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.

 

False Claim Act Helps Hold Trinity Accountable For Cutting Corners!

 

Virginia is suing the guardrail maker Trinity Industries, saying that it sold the state thousands of pieces of potentially dangerous, improperly tested and unapproved products.

We first reported on this a couple of months ago when it was first discovered they have been cutting corners to save money in manufacturing.

 

The suit makes Virginia the first governmental entity to participate in whistle-blower suits against Trinity, which is based in Dallas. The suits were brought on behalf of state and federal governments, but none of those entities, until now, have been plaintiffs.
 

In October, a jury found that Trinity had defrauded the federal government when it did not inform the Federal Highway Administration of changes it made to the guardrail, the ET-Plus, in 2005. The company sold the guardrails to state governments, which, in turn, received federal reimbursement.

 

The jury returned with a verdict for $175 million, which will, by law, be tripled, to $525 million. The highway agency did not participate in the federal case.

 

It is shocking that a company would think they could secretly modify a safety device in a way that may actually pose a threat to Virginia motorists,” he said. “Trinity had an obligation to test and seek approval for its equipment, but instead, they sold the commonwealth thousands of unapproved products that had not been properly tested to ensure they would keep motorists safe.”

Trinity said it would defend itself against Virginia’s lawsuit. “Trinity did not commit fraud against the Commonwealth of Virginia,” said Jeff Eller, a spokesman for Trinity. He said it was “conducting the eight tests requested by the F.H.W.A., which includes the two tests specifically requested by Virginia,” and had “given them all the data they have requested.

 

In addition to the Virginia case, a separate lawsuit was filed by counties in Illinois. Prosecutors in Hamilton and Macon counties sued Trinity in federal court on Nov. 26 on behalf of all Illinois counties, accusing the company of a “fraudulent cover up” and deceptive trade practices, court records show.

 

 

Virginia and more than 30 other states have banned the guardrail products, which are suspected of having a defect that could make them jam. When that happens, the rail can pierce a vehicle. More than a dozen other private lawsuits blame the guardrails for five deaths and more injuries.

 

In October, after the federal jury verdict, Virginia’s Transportation Department threatened to remove the guardrails if Trinity did not do more tests. Soon after, the federal highway agency required further testing.