NEW YORK, June 9 (Reuters) - A U.S. judge on Tuesday ordered Trinity Industries Inc to pay $663.4 million after a federal jury found it liable for failing to tell a government highway agency about changes made to a widely used guardrail system that raised safety concerns.
U.S. District Judge Rodney Gilstrap in Texas tripled the $175 million jurors had unanimously ordered Trinity to pay last October, to $525 million, and added $138.4 million in civil penalties over its ET-Plus guardrail head system. Gilstrap also rejected the company’s bid to overturn the original verdict.
A spokesman for Trinity, Jeff Eller, said the company believes that no fraud had been committed and that it will seek to reverse the judgment.
In October, a federal jury in Marshall, Texas, found Trinity liable of violating the False Claims Act for failing to tell the Federal Highway Administration about changes it made in 2005 to ET-Plus rail heads, which are found at the ends of guardrails.
Plaintiff Joshua Harman, a guardrail installer and Trinity competitor, said in his 2012 lawsuit that the changes could cause guardrails to pierce vehicles rather than absorb their impact, endangering occupants. The U.S. government declined to intervene in the case, leaving Harman to pursue it on his own.
Harman said that Trinity did not disclose the changes or properly test the modified units, and that the company falsely certified that the ET-Plus was approved for federal reimbursement 16,771 times.
Penalties for false certification under the False Claims Act can range from $5,500 to $11,000 per violation. In Tuesday’s order, Gilstrap said he had chosen a mid-range figure of $8,250 per violation, bringing the total penalty to $138.4 million.
Under the False Claims Act, the majority of the $663.4 million will go to the U.S. government. But, Gilstrap on Tuesday awarded Harman $218 million, which includes 30 percent of the overall judgment and nearly $19 million in attorney fees, saying the U.S. government’s decision not to participate in the trial “left the full burden of prosecuting” that case to Harman and his attorneys.
A lawyer for Harman, George Carpinello of Boies Schiller & Flexner, said Tuesday’s order was good “not just for my client, but the traveling public.”
The verdict in Harman’s lawsuit prompted several states to ban use of the ET-Plus. In February, following concerns about the guardrail system, federal regulators announced that the system had passed a new round of crash tests. (Reporting by Jessica Dye; Additional reporting by Jonathan Stempel; Editing by Jonathan Oatis and Lisa Shumaker)