Guardrail Company Defrauded Government, to Pay $175M

PHOTO: In a wreck in North Carolina, a guardrail pierced the car of N.C. man Jay Traylor, severing his legs.PlayLaw Enforcement Officials
WATCH Verdict Is In: Guardrail Company Defrauded Government

A jury found today that a leading guardrail company made false statements to the government relating to a nearly decade-old modification that critics say made the guardrails more dangerous for motorists across the country, and ordered the company to pay $175 million in damages.

The jury in Marshall, Texas found in favor of Josh Harman, a competitor of guardrail company Trinity Industries, who sued the company over what he called fraudulent behavior.

At the center of the trial, which began Monday, were modifications made by Trinity Industries in 2005 to the design of guardrail end terminals used alongside many roads from coast to coast, and the company’s failure at the time to disclose the changes to the federal government or any state transportation departments.

The modified guardrail, called the ET-Plus, was the subject of an ABC News “20/20” investigation in September that looked into allegations from crash victims that the modified guardrail malfunctioned when struck from the front by their vehicles’. Rather than ribboning out and absorbing the impact as designed, the guardrails “locked up” and speared straight through the cars, severing the motorists’ limbs in some cases.

In an internal email obtained by ABC News, a company official said that one particular design change – the shrinking of a metal piece in the end guardrail terminal from five inches to four -- would save the company $2 per guardrail, or $50,000 a year. The company also admitted that it had “inadvertently omitted” documentation that was required to be turned over to the Federal Highway Administration (FHWA) about the change.

Harman alleged the guardrail maker sold states a product that was different from the one they believed they were getting.

Attorneys for Harman used the $2 email as evidence against Trinity as well as crash test videos produced by Trinity of a different configuration for the guardrail system – which weren’t disclosed to the government – that Harman’s team said showed the end piece failing. Trinity maintained those crash test videos were for an experimental system that was never produced for real world and didn’t need to be turned over for review.

Harman’s attorneys said after the verdict they were “pleased” that the jury “after hearing evidence for just four days and deliberating only three hours… saw the plain truth that the FHWA has clearly been defrauded and that fraud has exacted the ultimate toll in claiming lives of those unnecessarily endangered by Trinity’s secretly modified guardrail end terminals.”

One of Harman's attorneys, George Carpinello, said that the government will receive a majority of the damages, but more than a quarter could go to Harman.

In their closing arguments today, attorneys for Trinity said the company had been the target of a “grand conspiracy” constructed out of “baseless allegations.” An attorney for the company, Ethan Shaw, noted that even after the FHWA learned of the modification in 2012, it was repeatedly approved for use on the nation’s highways.

Trinity told ABC News for its original report that the aftermath pictures of the fatal and serious accidents don’t prove anything – that each accident has its own unique circumstances and that their product has a proven record of safety. Trinity has a “high degree of confidence in the performance and integrity” of the ET-Plus system, the company said.

After the verdict, the company said it "respects the jury's decision."

"However, Trinity believes the decision cannot and will not withstand legal scrutiny. The Company strongly believes the courts will affirm its position," Trinity said.

In recent months, four states have suspended use of the modified guardrail system as they investigate further. Virginia, for instance, has given Trinity until the end of the week to prove to them through new crash tests and crash test data that the system is safe.

Editor's Note: A previous version of this report misidentified the state that had given Trinity a deadline for proving the guardrails' safety.