$663 Million in Penalties for Maker of Guardrail

A Texas federal judge handed down a $663 million judgment Tuesday against Trinity Industries, the guardrail maker accused of producing a faulty product that can jam and spear through vehicles.

The judgment stems from the trial held last year in a whistle-blower lawsuit filed by Josh Harman, a competitor who discovered in 2011 that Trinity had made a critical change to the dimensions of its ET-Plus guardrail in 2005, but failed to tell federal regulators as required by law.

The jury found the company liable for defrauding the Federal Highway Administration and awarded $175 million, which, under the False Claims Act, was tripled to $525 million. On Tuesday, the judge ordered Trinity to pay additional civil penalties of $138 million — amounting to $8,250 for each of 16,771 false certifications made to the government and other entities to get payment for guardrails. In addition, nearly $19 million in lawyers’ fees and expenses were awarded to Mr. Harman’s legal team.

Judge Rodney Gilstrap of United States District Court wrote that the plaintiffs had “introduced substantial evidence” showing that Trinity “made the decision to modify the ET-Plus, conceal such modifications, and falsely certify that the ET-Plus units had been accepted” by the highway agency.

Mr. Harman, who brought the case on behalf of the federal government, was awarded 30 percent of the award, or about $199 million, given, the judge wrote, “that the U.S. government opted not to participate in the trial of this case and left the full burden” on the whistle-blower.

“This is just a steppingstone,” Mr. Harman said in a phone interview, emphasizing that his goal in the case was not to make money, but for Trinity to recall the ET-Plus. “People are dying.”

A Trinity spokesman, Jeff Eller, said that the company felt that “no fraud was committed” and that the court made “significant errors in applying the federal law to the plaintiff’s allegations.”

“The judgment is erroneous and should be reversed in its entirety,” Mr. Eller said in a statement on Tuesday, suggesting that the company would appeal the decision.

Last year, after the jury verdict in the whistle-blower case, dozens of states banned the ET-Plus, and Trinity temporarily halted sales of the guardrails. Though the verdict dealt with fraud, the trial offered a public airing of safety concerns about the product, which Trinity has repeatedly disputed.

At least 14 lawsuits blame the guardrails for causing injuries in crashes, including five deaths.

Judge Gilstrap ordered both sides into mediation after the verdict, in an attempt to see if a settlement could be reached before issuing his final judgment. But those talks recently broke down, prompting the judge to move ahead with his decision.

Highway administration authorities said they learned about Trinity’s design changes in 2012 from Mr. Harman, but the agency did not take action. (While states are ultimately responsible for choosing highway equipment, the Federal Highway Administration plays a key role in approving products for federal reimbursement.)

The day after the jury returned its fraud verdict in October, the highway agency instructed Trinity to perform more crash tests on the equipment. The agency had previously defended the guardrail unit for more than two years, even after learning Trinity had not disclosed the design change.

In March, the highway agency announced that the company’s guardrails had passed a series of eight crash tests, including a final test in which the guardrail bent and smashed in the driver’s side door of the test vehicle. The agency said on Tuesday that it would evaluate the judge’s opinion.

The Justice Department and the Transportation Department inspector general’s office have begun a joint criminal investigation into Trinity and its dealings with the Federal Highway Administration, according to people with knowledge of the case.

“The fact that a federal criminal investigation is pending is hardly surprising given the strength of the evidence we presented at trial,” said Nicholas Gravante of Boies, Schiller & Flexner, a lawyer representing Mr. Harman. “The evidence of fraud in this case could not have been more compelling.”

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