By Jared Boyer
Many farmers are all too familiar with the Risk Management Agency’s
(RMA) role in administering the federal crop insurance program. In
addition to promulgating regulations, drafting policies, and issuing
bulletins affecting crop policies, RMA occasionally elects to participate
in the adjustment of an insured’s claim for indemnity. When disputes arise over RMA’s actions
(usually involving the calculation or outright denial of an indemnity), crop insurance policies
require insureds to pursue their remedies through the National Appeals Division (NAD), a
branch of the USDA responsible for resolving disputes involving the USDA’s various agencies.
The NAD appeal process allows an insured to select one of several review options, including a
review of the written record, a telephone hearing, or an in-person hearing. Many insureds have
found that hiring an attorney to represent them in this process can be helpful, as often complex
issues of federal and statutory law and contract construction are at issue. Given the language
found in crop insurance policies – “Under no circumstances can [the insured] recover any
attorney fees or other expenses”from RMA - Common Crop Insurance Provisions, Section 20(e) –
insureds who choose to hire an
attorney may be surprised to
learn that a federal statute may
provide an avenue to recover
a substantial portion of the
attorneys’ fees incurred during
an NAD appeal. 
The Equal Access to Justice
Act (EAJA), found at 5 U.S.C.
§ 504, provides that a federal
agency that conducts an
adversary adjudication (such as
an NAD appeal) “shall award,
to a prevailing party... fees
and other expenses incurred
by that party in connection
with that proceeding, unless
the adjudicative officer of the agency finds that the position of the agency was substantially
justified or that special circumstances make an award unjust.” The
EAJA is not a “win and get reimbursed” statute, as insureds must
meet specific requirements to be eligible for an award of fees and
other expenses:
- The insured must have “prevailed” in the NAD appeal,
meaning that the NAD found that RMA’s decision was
erroneous in whole or in part.
- The insured must show that RMA’s position was not
“substantially justified.”
- The insured must meet the “net worth test,” meaning that
an individual insured must have a net worth of less than $2
million, and a corporate or other entity insured must have
a net worth of less than $7 million and have fewer than 500
employees.
While the first and third criteria are relatively straightforward, it
is the second condition that presents the real hurdle for insureds.
If RMA’s position was “substantially justified,” then an EAJA
award will be denied regardless of the insured showing that RMA’s
actions were erroneous. A “substantially justified” position is
one that is reasonable in both law and fact. In other words, the
RMA’s position must be justified to a degree that would satisfy
a reasonable person. If reading these explanations still leaves
you wondering what exactly ‘substantially justified’ means, you
have identified why the majority of litigation over EAJA awards
involves this requirement. In fact, it is possible to be denied an
EAJA award because RMA’s position was “substantially justified”
even if the insured successfully showed that RMA’s actions were
“arbitrary and capricious” during the appeal. This elusive standard
makes having an attorney experienced in crop insurance disputes
particularly valuable in many cases.
The determination of whether an insured is entitled to an EAJA
award is generally based on the application and any written
response submitted by the agency. If the application shows
the insured prevailed in the NAD appeal, meets the net worth
test, and that RMA’s position was not substantially justified,
the insured will be entitled to an award. The amount of the
award is based on rates customarily charged by attorneys in the
community, and consideration will be given to the reasonableness
of time actually spent on the NAD appeal in relation to the
difficulty and complexity of the case. Typically, the insured’s
attorney will submit an itemized statement of the time spent on
the appeal along with the attorney’s customary rate, but federal
regulations prohibit any fee award in excess of $150 per hour. Still,
EAJA awards will often cover a substantial portion of a farmer’s
overall bill.
Like other aspects of crop insurance disputes, applications for
an EAJA award are subject to specific regulations that govern
such things as the timing and contents of the application. In the
experience of attorneys at this firm, the Equal Access to Justice
Act can be a valuable tool for lessening the burden on farmers
who are forced to litigate disputes with RMA.