A federal jury in Texas this past Monday came down hard against highway guardrail maker Trinity Industries in a whistleblower action brought by one of Trinity’s competitors, a guardrail installer named Joshua Harman. He claimed Trinity cut corners on its guardrails, did not come clean with the government, and ultimately put millions of motorists at serious risk. The jury agreed with Harman’s charges and rendered a $175 million verdict against the company. If it stands, the award automatically will be tripled under federal law and could climb as high as $800 million if other statutory fines and penalties are thrown into the mix.
At the heart of this False Claims Act case is the central allegation that Trinity defrauded the government by selling it a defective and dangerous highway guardrail system. Specifically, Harman’s lawsuit alleges that in 2005 Trinity made a money-saving design change to its ET-Plus rail head, which is the end piece of the guardrail often marked with yellow and black stripes. It is supposed to collapse when hit head-on, absorbing the impact of the vehicle and guiding the railing out of the vehicle’s path. But with Trinity’s design change, which narrowed the width of the piece, what it apparently has done instead is jam up and back fire, sometimes piercing the oncoming vehicle like a harpoon.
But the case was less about this supposed design flaw and the obvious safety issues it raises and more about Trinity’s dealings with the government about the design change. Apparently there were none. The Federal Highway Administration (FHA), which oversees the country’s highway system, requires that such design changes be reported to the agency, properly tested and ultimately approved. The lawsuit claims Trinity failed to comply with this regulatory imperative and implemented its rail head modification on the sly. In doing so, the jury found the company violated the False Claims Act by essentially selling the government a very different product from what the government thought it was purchasing and what Trinity held it out to be.
Beyond the hefty damages award and the broad safety issues implicated by Trinity’s alleged misconduct, what really makes this whistleblower action stand out is the failure of the government to join in. That is what typically happens when these kinds of whistleblower cases make it this far. Here, however, Harmon went after Trinity all on his own as he is entitled to do under the qui tam provisions of the False Claims Act. The government not only stayed on the sidelines. The FHA seemingly saw nothing wrong with Trinity’s behavior, apparently buying into Trinity’s assertion that its rail heads were safe and effective and its failure to disclose the design change inadvertent and of no moment. This despite the concerns raised by many state and federal highway officials about the safety of Trinity’s system, not to mention more than a dozen lawsuits blaming the guardrails for several deaths and injuries.
All this changed after Monday’s verdict. Now the government is demanding that Trinity perform new tests to prove its guardrail system is safe. In a letter the FHA sent Trinity on Tuesday, the agency called on the company to perform new tests in the presence of federal authorities by the end of the month. Should Trinity not comply with this command, the FHA warned it may revoke the company’s eligibility to receive government reimbursement for the systems it sells. Several states are not waiting to see what happens. Missouri, Massachusetts, Virginia, Nevada and, most recently, New Hampshire have all banned the ET-Plus units indefinitely.
At least one prominent legislator is not too happy with the FHA’s belated action. According to Connecticut Senator Richard Blumenthal, “this federal agency is now asking the right questions, but way too late. The more I learn about the supposed watchdog function of these federal agencies, the more concerned I am about how cozy they are with the industry.” Thanks to the efforts of Harmon, whatever government lapses may have been involved here will soon be shored up and a potentially serious threat to the public remedied. Just another shining example of whistleblowers at work under the False Claims Act.
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