing vehicle. He says Trinity never disclosed those changes to the FHWA, nor did it test the units according to FHWA protocols. The FHWA partially approved the guardrails after a 2005 crash test, but it’s unclear whether Trinity used the new ET-Plus for the test.