AASHTO Journal, 24 October 2014
The Federal Highway Administration has asked guardrail manufacturer Trinity Industries to retest its widely used ET-Plus end terminals, after a federal jury in Dallas found Trinity liable for fraud and awarded the federal government damages of $175 million.
The jury decision came Oct. 20 in a whistle blower suit, which alleged Trinity had not made required disclosures to the FHWA of design changes to the ET-Plus product in 2002–2005.
The company issued a statement that same day indicating it will appeal. “Trinity believes the decision cannot and will not withstand legal scrutiny,” the statement said. “The company strongly believes the courts will affirm its position.”
The next day, Acting FHWA Administrator Gregory Nadeau told Trinity in a letter, “FHWA has concluded that Trinity must perform additional crash testing of the ET-Plus.” Nadeau also said the agency may suspend or revoke the product’s eligibility for federal reimbursement payments to states if the company does not submit a crash testing plan by Oct. 31.
At least 11 states have suspended installations of the ET-Plus product for now.
The American Association of State Highway and Transportation Officials backed the FHWA request that Trinity retest the ET-Plus, to ensure it meets eligibility requirements for use on federal-aid highway projects.
“Safety of the traveling public is of paramount concern to state departments of transportation and AASHTO,” said Bud Wright, AASHTO’s executive director. “We support FHWA’s actions to have the manufacturer re-verify, through appropriate crash-testing procedures, whether the ET-Plus guardrail end treatment meets the requirements to remain eligible for use on federal-aid projects,” he said.
“Additionally, in support of continuously improving safety by our member departments on their roadways, we look forward to the results of an FHWA review of the performance of the ET-Plus guardrail end treatment,” Wright said.
Meanwhile, the credit ratings agency Fitch Ratings warned the final outcome of the case and potential for much higher penalties against Trinity under the False Claims Act could hurt the company’s liquidity at some point.
Trinity is a major supplier of a range of road safety products to states through its Trinity Highway Products unit, while its construction materials unit supplies asphalt rock, sand, gravel and aggregates to road builders.
As the Dallas Morning News explained, that law requires damages to be tripled, and with attorneys fees and other penalties the company could face expenses of $800 million of more.
While Fitch said the case could take years to finally resolve, it said Trinity’s “liquidity would be pressured if cash collateral must be posted during the appeal process, a scenario Fitch believes is possible although the probability is seen as low. Fitch assumes the reasonable worst case scenario as approximately $1 billion.”