A federal jury last week found Trinity Industries of Dallas Texas defrauded the federal government by changing the design of a component it manufacturers for highway guard rail systems without notifying the Federal Highway Administration. The jury awarded damages of $175,000,000, but since the suit was brought under the federal False Claims Act, that award will be tripled to $525,000,000.
The component at issue is called a rail head or end terminal. It fits over the beginning of a section of guardrail and is designed to peel the railing away from the support posts in the event of a head-on collision and push it to the side of the automobile. After the original design was approved by the government, Trinity Industries modified the end terminal, calling it the ET-Plus but did not notify authorities of the change. The lawsuit alleges the new piece can jam, causing the guard rail to penetrate the interior of the vehicle and cause serious injury to the driver and passengers. So far, 5 deaths and multiple injuries are attributed to the redesigned ET- Plus component.
Trinity is the largest supplier of highway guard rails in the world. In testimony at trial, it admitted the redesigned component saved it about $2.00 for each piece. So far, Missouri, Massachusetts, Nevada and Virginia have barred Trinity from doing business within their borders. Other states, including Vermont, are considering action against the company. This week, the trial judge ordered the two sides to mediate a settlement to their dispute and report back to the court before the end of the year.
When the case is finally resolved, the money will be divided between the federal government and Joshua Harmon, a competitor who brought suit on behalf of the government as a whistle blower. Harmon has said all along that the suit is not about the money; it’s about the safety of the motoring public. He wants Trinity to replace all its guard rails. Trinity in turn says there is nothing wrong with its products. It estimates replacing all the guard rails it has manufactured and installed world wide would cost the company over a billion dollars.
The federal mediator will have a difficult task getting the parties to the suit to agree to a settlement that each is comfortable with. In the meantime, states like Oklahoma and New Orleans have stopped installing new Trinity guard rails, and will be looking at this lawsuit to determine their next course of action.