in state court.12 So, the filing of a tort lawsuit in state court before an arbitration proceeding has been conducted will likely result in a court order compelling arbitration and staying the tort litigation.13 Attorneys Must Know When to Get the USDA Risk Management Agency Involved In a crop insurance arbitration, the arbitrator’s power is limited by federal law.14 The arbitration process that is outlined in the typical crop insurance policy reserves certain issues for the USDA’s Risk Management Agency. Specifically, issues concerning policy interpretation and application fall within the jurisdiction of the Risk Management Agency, while questions of fact are to be decided by the arbitrator.15 The Code of Federal Regulations states that when a dispute involves “a policy or procedure interpretation,”16 the arbitrating parties must obtain an interpretation of the disputed policy provision or procedure from the Risk Management Agency.17 The Agency’s interpretation is controlling during any subsequent arbitration.18 The “[f]ailure to obtain any required interpretation from FCIC will result in the nullification of any agreement or award.”19 When Risk Management Agency Gets Involved on Its Own Initiative The crop insurance policy and federal regulations also require an administrative review, or an administrative appeal, of a claim denial whenever the Risk Management Agency “elects to participate” in the claims-
adjustment process or “modifies, revises, or corrects” a claim before payment.20 The Agency will often get involved with the adjustment of large crop insurance claims,21 and it—“as a federal regulator of the crop insurance program”—may act to ensure that the Federal Crop Insurance Program is administered properly.22 Put simply, when the Risk Management Agency chooses to get involved with your client’s crop insurance claim, arbitration is generally no longer an option. Agency involvement, instead, requires that an attorney consider the administrative review and appeal process that the Risk Management Agency and the United States Department of Agriculture have established. In certain circumstances under the Federal Equal Access to Justice Act, limited attorney’s fees and expenses may be awarded to farmers who prevail at an administrative proceeding.23 Good Farming Practices If an insurance company or the Risk Management Agency finds that your client has failed to use “good farming practices,” then otherwise insurable crop losses may be uninsured.24 “Good farming practices” disputes require special attention and have been given a unique administrative review process.25 A farmer may not use the arbitration process to argue a good farming practices determination. To challenge a finding that your client failed to use good farming practices,26 an attorney must generally seek the opinion of the Risk Management Agency as to what practices constitute a “good farm-
ing practice.” If the Agency determination is against the insured producer, then the insured has the right to request a reconsideration27 and can, in the alternative, sue the Federal Crop Insurance Corporation in federal court.28 Concluding Thoughts for Attorneys Considering Crop Insurance Cases The law that governs crop insurance disputes is a confusing array of federal statutes, regulations, and case law. The fact that crop insurance covers so many different types of crops across the country, under different plans of insurance, makes this insurance program a difficult topic to summarize. Furthermore, the dispute resolution process prescribed by the crop insurance policy and federal regulations is somewhat unique. At the same time, the possibilities for disputes between an insured farmer and insurance provider are seemingly endless. Disagreement may arise as to the propriety of production practices, the cause of yield loss, or the interpretation of the actual crop insurance policy and federal regulations that control the provision of insurance. As such, an attorney who chooses to take on a crop insurance case must take the time to review, not only the facts of the case and basic policy provisions, but also the crop specific provisions, guiding federal regulations, and farm production practices. In the event that an expert witness is needed for the arbitration of a case either involving a factual dispute as to the cause of loss to a crop or the acceptability of production
Vol. 48 No. 3/Summer 2013 The Arkansas Lawyer
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