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From Products Liability Law Daily, November 25, 2014

Takata airbag failures not disclosed in Honda’s TREAD Act reports

By Pamela C. Maloney, J.D.

According to the results of a third-party audit of its TREAD Act reporting, Honda did not report to the National Highway Traffic Safety Administration (NHTSA) a total of 1,729 claims or notices, including eight related to Takada airbags, regarding injuries or deaths. The report concluded that the reporting failures, which occurred between July 1, 2003, and June 30, 2014, were inadvertent data entry and computer programming errors. The eight unreported claims related to Takata airbags were, according to Honda, a “separate and distinct matter from NHTSA’s current Takata airbag inflator rupture investigation. (Honda Press Release, published November 24, 2014, and printed November 25, 2014).

TREAD Act requirements. The TREAD Act requires vehicle manufacturers to report to NHTSA, on a quarterly basis, a wide variety of information that could indicate a potential safety defect. The information required in these reports, also known as Early Warning Reports (EWRs), includes a report on any death or injury incident that is known to the manufacturer pursuant to a written claim or a written notice which contains any allegations that the injury or death might have been caused by, or related to, a possible defect. These claims are received by manufacturers from customers, their representatives, or other sources. Death and Injury EWRs to NHTSA are required to include certain specified information about the incidents. Oral claims and notices of death or injury do not carry the same reporting requirements.

The TREAD Act also requires manufacturers to provide aggregate information about warranty claims it has paid, property damage claims (regardless of whether paid or denied), customer complaints (oral and written), and field reports. Certain field reports are required to be provided in hard copy, as well.

Timeline of reporting failures. According to the press release, a Honda associate first recognized an issue related to the recording of a verbal date code in the legal file management system in 2011 and believed that it could have affected the accuracy of the EWR reports. There apparently was no follow-up until early January 2012 when NHTSA made Honda aware of its under-reporting EWRs. Honda began looking into the issue at that time, but did not take conclusive action until September 2014 when it began a third-party audit to determine the full extent of its under-reporting. Honda notified NHTSA of the discrepancies in its Early Warning Reporting in October 2014 and it briefed NHTSA on the matter on October 17, 2014. On November 3, NHTSA issued a Special Order to Honda requesting information relating to Honda’s EWRs. The press release provides an overview of that information. Honda has acknowledged that it lacked the urgency needed to correct its problems on a timely basis.

Takada air bag inflator ruptures. Honda explained that even though the eight Takata airbag inflator ruptures were not included in Honda’s EWRs, these claims, which included one fatality, were disclosed to NHTSA in detail by other means and, in the case of the fatality, NHTSA had received all the relevant information more than two months before the quarterly report was due.

Key findings of audit. A review of the data indicated that the reporting errors were attributable to inadvertent data entry and computer programming errors. Additionally, the audit found a delay between the time that Honda first became aware of possible discrepancies in its TREAD reporting and the full investigation and reporting of the issue. The data entry errors involved a failure to input a “written claimed received” date and the programming errors were a result of the improper mapping of all of Honda’s internal component part sub-codes to a NHTSA code. Another group of reporting failures was traced to Honda’s use of a narrow interpretation of what constituted “written notice” under the TREAD Act.

Finally, in reviewing the reporting of warranty and property damage claims, Honda determined that regular warranty claims had been reported properly to NHTSA. However, certain special warranty claims, including a “good will” warranty and extended warranties for certified pre-owned vehicles and under third-party service contracts, were not properly reported.

Corrective measures. Honda announced that it has or will implement the following actions to ensure that these errors do not recur:

  • Honda has already corrected the computer programming issue and mapped the complete universe of Honda's codes to corresponding NHTSA component codes.

  • Honda will voluntarily include both written and oral claims of injuries or death in all future Early Warning Reports.

  • Honda will implement full training regarding the data entry process, including refresher training with detailed written guidelines.

  • Honda is in the process of enhancing its oversight of the Early Warning reporting process.

  • Honda will make organizational and staffing level changes in the functional areas responsible for its Early Warning reporting.

  • Honda will reprogram warranty and property claims to the EWR reporting system so that all warranty claims are included, and property damage reports will be included whether they are paid or denied.

Companies: Honda North America

MainStory: TopStory NHTSANews MotorEquipmentNews

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