Over the past decade major car safety scandals dealing with issues such as faulty ignitions, unintended acceleration and defective airbags have caused hundreds of unnecessary deaths and many more injuries. In response to the public’s outrage, Congress passed the Motor Vehicle Safety Whistleblower Program. The Senate report for the program can be viewed here. This groundbreaking program has been greatly underpublicized and it deserves more attention, especially within the industry.
The program is largely modeled on the highly successful SEC Whistleblower Program. That program, created in response to the financial crisis shenanigans, has resulted in a huge uptick in the number of tips the SEC receives each year regarding financial frauds. As of this year, the SEC has recovered almost $1 billion through the program and likely deterred countless other frauds. Whistleblowers have done very well under the program as well. As of 2017, they have collectively received over $150 million for their information and efforts since inception.
Under the program, an employee or contractor of a motor-vehicle manufacturer, parts supplier or dealership can report violations of federal vehicle-safety laws and receive from 10 percent to 30 percent of any monetary sanction over $1 million that the government recovers based on that information. Whistleblowers can expose any violation, even ones that occurred before the program’s creation, that originated in the US or abroad, as long as the vehicles or components were sold in the US. Whistleblowers are also protected from employer retaliation and, perhaps more importantly, can remain anonymous if they are represented by an attorney.
The program is relatively new – it’s only been in force since 2016. The program is administered by the National Highway Transportation Safety Administration (NHTSA) I’m not aware of any public cases that the NHTSA has pursued or paid an award. Whistleblower actions commonly take a couple of years to resolve so this doesn’t mean they aren’t acting. In any case, I’ve had recent conversations with the General Counsel’s office at the NHTSA and they are eager to pursue solid tips.
The program clearly has the potential to save countless lives and richly reward industry insiders who provide new and useful information to combat safety violations. Much of its success depends on how aggressively the NHTSA pursues tips. While the SEC program is lauded as a game changer, the IRS whistleblower program is viewed as something of a cautionary tale. The IRS has a program to reward and protect people who come forward and expose large tax frauds. The program has a reputation for being understaffed and painfully slow in processing claims. The risks whistleblowers take to expose fraud is real and if the government doesn’t use the information, it could cause tips to dry up. Hopefully, the NHTSA models the SEC in their staffing and aggressiveness.
The Motor Vehicle Whistleblower Safety Program is arguably the most important of the three programs we’ve discussed. Uniquely, it deals not just with money, but also with lives. Whistleblowers here can literally be life savers. I’m hopeful the government will recognize the immense value safety whistleblowers bring to the table and treat their claims with the attention and immediacy they deserve.