A $4 Billion Fine for Volkswagen

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Beige Volkswagen Beetle, representing the $4 Billion Fine for Volkswagen and NHTSA Whistleblower Rules

A $4 Billion Fine for Volkswagen

Reuters is reporting that Volkswagen AG and the Justice Department are near an agreement to resolve criminal and civil liability for the German automaker’s diesel emissions cheating scandal. If the reported $3 billion figure is finalized, it will be the largest fine ever paid by an automaker to the U.S. Government.

The settlement is expected to have either a deferred prosecution agreement or guilty plea to criminal charges as well as an outside monitor for future oversight. Volkswagen has already agreed to civil settlements with consumers, the EPA and the state attorneys general that could reach $17 billion.

The coverage indicates that VW is trying to wrap up the Justice Department settlement before the Trump Administration takes over. Reuters is reporting that the deal could be announced as early as next week. If the agreement is not finalized by the transition, there could be a substantial delay.

Numerous media sources at the end of the year reported that Takata is close to a $1 billion criminal settlement with the Justice Department over the defective airbag investigation. Takata has already agreed to pay up to $200 million in penalties for violations of National Highway Traffic Safety Administration standards. The Takata recall currently covers 42 million vehicles, the largest in U.S. history.

Four billion in criminal fines against the auto industry should put more fuel on the fire for auto employees considering reporting under the NHTSA whistleblower program. The program, created by Congress in the FAST Act in December 2015, authorizes the Transportation Secretary to pay rewards to auto industry employees for reports of safety-related issues in amounts between 10 and 30 percent of the government fines.

Neither settlement will leave a whistleblower eligible for a reward, as the government was aware of both problems before Congress adopted the FAST Act and the VW case didn’t involve a safety issue. But future auto whistleblowers will surely look at the potential for awards exceeding $100 million from these government fines when they are deciding whether to report their company’s misconduct.

UPDATE: The announcement happened. The final number was a total of up the $4.3 billion in fines and they will plead guilty to three criminal felony counts.

Update: The New NHTSA Whistleblower Program

The National Highway Traffic Safety Administration (NHTSA) launched a website to simplify the process for employees or contractors of motor vehicle manufacturers, part suppliers, or dealerships to share whistleblower information with the agency. The website provides guidance to whistleblowers on what information to provide and how to submit it. This initiative reflects NHTSA’s recognition of the vital role whistleblowers play in enhancing roadway safety.

Although the agency is currently developing a Notice of Proposed Rulemaking (NPRM) to formalize its whistleblower program, potential whistleblowers are encouraged to provide information to NHTSA without waiting for the NPRM’s completion. Whistleblowers are protected by law from retaliation, and they may be eligible for monetary rewards even before the rule is finalized.

NHTSA welcomes whistleblower information on various topics, including potential vehicle safety defects, noncompliance with Federal Motor Vehicle Safety Standards, and violations of the Vehicle Safety Act. This information can lead to formal actions such as investigations, recalls, or civil penalty enforcement actions.

Whistleblowers who provide original information that leads to the successful resolution of an enforcement action may be eligible for a monetary award. The award amount ranges from 10% to 30% of collected monetary sanctions over $1 million. NHTSA’s website provides information on their previous enforcement actions.

Overall, NHTSA’s new website and ongoing efforts aim to make it easier for whistleblowers to report concerns, strengthen roadway safety, and ensure accountability in the automotive industry.

While the Vehicle Safety Act does not directly relate to the False Claims Act, there can be situations where both laws intersect. For example, if a company or individual knowingly submits false claims to the government related to vehicle safety, such as providing misleading information about compliance with safety standards or concealing safety defects, the False Claims Act could come into play. Whistleblowers who have knowledge of such fraudulent activities may file qui tam lawsuits under the False Claims Act on behalf of the government to expose the fraud and recover funds.