Consumer Fraud

Verdict in whistleblower guardrail case could be breakthrough for False Claims Act suit

guard rail KCPQ TV image 435x244 Verdict in whistleblower guardrail case could be breakthrough for False Claims Act suitJust because the U.S. government fails to intervene in a False Claims Act case doesn’t mean the lawsuit can’t prevail in court, a fact demonstrated by the $175-million verdict a Texas federal jury handed down this week in a whistleblower case against the nation’s leading guardrail manufacturer.

According to the Wall Street Journal, the verdict in whistleblower Josh Harman’s case against Trinity Industries Inc. should serve as a “False Claims Act wake-up call” to companies that contract with or in other ways do business with federal agencies and programs, signaling that even false claims lawsuits without the government’s backing can be successful.

Mr. Harman, a Virginia guardrail installer, sued Trinity Industries on behalf of the U.S. government in 2012, under the qui tam or “whistleblower” provisions of the False Claims Act, which allow private citizens to sue on behalf of the federal government and share 15 to 30 percent of any recovery.

The federal government can choose to intervene in a False Claims Act lawsuit, effectively taking it over, but the lawsuit can proceed without the government’s involvement. According to the Wall Street Journal, “Most penalties won are in cases the government gets involved in, making [the Harman] verdict even more staggering …”

Mr. Harmon alleged that Trinity Industries secretly changed its government-approved ET-Plus guardrail design to save money. Those modifications, he claimed, caused the guardrail to pierce vehicles like a giant spear rather than rolling back away from the vehicle and slowing it to a stop. The guardrails were used on highways in nearly every state.

At least a dozen cases of vehicular impalement by Trinity’s modified ET-Plus guardrails have occurred in recent years, killing or maiming the vehicle’s occupants.

The jury agreed with Mr. Harman and ordered Trinity to pay $175 million in restitution. That final recovery, however, will triple to $525 million under federal whistleblower law. The Wall Street Journal notes that the damages will likely continue to swell as legal proceeding continue against the company.

One False Claims Act attorney told the Wall Street Journal that the verdict in Mr. Harman’s qui tam case “will certainly encourage relators to bring more and more False Claims Act cases,” predicting that more of the cases will proceed to trial now than before.

Sources:

Wall Street Journal