The Federal Crop Insurance Act (“FCIA”), 7 U.S.C. §§ 1501-24, is designed to “promote the national welfare by improving the economic stability through a sound system of crop insurance and providing the means for the research and experience helpful in devising and establishing such insurance.” 7 U.S.C. § 1502(a). Congress created the Federal Crop Insurance Corporation (“FCIC”), a government-owned corporation which acts as an agency of and within the United States Department of Agriculture to administer the FCIA. 7 U.S.C. § 1503. In addition, Congress created the Office of Risk Management (“RMA”) to supervise the FCIA and administer all programs authorized under the FCIA. 7 U.S.C. §§ 6933(a), (b)(1)-(3); 7 C.F.R. § 400.701. The FCIA empowers the FCIC to provide reinsurance “to the maximum extent practicable” to private entities providing such crop insurance. 7 U.S.C. § 1508(a)(1) and (k). The FCIC encourages farmers to purchase multiple peril crop insurance which protects farmers from crop losses from natural disasters. Meyer v. Conlon, 162 F.3d 1264, 1266 (10th Cir. 1998). The FCIC makes crop insurance available by reinsuring insurers that issue crop insurance. Private insurance companies that provide crop insurance pursuant to the FCIA are referred to as “authorized insurance providers” (“AIPs”).
The resolution of disputes involving federal crop insurance claims is a highly specialized area of law that not only requires a thorough understanding of the FCIA, the applicable federal regulations, the specific crop insurance policy provisions and other applicable FCIC manuals, procedures and final agency determinations, but also insight into the agriculture industry and in-depth knowledge of farming practices.
McAfee & Taft has a proven track record representing agricultural producers – both individual farmers and groups of all sizes – throughout the country in crop insurance disputes. Unlike other litigation which is typically settled out of court after extensive pretrial discovery, motion practice and aggressive settlement negotiations or litigated in the courtroom following state or federal law, crop insurance disputes are governed by complex dispute resolutions provisions which take several forms:
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Arbitration or Mediation to resolve disputes with AIPs;
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National Appeals Division ("NAD") Administrative Appeals to resolve disputes over adverse RMA determinations;
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Federal Court Judicial Reviews to resolve disputes regarding good farming practice determinations, appeals of NAD decisions or arbitration awards, and actions to enforce NAD decisions.
In addition to recovering monies owed to farmers through their policies, we have successfully recovered attorneys’ fees and other costs by meeting the strict requirements and heavy burden for recovery of such fees and costs under the Equal Access to Justice Act (“EAJA”).
McAfee & Taft employs a team approach which utilizes the skills of Agriculture Industry Group litigators with proven experience in the various forms of crop insurance dispute resolution. Leveraging such experience and taking a focused team approach allows us to provide legal services in a manner that is responsive and aggressive while also being efficient and cost-effective.
Over the years the firm has accomplished this, in large part, by making significant investments in talent and technology and then leveraging those resources for the benefit of our clients. Today, our Litigation Group consists of more than 60 lawyers backed by skilled paralegals and administrative support staff and industry-leading technology that allow us to effectively represent clients in disputes on the local, regional, multi-state and national levels. Our firm’s size, quality of clients, and the challenging nature of our work has also provided us with numerous opportunities to develop strong relationships with leading industry organizations, regulatory authorities, business consultants, subject matter experts, expert witnesses and financial firms, and we stand ready to leverage those relationships for the benefit of our clients.
Representative Experience
- We represented a producer from North Dakota in an arbitration proceeding against his AIP involving a Multiple Peril Crop Insurance (“MPCI”) policy and the insurance company’s refusal to pay under a prevented planting buy up exercised by the producer. The AIP contended that a cause of loss for potential prevented planting was present before the date the producer elected to buy up his prevented planting coverage. After hearing the evidence and applying the standards of FCIC Final Agency Decision 112 (FAD-112), the arbitrator concluded that a cause of loss was not present at the time of the election and the prevented planting buy up was proper. Accordingly, the producer received an award for the additional indemnity due plus interest.
- In 2008, we represented a group of over ninety (90) Texas corn farmers with respect to an adverse decision by RMA pertaining to their Group Risk Income Protection (“GRIP”) crop insurance policies. The issue involved RMA’s manipulation of the applicable “final county yield,” a key component in calculating the GRIP indemnity. We successfully argued that RMA’s adjustment of the yields published by the National Agricultural Statistics Service (“NASS”) was arbitrary and capricious because it was based on “good farming practice” determinations which were later retracted. The NAD Director found RMA’s actions erroneous, and RMA later agreed to a settlement that included payment of over $3 million in unpaid indemnity plus a large portion of attorney’s fees and costs to the group.
