Court: Trinity Must Pay $682M in Guardrail Fraud Case; Company Will Contest It

AASHTO Journal, 12 June 2015

U.S. District Court Judge Rodney Gilstrap ruled Trinity Industries must pay $682.4 million in federal fraud damages and civil penalties plus trial expenses to a whistleblower, for how the company altered its widely used highway guardrail product without notifying the Federal Highway Administration.

Trinity promptly vowed to contest the judgment, claiming errors by the trial court and noting that its ET Plus guardrail end terminal has passed FHWA crash tests.

“The company believes the evidence clearly shows that no fraud was committed,” the manufacturer said in a statement issued after the judgment. “Trinity also believes that the trial court made significant errors in applying the federal law … and, therefore, the judgment is erroneous and should be reversed in its entirety.”

Gilstrap, in the Eastern District of Texas, said in a June 9 final judgment that Trinity would have to pay the U.S. government $464.4 million of the total, while $218 million would go to Joshua Harman, the whistleblower who brought the case.

The jury in the case determined in its Oct. 20, 2014 verdict that the government had suffered damages for fraudulent claims by Trinity of $175 million, which under fraud law triples to $525 million. In addition, the judge assessed $138.4 million in civil penalties for “false certifications Trinity made” in claims for payment on its ET-Plus guardrail products.

Of that $663.4 million judgment, the judge awarded Harman 30 percent or $199 million “as his commission,” noting that “the U.S. government opted not to participate in the trial of the case and left the full burden of prosecuting” it to Harman. Gilstrap also awarded Harman $19 million in attorney’s fees and other expenses.

Trinity said the judgment “was expected after post-verdict, court-ordered mediation failed to resolve the numerous legal issues involved.”

The company’s statement also said: “The Federal Highway Administration has repeatedly confirmed that the ET Plus is fully compliant with all applicable federal safety regulations – and that the ET Plus is and has always been eligible for reimbursement under the federal-aid highway program.”

It noted that the ET Plus passed eight crash tests after the trail, in December and January. “Trinity takes all allegations concerning the ET Plus seriously and is committed to roadway safety and will continue to defend its position and protect its reputation,” the company said.

Trinity also said it “intends to file certain post-judgment motions and, depending upon the district court’s rulings on those motions, to appeal to the United States Court of Appeals for the Fifth Circuit.”

To make that appeal, the company said it may also have to post a bond that could equal the amount of the judgment entered plus interest, and said the company expects to obtain that bond on an unsecured basis.

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