NHTSA Fines Honda $70 Million for Not Reporting Death and Injury Claims Properly

Federal safety regulators fined Honda Motor Co. $70 million — the maximum allowed — for failing to report death, injury and other safety-related claims involving its vehicles in a timely matter.

The National Highway Traffic Safety Administration fine, which has two components, is the largest ever levied on an automaker by the safety agency.

“We cannot tolerate an automaker failing to report to us any safety issues,” said U.S. Transportation Secretary Anthony Foxx. “If we don’t know about these problems, we are missing a crucial piece in the recall process.”

Late last year, Honda acknowledged failing to tell the NHTSA about 1,729 incidents involving injuries or deaths in its automobiles.

The Japanese automaker blamed the lapse on data-entry and computer-coding errors, as well as a “narrow interpretation” of what incidents necessitated a report to regulators.

Honda said it began investigating the errant reports, stretching from July 2003 to June 2014, after a Honda employee noticed reporting discrepancies. The company then hired a third-party firm to audit the data.

While regulators have discussed the case with the Department of Justice in advance of a possible criminal investigation, Foxx declined to say whether a probe has been launched.

He said Honda’s explanation for failing to report safety claims was not a factor in the combined fine.

“Good intentions don’t help the automaker in a situation like this,” Foxx said. “We need the industry to be vigilant and do everything they can to ensure that we are getting timely information.”

Just a single violation could lead to a fatality, Foxx said.

A Honda executive said the company had addressed the problem.

“We have resolved this matter and will move forward to build on the important actions Honda has already taken to address our past shortcomings in early-warning reporting,” said Rick Schostek, Executive Vice President of Honda North America Inc. “We continue to fully cooperate with NHTSA to achieve greater transparency and to further enhance our reporting practices.”

Honda has agreed to pay the fine, and signed a Consent Order that gives NHTSA increased oversight over what it reports and mandates third-party audits to ensure that all required reporting is completed now and into the future, according to NHTSA Administrator Mark Rosekind.

Regulators believe that some of the unreported cases may involve defective Takata air bags that can deploy with too much force and send metal shrapnel into the passenger cabin. They are linked to multiple deaths and are responsible for recalls of more than 20 million vehicles globally.

Last month, as the scandal grew, the president of Takata Corp. resigned. Stefan Stocker, named president only 18 months ago, was replaced by Shigehisa Takada, grandson of the company’s founder. Takata is one of the world’s largest manufacturers of auto safety restraint systems.

The vehicles affected include those made by Honda — Takata’s biggest customer — as well as Nissan, Subaru, Ford, Chrysler, BMW, Mitsubishi and Mazda.

Because federal law limits the maximum fine NHTSA can impose to $35 million, Honda’s penalty was split in two. The first civil penalty is for its failure to report the death and injury claims. The second $35 million is from its failure to report certain warranty claims and claims under customer-satisfaction campaigns throughout the same time period that could signal safety defects.

Transportation Department officials have asked Congress to raise the fine limit to $300 million.

“We need to increase that cap, and only Congress has the ability to do that,” said Rosekind. Raising the limit tells the “industry to obey the law or pay a steep price.”

Safety advocates are pushing for a criminal investigation.

“$70 million is too small a price to pay,” said Clarence Ditlow, Executive Director of the Center for Auto Safety. “How many deadly defects are concealed in the 1,729 death and injury claims not reported by Honda? The company must waive all statutes of limitations at the state and federal level over potential recalls or lawsuits arising out of defects concealed in the unreported claims.”

Under fire from Congress for not detecting safety defects quickly enough, including a deadly ignition switch in older General Motors cars that is linked to at least 42 deaths, NHTSA is stepping up its enforcement action.

General Motors was hit with a $35 million fine in May, after it was revealed the company knew about the fatal ignition-switch failures for more than a decade before reporting them to the federal agency.

Last year, NHTSA also fined South Korean automaker Hyundai $35 million for failing to issue a recall in a timely manner and Italian automaker Ferrari $3.5 million for failing to report incidents that included three fatalities.

The increased attention on auto safety contributed to the record recall of 60 million vehicles in the U.S. last year, about double the previous record set in 2004.

This article appeared in print in the January 9th, 2015 edition of Hamodia.