United States Ex Rel. Harman v. Trinity Industries Inc.
2017 U.S. App. LEXIS 18902
| 5th Cir. | 2017Background
- Trinity manufactured the ET-Plus guardrail end terminal under license from Texas A&M Transportation Institute (TTI); TTI designed and tested the product under NCHRP Report 350 standards adopted by FHWA.
- In 2005 Trinity changed the extruder head (notably narrowing the guide channel from 5" to 4") and submitted crash-test materials; a drawing of some fabrication changes was allegedly omitted from the report sent to FHWA.
- Relator Joshua Harman brought a qui tam False Claims Act suit alleging Trinity made false certifications of Report 350 compliance that induced states to seek federal reimbursement; DOJ declined to intervene and FHWA issued a June 17, 2014 memorandum stating the 4" units were crash-tested in 2005 and remained eligible for federal reimbursement.
- After a second jury trial found for Harman, the district court entered a large damage award; Trinity sought judgment as a matter of law and a new trial, arguing among other things that the allegedly false statements were not material to the government’s payment decision.
- The Fifth Circuit reversed and rendered judgment for Trinity, holding the FCA claim fails for lack of materiality because FHWA—fully aware of Harman’s allegations—expressly affirmed continued eligibility and reimbursement, and post‑trial independent testing confirmed the units’ representativeness and crashworthiness.
Issues
| Issue | Plaintiff's Argument (Harman) | Defendant's Argument (Trinity) | Held |
|---|---|---|---|
| Falsity: Did Trinity make false statements certifying Report 350 compliance? | Trinity failed to disclose 2005 head/fabrication changes so post‑2005 certifications were false. | The modified head was crash‑tested in 2005; any omitted drawing was inadvertent and TTI reviewed/approved changes. | Court did not decide definitively; found falsity question close but unnecessary to resolve given materiality ruling. |
| Scienter: Did Trinity act knowingly or recklessly? | Profit motive and concealment (emails, nondisclosure) show intent to deceive. | Trinity reasonably relied on TTI’s engineering judgment; omission was inadvertent, not reckless. | Court found scienter questionable and that reasonable reliance on ambiguous Report 350 undercuts inference of reckless intent. |
| Materiality: Were the alleged misstatements material to government payment decisions? | States relied on certifications; post‑verdict state hesitation shows materiality. | FHWA knew of allegations, issued an explicit memorandum affirming eligibility, and continued reimbursements—strong evidence of non‑materiality. | Held for Trinity: FHWA’s express, informed decision to continue reimbursement is "very strong evidence" that misstatements were immaterial; FCA claim fails. |
| Post‑trial evidence/new trial: Do post‑trial tests and surveys entitle Trinity to relief? | Harman argued post‑trial testing is not dispositive; issues of fact remain. | Trinity argued post‑trial tests and nationwide sampling confirmed units and rebutted Harman’s proof. | Court did not rely on Rule 60 grounds; treated post‑trial testing as confirmatory of FHWA’s view and rejected district court’s contrary inferences. |
Key Cases Cited
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) (materiality standard under the FCA is demanding; government payment despite knowledge is strong evidence of non‑materiality)
- United States ex rel. Longhi v. United States, 575 F.3d 458 (5th Cir. 2009) (FCA falsity and materiality standards; natural‑tendency test)
- United States ex rel. McBride v. Halliburton Co., 848 F.3d 1027 (D.C. Cir. 2017) (government investigation and continued payment supports immateriality)
- United States ex rel. Campie v. Gilead Sciences, Inc., 862 F.3d 890 (9th Cir. 2017) (continued payment after revelation can still raise materiality questions at pleading stage where government knowledge/timing is unclear)
- United States v. Sanford‑Brown, Ltd., 840 F.3d 445 (7th Cir. 2016) (agency re‑examinations that conclude no enforcement supports immateriality)
- United States ex rel. Kelly v. Serco, Inc., 846 F.3d 325 (9th Cir. 2017) (government acceptance of noncompliant submissions and payment undermines FCA materiality)
- United States ex rel. Petratos v. Genentech Inc., 855 F.3d 481 (3d Cir. 2017) (agency continued approvals and lack of enforcement weigh against materiality)
- D’Agnostino v. ev3, Inc., 845 F.3d 1 (1st Cir. 2016) (agency’s continued reimbursement after allegations casts doubt on materiality)