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Failure to report claims of injury, death could be costly for Honda

WASHINGTON – Honda Motor said it failed to report more than 1,700 claims of injury or death involving its cars to U.S. regulators, a violation that would be one of the biggest in history and could lead to a fine of $35 million.

In a synopsis of an internal review filed with the National Highway Traffic Safety Administration, Honda on Monday blamed the underreporting on “inadvertent data entry or computer programming errors” that spanned 11 years. NHTSA hasn’t made the audit documents public yet as it continues an investigation.

“The audit identifies difficult facts where we did not meet our obligations,” Rick Schostek, executive vice president of Honda North America, told reporters on a conference call. There will be retraining and staffing changes, he said.

The number of injury-claim omissions exceeded the 1,144 reports Honda filed over the period and primarily came to light because investigations into Takata Corp. air-bag recalls cast doubt on the diligence of automakers to tell the government about potential product defects. In some cases, Honda didn’t share with NHTSA information from police reports.

NHTSA is reviewing Honda’s report as part of an investigation into the company’s failure to report air-bag related deaths and injuries in a timely manner, said Kevin Vincent, the agency’s chief counsel. There’s no timetable for an agency decision, he said in a statement.

“We received Honda’s response to our Special Order and will immediately begin reviewing the documents as part of our ongoing investigation,” Vincent said.

Honda President Takanobu Ito said Tuesday the automaker didn’t share the same understanding as authorities of its obligations under U.S. law. He said local management made many mistakes filing early-warning reports, which NHTSA relies on to help spot potential defects.

Japan’s government is forming groups to oversee air-bag recalls tied to Takata and probe Honda’s U.S. reporting errors, Transport Minister Akihiro Ohta told reporters in Tokyo, where both the companies are based.

Honda said eight of the 1,729 cases involved Takata air-bag inflator ruptures and that NHTSA knew of those incidents.

“I think absolutely they are going to get a $35 million fine,” said Joan Claybrook, a former NHTSA administrator who now advocates for consumer safety.

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

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

If Honda’s admitted lapses – spanning from July 1, 2003, to June 30, 2014 – average at least three days each, the automaker would actually exceed the law’s $35 million maximum civil penalty.

The largest fine NHTSA has levied for lack of compliance with its early-warning reporting system was a $3.5 million penalty last month against Ferrari SpA for failing to file information on alleged defects and three deaths.