U.S. top court declines to take up Trinity Industries guardrail case

FILE PHOTO: The building of the U.S. Supreme Court is seen in Washington, U.S., June 26, 2017. REUTERS/Yuri Gripas (Reuters)

By Nate Raymond

(Reuters) - The U.S. Supreme Court on Monday turned away a whistleblower's bid to revive a $663.4 million judgment against Trinity Industries Inc in a lawsuit accusing the company of failing to tell a federal agency about changes made to a guardrail system that raised safety concerns.

The justices left in place a 2017 decision by the New Orleans-based 5th U.S. Circuit Court of Appeals overturning a 2014 verdict by a federal jury in Texas that found Trinity had defrauded the government.

Joshua Harman, a competitor of Dallas-based Trinity, filed the lawsuit in 2012 under the False Claims Act, which allows whistleblowers to sue companies on the government's behalf to recover fraudulently paid-out taxpayer money.

"We are disappointed, but believe the true objective of the case has been achieved. Because of Joshua Harman's efforts, there is more federal and state scrutiny than ever before to ensure the safety of our nation's roads and highways," said Nicholas Gravante, one of Harman's lawyers.

Harman had argued that the case presented an opportunity for the top court to clarify to what extent the government's decision to keep paying a company suspected of fraud meant any wrongdoing was immaterial to its payment decisions.

The Supreme Court's action "confirms the company's long-standing belief that no fraud was committed," Trinity said in a statement.

In his lawsuit, Harman alleged that Trinity failed to tell the government about a design change it made in 2005 to its ET-Plus guardrails that could cause vehicles to be speared when struck, potentially causing severe injury or death to occupants.

Jurors had found Trinity liable for defrauding the Federal Highway Administration, which reimburses states for installing guardrails meeting its standards, and awarded $175 million, which was tripled to $525 million under the False Claims Act.

In 2015, U.S. District Judge Rodney Gilstrap in Marshall, Texas added $138.4 million in civil penalties, or $8,250 for each of 16,771 alleged false certifications to obtain payments.

Harman was awarded $199 million, or 30 percent, of the total judgment. The judge also awarded $19 million in attorneys' fees and costs.

But in 2017, the 5th Circuit said because the agency continued reimbursements for the ET-Plus with "full knowledge" of Harman's claims, he could not show any misstatements by Trinity materially affected the government's payment decisions.

(Reporting by Nate Raymond and Lawrence Hurley; Editing by Will Dunham)