Jury Says Trinity Industries, a Highway Guardrail Maker, Defrauded US

Trinity Industries, the highway guardrail maker accused of selling systems that can malfunction during crashes and slice through cars, was found by a jury on Monday to have defrauded the federal government.

The case was brought under the False Claims Act by Joshua Harman, a competitor who discovered that the company made changes in 2005 to its rail head - the flat piece of steel at the front of the system - without telling the Federal Highway Administration, as is required. The company sold the guardrails to state governments that, in turn, received federal reimbursement.

A Texas jury on Monday awarded $175 million that will, under federal law, be tripled. The money will be split between the United States Treasury and Mr. Harman, who, although a competitor to Trinity, is considered a whistle-blower. After discovering the design change during litigation in 2011, he filed the case on behalf of the government.

'We are pleased the jury recognized what has been overlooked for three years,' said Nicholas Gravante of Boies, Schiller & Flexner, one of the lawyers representing Mr. Harman.

In a statement, Trinity suggested it would appeal. 'Trinity believes the decision cannot and will not withstand legal scrutiny,' the statement said. 'The company strongly believes the courts will affirm its position.'

Beyond the jury verdict itself, the judge hearing the case will determine exactly how many 'false claims' apply in the case to Trinity. Statutory penalties for each instance of a false claim range from about $5,000 to $12,000, and Trinity would be responsible for such payments.

At the heart of the legal dispute was a design change Trinity made to its rail head, the ET-Plus, in 2005, which could cause a guardrail system to jam up during a crash and transform the railing into a spear, according to some state regulators and the federal lawsuit. Those changes were not disclosed to the Federal Highway Administration for seven years, despite requirements that any such changes be immediately reported.

While states are ultimately responsible for their highway equipment, the federal agency plays a crucial role, providing guidance on which products are eligible for federal reimbursement dollars. The agency has continued to approve the ET-Plus for this purpose, even as state officials have raised concerns. The agency did not immediately comment on the verdict.

The guardrail system works by collapsing like an accordion when hit head on, absorbing the impact of the vehicle and helping the railing curl out of its path. The so-called rail head or end terminal, which is often marked with yellow and black stripes, is supposed to slide along the guardrail itself, pushing it to the side.

Instead, the redesigned Trinity product narrowed the channel behind the head, which can cause it to jam instead of sliding along the rail, some state officials said. When that happens, the rail can pierce directly into a vehicle like a harpoon, endangering the people inside.

At least 14 other lawsuits blame the guardrails for five deaths, and more injuries. Trinity is a major guardrail supplier nationwide. According to internal company documents, the change was expected to save about $2 on every rail head. And Mr. Harman alleged that the change made the guardrails impossible to reuse.

Trinity has said that it does not believe the guardrails pose a threat to safety and that the failure to disclose the design changes to the Federal Highway Administration was accidental.

But three states - Missouri, Massachusetts and, most recently, Virginia - have banned further purchase of the ET-Plus, citing safety concerns. And a fourth, Nevada, prohibited them in January, citing Trinity's failure to disclose the change when it was made.

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