MARSHALL, Texas (CN) – Trinity Industries must pay $682 million for failing to tell the federal government of dangerous changes it made to its guardrails, a federal judge ordered Tuesday in a whistleblower lawsuit.
U.S. District Judge Rodney Gilstrap tripled the $175 million a jury awarded in October 2014.
Joshua Harman sued the Dallas-based company under the False Claims Act in 2011, claiming that in 2005 Trinity changed the design of its rail head – the steel sheet that keeps vehicles from going off the road – without telling Federal Highway Administration officials. Trinity then sold the guardrails to states that received federal reimbursement.
Harman claimed the design changes to the rail head, known as the ET-Plus, could transform the guardrail into a spear during a crash , rather than pushing cars away from the rail.
Judge Gilstrap also assessed $138 million in civil penalties – $8,250 for each of the 16,771 false certifications Trinity made for false payment claims. Trinity was also ordered to pay $19 million in attorneys’ fees and expenses.
Harman will receive $218 million – 30 percent of the award – while the federal government will get $464 million.
Gilstrap’s final judgment comes after court-ordered arbitration failed.
Trinity spokesman Jeff Eller said the company will appeal to the Fifth Circuit.
“The company believes the evidence clearly shows that no fraud was committed,” the company said in a statement.
“Trinity also believes that the trial court made significant errors in applying the federal law to Mr. Harman’s allegations and, therefore, the judgment is erroneous and should be reversed in its entirety.”
Trinity said the FHA “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 federal aid programs.
The company claims the Fifth Circuit expressed its concerns with the trial court proceedings in a previous mandamus order, that Trinity has “strong” legal arguments that it made no false claims to the government because the FWA had said that the guardrail system complied with federal safety standards.
Days after the October jury verdict, Trinity announced it would stop selling ET-Plus . Trinity said at the time it would perform additional crash testing on the guardrails at the request of the FHA, in support of the agency’s “ongoing evaluation” of the system.
Gregg Mitchell, president of Trinity subsidiary Trinity Highway Products, said stopping the sales was “the right thing to do.”
Primarily know as a railcar manufacturer, Trinity receives significant revenue from guardrail system sales. They generated approximately $33 million in revenue for the first three quarters of 2014.
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