THE BLOG
08/13/2013 11:13 am ET Updated Oct 13, 2013

Ford Fined $17.35 Million, No Press Release From NHTSA

Saige Bloom was 17-years-old. Her mom took her to a Ford dealership in Arizona to buy her first car -- a 2002 Ford Escape.

Bloom was driving the car home from the dealer in May 2012 when the Escape started to accelerate.

Her mother was following in another car, watching her child not able to control the accelerating vehicle.

"She cannot stop," the mother told a 911 dispatcher. "We're coming up to a red light and I don't know what to do for her."

Shortly after that call, Saige hit another car and rolled three times, according to an ABC 15 report.

Saige died of her injuries hours later in a local hospital.

Turns out that the Ford Escape that Saige Bloom was driving was the subject of a recall in 2004 for a sudden acceleration problem. Problem is, the fix had a tendency in some cases to make the problem worse.

Ford notified the dealers about this. And the federal auto safety agency -- the National Highway Traffic Safety Agency (NHTSA) -- knew about it.

But Ford didn't notify the 500,000 or so owners of the vehicles. Until Saige Bloom's death. That's when Ford instituted another recall to finally fix the problem.

Last week, NHTSA fined Ford $17.35 million.

Federal law requires all auto manufacturers to notify NHTSA within five business days of determining that a safety defect exists or that the vehicle is not in compliance with federal motor vehicle safety standards and to promptly conduct a recall.

On July 17, 2012 -- in the wake of the publicity of Bloom's death -- NHTSA opened a safety defect investigation to examine a potential issue involving a "stuck throttle" after the accelerator pedal had been released in certain 2001‑2004 Ford Escapes. When it opened the investigation, NHTSA sent an information request to Ford. A week later, before Ford's response to the information request was due, Ford announced it would recall the vehicles. Ford subsequently responded to NHTSA's information request.

NHTSA reviewed Ford's response to evaluate the adequacy of Ford's remedy, and closed the investigation on February 21, 2013. NHTSA said that based on information supplied by Ford during NHTSA's investigation, the agency reached a tentative conclusion that the automaker may have been untimely. NHTSA recently contacted Ford to inform the company that the agency was planning to open a timeliness query. In response, Ford indicated that they would pay $17.35 million, the maximum fine allowable under the law, the safety agency said.

Clarence Ditlow, executive director of the Center for Auto Safety, which petitioned the agency to open a recall query after Bloom's death, says that the monetary penalty didn't go far enough. "To me, if there was ever a case for a criminal penalty this was it. It meets the requirements of the TREAD Act -- there was a death," Ditlow said. "In fact, there have been at least three deaths. Who knows how many there are, in reality? There's an eight‑year gap between the first recall and the fine."

Sean Kane agrees with Ditlow that there should be a criminal investigation into Ford's actions in this matter, claiming it wasn't just Bloom who died as a result of Ford's behavior but that there were two others. Kane is president of Safety Research & Strategies in Rehoboth, Massachusetts.

"Marta Baier of St. Charles, Missouri dies in a 2003 Ford Escape," Kane told Corporate Crime Reporter in an interview last week. "She had her 16-year-old son in the vehicle. The son indicated that when she was driving on the highway, the accelerator stuck. She tried to slow down and she couldn't. She told him he should jump from the vehicle. He jumped and survived. His mother was severely injured. And she died also."

"In December 2005, Mary Delvescovo of Lancaster, Pennsylvania bought a one year old 2004 Ford Escape from a local Ford dealer. The dealership had done the first recall repair in December 2005, just before its sale to Mary. They didn't do the technical service bulletin work. Again, it's not something you tend to go back and look for."

"In July 2007, she was driving the vehicle when the throttle gets stuck. And she ends up swerving, flipping on the driver's side, coming to a stop and sliding into a school bus. She ultimately died of her injuries on August 8, 2007."

"The attorney, Jamie Jackson, said this is a case Ford was really anxious to settle. But he was really anxious to try it because he knew that Ford knew this was a problem. And they have documented it."

"The circumstances here clearly started with Ford," Kane says. "But NHTSA has blood on its hands as much as Ford does. They were asleep at the wheel and did not address the problems that were clearly being sent to them about the recall, technical service bulletin and the repairs that weren't made to vehicles. NHTSA knew about it. They knew about the deaths. They knew about complaints post recall. And nothing happened for eight years. And as a result of their inaction for eight years, Ford got away with it."

"What this comes down to is a lack of institutionalized process, practices and procedures within the defects office at NHTSA," Kane said.

"That office has resisted, despite recommendations from the Inspector General, the GAO, of institutionalizing its process and practices on how they do certain things. This is just another example of the agency failing to pay any attention to the data, the documents that are provided to it. I understand this is an understaffed and low-budget agency. But when you are getting information about deaths associated with a recall, you have a manufacturer sending you information that the recall repair may not work, they are getting complaints from consumers -- they are getting signals from many places telling them ‑‑ this recall is not working. And they didn't take any action until after a death in 2012 that was totally preventable."

"What used to be investigations are no longer investigations. The agency is now calling them defect inquiries, not defect investigations."

"They don't rise to the level of public notice. There is no document retention. There is no documentation of what the agency does."

NHTSA won't say whether they have referred Ford to the Justice Department for criminal prosecution. They say -- check with the Justice Department.

The Justice Department didn't return calls seeking comment.

In 1980, Ford Motor Company was charged with homicide by a state prosecutor in Indiana. The case involved the deaths of three teenaged girls who were burned to death when their Ford Pinto was rear ended. The company was found not guilty after trial.

Could a state prosecutor bring a similar case against Ford in this case?

"They certainly should be looking at it," Kane said. "The question is the costs to a local prosecutor. The Saige Bloom case could have and should have risen to that level. It takes a lot of courage. It takes a lot of money."

NHTSA didn't put a press release about its fine against Ford. Why not?

In some high-profile enforcement cases, the corporation negotiates with the government not to put out a press release.

That wasn't the case here, NHTSA says.

Instead, NHTSA's practice in civil penalty agreements is to issue statements in response to media query.

There have been exceptions in recent years with high-profile penalty cases -- Toyota, BMW and Volvo -- where the press was alerted with press releases.

But now, NHTSA apparently is getting back to its practice of not putting out a press release for a multi‑million dollar fine involving a major American multinational.

For the complete q/a format Interview with Sean Kane, see 27 Corporate Crime Reporter 32(13), August , 12, 2013, print edition only.