Honda Failed To Report More Than 1,700 Death And Injury Claims, Could Face Record $35M Fine

Honda’s issues with the National Highway Traffic Safety Administration aren’t looking any better after the manufacture announced that it failed to report more than 1,729 claims of injury or death to the regulators. And that violation could lead to the biggest fine in the history of NHTSA, totaling more than $35 million.

The revelation comes as Honda officials provided NHTSA with an overview of an internal investigation into possible inaccuracies in providing information for early warning reports, Bloomberg Businessweek reports.

In its synopsis of the internal review, Honda blamed the underreporting on “inadvertent data entry or computer programming errors” that spanned 11 years.

In all, Honda’s audit found more than 1,144 omissions of injury-claims from July 1, 2003 to June 20, 2014. Eight of the cases involved Takata airbag inflator ruptures.

“The audit identifies difficult facts where we did not meet our obligations,” Rick Schostek, executive vice president of Honda North America, tells Businessweek.

Schosteck also says the company used an overly narrow interpretation of “written notice,” and that information from third parties, such as from police reports or private investigators hired by the company, wasn’t considered subject to the law.

Honda President Takanobu Ito said the manufacturer’s reporting inaccuracies occurred in part because of fact that automakers didn’t share the same understanding as authorities of its obligations under U.S. law.

He tells Businessweek that local management made many mistakes filing early warning reports.

Officials with the car maker say they have corrected programming errors and will voluntarily include both written and oral claims of injuries and death in future early warning reports.

Car manufacturers are required under law to report death and injury claims to NHTSA. Those figures allow the regulatory agency to identify potentially fatal and dangerous defects.

The internal report came as a response to criticism from consumer safety groups over Honda’s lack of reporting. The groups claimed that Honda’s reporting inaccuracies hampered regulators ability to spot safety defects, leaving dangerous vehicles on the roadways.

In early November, NHTSA announced it would begin a third-party audit into Honda’s reporting practices. The regulators have yet to make the report they received from Honda on Monday public, citing the ongoing investigation.

Issues with Honda’s reporting came to light over the Takata airbag defect and subsequent recalls. So far four of the deaths tied to the recall occurred in Honda vehicles.

Former NHTSA administrator Joan Claybrook tells Businessweek that she’s confident Honda will receive a $35 million fine for its reporting issues.

“It’s quite shocking Honda would behave this way. They’ve put their company reputation at risk,” she says.

Car manufacturers face fines of $7,000 per violation per day for not abiding by the Transportation Recall Enhancement, Accountability and Documentation Act (TREAD), which requires companies to tell regulators about customer injuries, lawsuits, warranty claims and complaints.

So for Honda, the company’s lapses, which average at least three days each, could exceed the law’s $35 million maximum civil penalty.

To date, the largest fine NHTSA has levied for lack of early warning reporting compliance was a $3.5 million given to Ferrari just last month.

Still, some industry officials believe that Honda’s cooperation with NHTSA regarding the early warning reporting failures could mean the company receives a less severe fine.

“It is certainly possible that Honda’s cooperation and proactive efforts, and agreement to institute certain changes, will mitigate the magnitude of this fine,” Neil Steinkamp, a managing director at Stout Risius Ross who studies warranty and recall issues, tells Businessweek. “More importantly, this is likely to serve as a significant warning to other automakers.”

Honda May Face Record U.S. Fine Over Unreported Deaths [Bloomberg Businessweek]

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