Agricultural Law Update - Volume 28, Number 4 - November 2011

Purchasers of federally reinsured crop insurance policies often find themselves at odds with the actions of the Risk Management Agency (the “RMA”), the arm of the USDA in charge of administering the federal crop insurance program. As most producers well know, the role of the RMA is not limited to promulgating general regulations concerning crop insurance program and drafting policies, but includes issuing memoranda and bulletins that affect the administration of certain policies, reviewing an insured’s reported yields, calculating county yields for area-based policies, and occasionally even electing to participate in the adjustment of an insured’s claim.

Crop insurance policies provide that disputes over RMA’s actions (as opposed to those done solely by the insurance provider) must be pursued through the National Appeals Division (“NAD”), which is a separate and nominally independent branch of the USDA tasked with resolving disputes against the USDA’s various agencies, such as RMA or the Farm Service agency. The NAD appeal process provides several options for a producer to contest RMA’s actions, including a written record review or a telephone or in-person hearing conducted by an NAD Hearing Officer.

The NAD appeal process does not require that a producer retain an attorney to conduct the appeal, but many producers have found that doing so is helpful, as often complex issues of federal statutory and regulatory law and contract construction will be at issue. In such cases, the crop insurance policies provide that “[u]nder no circumstances can [the insured] recover any attorney fees or other expenses” from RMA. (See Common Crop Insurance Provisions, Section 20; Group Risk Income Protection Plan, Section 16.) However, a federal statute called the Equal Access to Justice Act (“EAJA”) can trump this language, and allow insureds to recover a large portion of attorney fees incurred in connection with a successful EAJA appeal.

Article authored by McAfee & Taft Attorneys: Jeremiah Buettner and Jared Boyer.