- We represented another group of wheat farmers in a NAD appeal against RMA arising from RMA’s revision of the applicable “final county yield” based on a correction by NASS of its data. The correction, which occurred well after the producers had been paid under their policies and after the deadline for issuing final county yields, increased the final county yield to a point that RMA argued that the farmers should return their payments. Through the NAD appeal, we ensured that this untimely revision by RMA would not result in a recalculation of the group’s indemnity and a demand for reimbursement.
- We represented a Colorado ranch in an arbitration proceeding involving its Pasture, Rangeland, and Forage (“PRF”) Rainfall Index crop insurance policy which insured grassland and hayland against drought. The ranch’s insurance company retroactively revised the PRF policy and re-designated all the hayland acres to grassland acres. After establishing the ranch’s clear intent and ability to hay all of the land designated as hayland in the arbitration proceeding, the case settled.
- We represented a group of farmers from two Texas counties after RMA demanded a repayment of their GRIP indemnity due to a late “correction” of the NASS final county yields. In the NAD appeal, the NAD Hearing Officer and Director agreed that demanding repayment based on revisions to the “final county yield” occurring after the deadline for establishing final county yields was arbitrary and capricious, and reversed RMA’s determination requiring repayment. After filing an application for attorney’s fees under the EAJA, RMA agreed to reimburse a portion of the group’s fees.
- In 2009 and 2010, we represented two producers in a NAD appeal relating to whether RMA had improperly relied on unofficial, unpublished (and significantly high) NASS statistics in determining their right to indemnities under their GRIP policies. We prevailed in the NAD appeal and obtained a finding that RMA could not utilize unofficial, unpublished NASS data to determine payments under the policy. Instead of correcting its mistake, RMA recalculated the producers’ indemnities based on its own internal data. We appealed to the NAD again and obtained a second ruling that RMA was required to utilized official NASS county yields to determine payment. The matter was ultimately settled.
- We represented two corn farmers in a dispute with their AIP who refused to use the yields from representative strips to determine the indemnity due under their crop revenue coverage (“CRC”) insurance policy. In the arbitration proceeding, the arbitrator noted when there is a dispute over adjusted yields and representative strips are retained, the strips must be maintained in the same manner as the farmer would maintain other crops. After hearing the evidence, the arbitrator concluded that the farmers did maintain the strips after their claim was filed in the same manner as they maintained their other crops. Accordingly, the farmers received an award for additional indemnity due based on the yields from the harvested strips.
- We represented twenty-four (24) Colorado corn farmers in connection with their GRIP policies. We established that RMA arbitrarily and capriciously manipulated the final county yields in an effort to lower the indemnities due to every GRIP policyholder in the county. NAD rejected RMA’s determination and made it clear that indemnity payments should be calculated on the official, published NASS data instead. This decision lead to a group recovery of over $1 million in unpaid indemnity plus interest. We also obtained a ruling under the EAJA that RMA’s actions were not substantially justified leading to an award of attorney’s fees under the Act.
- In 2010, we represented three (3) Arizona producers, who farmed cotton within an Irrigation and Drainage District, with respect to a prevented planting claim under their 2009 MPCI policies. After the producers had purchased the policies and selected their planting strategy, RMA issued a bulletin that retroactively changed the maximum acreage a farmer could claim for prevented planting based on failure of the irrigation water source (which significantly reduced the producers’ prevented planting indemnity). We appealed to NAD contending that the bulletin constituted retroactive rulemaking and erroneously modified the terms of the policy purchased. The NAD Hearing Officer agreed and held the application of the bulletin created a new, retroactive procedure for calculating eligible prevented planting acres.
- We represented a producer who purchased a GRIP policy for his 2008 grain sorghum. Rather than calculate the applicable “final county yield” based on the official published NASS data as required by the policy, RMA attempted to utilize NASS data for the multi-county district where the producer’s farm was located which resulted in no payment due the producer despite a devastating grain sorghum crop of the county. We appealed to NAD and received a determination that RMA’s use of district level data was error. The Hearing Officer explained that “[t]he Policy is the contract between the parties, and Policy language emphasizes that Appellant cast his lot with other grain sorghum producers in his county, but not with every producer in the [District].” After filing an application for attorney’s fees under the EAJA, RMA agreed to pay the requested fees.
- We represented a cotton farmer from New Mexico in a NAD appeal over RMA’s refusal to issue a final agency determination (FAD) involving the insurance company’s obligation to adjust for disease loss in his crop. NAD determined that the farmer was entitled to an interpretation of the applicable policy by way of a FAD.
For more information about federal crop insurance disputes, check out our Frequently Asked Questions page. For inquiries, please contact: