RMA Cautions Against Having Agents Fill Out Forms

RMA recently published Final Agency Determination FAD-130, which addresses a situation where the wrong prevented planting acreage got reported.

Reading between the lines, here is what probably happened. The producer called his agent and told the agent how many prevented planting acres he had. The agent filled out the acreage report for the producer and accidentally wrote "zero" for the prevented planting acreage, or did not write in anything about prevented planted acreage (which would be the same as reporting zero). The producer later caught the agent's error, but did so after the Acreage Reporting Date (ARD). The AIP refused to revised the acreage report.

It looks like the producer argued that this should fall under Section 6(d)(2) of the MPCI Basic Provisions, which allows an acreage report to be corrected where there is "adequate evidence that we [the AIP or agent] or someone from USDA have committed an error regarding the information on your acreage report."

In FAD-130, RMA strongly stated that the above policy provision does not apply to situations where someone other than the producer provides incorrect information on the acreage report. RMA said it is the producer's sole responsibility to ensure correct information is entered on the acreage report form. RMA's position seems to be that if the producer has the agent fill out the form, and the agent writes in incorrect information, then the producer is stuck with that information for the policy. (Whether the producer might have an Errors & Omissions claim against the agent would be a matter of state law and is not addressed in this post.)

Although it seems to be common practice for agents to fill out forms for their clients, crop insurance policyholders might want to think twice about having agents do this. You can read the full text of FAD-130 by clicking here.

With any questions about acreage reporting or crop insurance, contact The O'Connor Law Firm, LLC by clicking here.

VA Re-examining Agent Orange Claims

In an earlier post, we told you about new federal rules that affect veterans' disability claims for Agent Orange-related diseases.

The VA is now in the process of reviewing 140,000 past claims for Agent Orange-related disabilities to determine if the new rules would cause the VA to change its original decision.

According to the National Veterans Legal Services Program:

Vietnam veterans or survivors of Vietnam veterans who filed their first claim for VA benefits related to any of the three diseases prior to August 31, 2010 are subject to special favorable rules regarding the effective date for their benefits. The special rules apply to claims that were pending, filed, or denied any time between September 25, 1985 and August 31, 2010.

The VA is required to pay you, if your claim is successful, benefits retroactive to the date the VA first received your claim. Many Vietnam veterans and survivors of Vietnam veterans will be entitled to tens of thousands of dollars, if not hundreds of thousands of dollars, of retroactive VA benefits.

We strongly suggest that Vietnam veterans NOT wait for the VA to contact them about past claims. Instead, we urge affected Vietnam veterans to contact The O'Connor Law Firm TODAY so that we can help ensure that the VA recognizes your past claim as one it needs to review, and that the VA pays you for all retroactive benefits that you have earned.

Contact The O'Connor Law Firm, LLC using its convenient contact form at http://www.oconnorlawfirm.us/contact.html.

Changes for Gulf War Claims and for Vietnam Agent Orange Claims

In the last few months, the federal government issued new rules that affect service-connected disability claims for Gulf War Syndrome-related ailments and for Agent Orange-related ailments.

The government has expanded the types of medical conditions for which veterans in these two claim categories can receive presumptive service connection (which may make some claims much easier for those affected veterans).

If you are a Gulf War-era veteran who served in the southwest Asia theater, or if you are a Vietnam-era veteran who served in or traveled through Vietnam, you should consult with a VA-accredited attorney to see if these recent changes might affect your rights.

Please visit our website at www.oconnorlawfirm.us/veterans.html.

Important Reminder About Initiating Arbitrations

RMA published Final Agency Determination FAD-126, which contains an important reminder about how to start the arbitration process if you have a dispute under your crop insurance policy (you can read that FAD in its entirety by clicking here).

The policy says a couple things. First, it says that you have to initiate arbitration within one year of the insurance company's determination (see Basic Provisions, Section 20(b)(1)). However, the policy also says that all arbitrations will use the rules of the American Arbitration Association (AAA), even if the parties use some other arbitration service (see Basic Provisions, Section 20(a)).

What these two policy provisions mean (and what FAD-126 reminds us) is that you must start the arbitration process using AAA's rules for doing so. AAA's rules say that in order to start an arbitration, the Claimant (the policyholder) must file an Arbitration Demand with AAA or whichever arbitration service the parties use.

Reading between the lines of FAD-126, it appears that a policyholder sent the insurance company a letter saying, "I want to arbitrate my dispute," but the policyholder then left it at that, perhaps thinking that was all he needed to do. Remember, reading the policy provisions alone will not alert you to the fact that you have to file an Arbitration Demand - you have to read AAA's rules to know that.

FAD-126, which is binding on all crop insurance participants, reminds us that just sending the company a letter is not enough. If you do not file an Arbitration Demand by the one-year deadline, you could lose your right to dispute the insurance company's determination.

The crop insurance dispute resolution rules can be complicated. Don't risk losing your rights - call The O'Connor Law Firm with any questions.

VA-Accredited Attorney

Attorney Ryan O'Connor of The O'Connor Law Firm, LLC is now fully accredited to represent veterans in their claims for benefits with the U.S. Department of Veterans Affairs.

Please visit the firm's website for more information regarding veterans' representation.

Please also check this blog for occasional updates regarding the laws and regulations controlling the veterans' benefits programs.

American Arbitration Association v. Private Arbitration

An initial decision in an arbitration is where to file the arbitration demand. The following explains the pros and cons of filing an arbitration with a case management organization, such as the American Arbitration Association (AAA), versus initiating an independent, private arbitration.

Federal crop insurance policies require the parties to use AAA’s rules (see a copy of their rules on their website, www.adr.org/sp.asp?id=22440). However, the parties do not have to hire AAA to manage their arbitration case (see RMA Final Agency Determination FAD-007). This means that the parties could instead use a different case management organization (for example, Judicial Arbitration and Mediation Service (JAMS)), so long as that organization agrees to use AAA’s rules.

This also means that the parties do not have to use a management organization at all – they can independently hire an arbitrator, without going through a case management organization. Again though, that arbitrator must agree to use AAA’s rules.

One big initial difference is the filing fee. For example, AAA (like most, if not all, case management organizations) charges relatively hefty fees just to file an arbitration, and those fees vary depending upon the dollar amount of the dispute. Under AAA’s current commercial rates, a party who claims he is due $100,000 must pay a filing fee of $1,850 just to start the arbitration (and later will have to pay a portion of the arbitrator’s hourly rate on top of that). Compare that to what it costs to file a lawsuit in this firm’s local general jurisdiction court: only $100 (and of course the parties do not pay the judge an hourly rate in a lawsuit).

When the parties independently hire their own arbitrator, there is usually no filing fee at all, which can be a significant cost savings for the complaining party.

One drawback of an independent, private arbitration is that the parties usually must first agree upon an arbitrator to use. It can take a significant amount of time to search for, and then negotiate an agreement upon, an arbitrator to use. AAA eliminates that hassle by giving the parties a list of (usually) ten prospective arbitrator candidates. Each party can rank the arbitrator candidates, and can cross off any arbitrator it does not want to use. AAA says that it does its best to abide by the parties preferences, but ultimately AAA can and will pick an arbitrator for the parties, sometimes regardless of the parties’ preferences.

Another difference can be in the pacing of the arbitration. Generally, AAA’s case manager will get the arbitration off to a running start, at quickly get everyone at least to the point of the arbitrator conducting a conference with the parties to set the case schedule, often including setting a date for the arbitration hearing itself. In a private arbitration, there is no case manager moving things along, and the parties can be at the mercy of the arbitrator in getting the case moving.

Although there are many highly qualified arbitrators who might be available to officiate a private arbitration, many of those arbitrators might not be all that familiar with AAA’s rules. One advantage to using AAA is that the case manager is always available to administer and explain AAA’s rules, and the arbitrators that AAA offers often have received extensive training from AAA. When there is a question over AAA’s rules, some of which can be rather vague, having someone with AAA experience can be crucial in quickly resolving that question, rather than spending an inordinate amount of time parsing the rule’s wording and potential applications.

The analysis might be boiled down to one question: is the savings in filing fees worth the potential downsides to a private arbitration? Of course, that assumes that there is in fact a cost-savings, which given the extra time that might have to be devoted to issues that AAA would otherwise handle itself, might be negligible in the end. And in the end, the answer will most often depend upon the unique circumstances of each individual case.

An Overview of the Arbitration Process

Arbitration can be very different from a traditional lawsuit in a court, and knowledge about the arbitration process can be important in achieving good results, especially in crop insurance disputes.

Federal crop insurance policies require the parties to use the rules of the American Arbitration Association (AAA), an organization that administers and manages arbitration cases (see a copy of their rules on their website, www.adr.org/sp.asp?id=22440). However, the parties do not have to hire AAA to manage their arbitration case (see RMA Final Agency Determination FAD-007).

Any arbitration organization, or independent arbitrator, who agrees to use AAA’s rules can handle a crop insurance arbitration. This is an important consideration, since one aspect of the arbitration process is that some arbitration organizations, including AAA, charge relatively hefty filing fees to the party who initiates the arbitration. So, for example, hiring an independent arbitrator (which would require the agreement of both parties) could completely eliminate filing fees.

Once a basic arbitration demand (typically a short form listing the parties’ contact information, the amount in dispute, and a brief summary of the disputed issue) is filed, AAA will provide the parties with a list of potential arbitrators. If the parties do not agree on an arbitrator from that list, each party ranks the arbitrator candidates (crossing off any arbitrator from the list whom it absolutely refuses to use) and separately submits their ranked list to AAA. AAA chooses an arbitrator based upon the parties’ rankings.

After an arbitrator is appointed, the arbitrator can conduct a preliminary conference with the parties, to discuss (and if necessary, make rulings upon) procedural issues, such as what discovery the parties will conduct and when, what documents or motions the parties can or must submit before the arbitration hearing, and when and how the arbitration hearing will be conducted.

An important consideration in deciding which procedural matters to try to work out directly with the other party, and which to have the arbitrator decide (and an important consideration throughout the arbitration process, really) is that the arbitrator usually charges an hourly rate for all time spent on the case. So before you have the arbitrator spend 50 hours deciding every little aspect of the case, it is important to think about how much that is going to cost (50 hours times an hourly rate of $100 to $600 or more).

Unlike a lawsuit in court, where there are very precise procedural rules governing motions and discovery, there are no procedural rules in the arbitration process, except whatever rules the parties agree upon, or whatever rules the arbitrator decides will apply to your individual case.

The arbitration hearing is the equivalent of a trial. The parties will present their evidence and witness testimony to the arbitrator, who acts as judge and jury. Few rules exist in arbitration as to what evidence is admissible and as to how parties can present evidence and testimony (which, again, is very different from a court, which has very strict evidence rules). If possible, the arbitration parties should agree on evidentiary matters before the arbitration hearing, or have the arbitrator decide what rules will apply.

Federal crop insurance policies state that if there is any question of what a particular policy term means, or how it should apply, the arbitrator should not decide that issue (see 2011 MPCI Basic Provisions, Section 20(a)(1)). In a traditional lawsuit (not involving a federal crop insurance dispute), a judge would decide such legal issues, and some arbitrators have decided such legal issues in crop insurance arbitrations, despite the policy provisions.

After the arbitration hearing ends, the arbitrator will take some time to make a decision (often 30 days or less), which can be as simple as a “yes” or “no,” or which can be a detailed, written determination. Typically, the parties can choose how detailed of a decision they want from the arbitrator (remember that the arbitrator will probably charge an hourly rate for the time it takes to write out the determination). However, the federal crop insurance policies require the parties to ask for a detailed determination describing the issues in dispute, the factual findings, and the determinations and the amount and basis for any award (see 2011 MPCI Basic Provisions, Section 20(a)(2)).

The arbitrator’s decision often ends the dispute, although the federal crop insurance policies seem to provide either party the right to a judicial review of that decision. However, in the five years that the federal policies have provided that apparent right, there has been no good explanation of how extensive that review must be. It is possible that the only right of review is the one that the Federal Arbitration Act (9 U.S.C. §1, et seq.) provides, which is a very limited review, and which is available only in certain circumstances (see 9 U.S.C. §§10-11).

Although this is already a long post, this is only an overview of the arbitration process, and later posts will go into more detail about some of the above issues.

What is an RMA Final Agency Determination?

More basics: What is an RMA Final Agency Determination (FAD)?

The crop insurance policy terms, and the federal laws and regulations governing them, are not always black and white. The government decided that there should be a way for people to ask the USDA to interpret the gray areas. The RMA Final Agency Determination (FAD) process is one of those ways.

Under 7 CFR Part 400, Subpart X, RMA (acting for FCIC) will respond to properly formatted requests for interpretations of any provision of the Federal Crop Insurance Act (7 U.S.C. §1501, et seq.) and of any regulation promulgated under that Act. Since almost all policy provisions are themselves federal regulations (or at least have identical language as the ones that are federal regulations), that means RMA will interpret policy provisions through the FAD process.

RMA must provide its response to a requested interpretation within 90 days (if it does not, then the requesting person’s proposed interpretation is presumed valid for certain, limited circumstances). See 7 CFR §400.768.

Once RMA issues its interpretation in a FAD, that interpretation is binding on all participants in the federal crop insurance program. See 7 CFR §400.765(c). A “participant” is anyone who has applied for crop insurance, any producer with a valid crop insurance policy, and any crop insurance company (and anyone acting for such a company). See 7 CFR §400.766.

However, it is important to realize that RMA cannot interpret any specific factual situation, such as whether a particular policyholder followed a particular policy provision. See 7 CFR §400.768(a).

The FAD process can be a useful tool in figuring out what certain policy terms mean. This can be useful when disputes arise. For example, you can bolster your argument by submitting a FAD request to show that your interpretation of a policy term is correct. If RMA agrees with your interpretation, then the insurance company must follow that interpretation.

RMA maintains a list of its FADs from the current year (and a link to FADs from past years) at www.rma.usda.gov/regs/533.

What is RMA?

Some basics: What is the USDA Risk Management Agency (RMA)?

Under federal law (7 U.S.C. §6933), RMA administers and oversees all aspects of the federal crop insurance program. Technically, RMA supervises the Federal Crop Insurance Corporation (FCIC), which is the entity that Congress created to implement the federal crop insurance program (7 U.S.C. §1501, et seq.), but as a practical matter, RMA and FCIC are one and the same.

RMA either writes or approves all policy provisions for all federal multiple peril crop insurance policies. RMA also writes the underwriting and loss adjusting rules for all the policies. RMA issues strict guidelines for many of the forms that the private insurance carriers use.

Through a Standard Reinsurance Agreement (SRA), RMA authorizes private insurance companies to sell and service federal crop insurance policies. Under the SRA, the private carriers must use exactly the policy provisions that RMA has approved, charge only the premiums that RMA has authorized, and follow all of RMA’s underwriting and loss adjusting procedures. So in terms of the provisions and rules, the policy that a producer buys from Insurance Company A is exactly the same (at exactly the same price) as a comparable policy from Insurance Company B.

RMA reinsures the private insurance companies, which means that RMA reimburses the companies for some of their operating expenses, and for some of the losses that the companies sustain when they pay claims. RMA also pays the companies a portion of the premiums that the producers owe (that is, the producers pay the companies only a fraction of the total premium due for the policy, and RMA pays the rest of that premium for the producer).

It is important for producers to realize that RMA is functioning in the background of what the private insurance companies do in the federal crop insurance program, even though RMA’s activities often remain invisible to the producers. RMA’s rules and oversight can explain a lot about why an insurance company acts the way it does, and understanding RMA’s rules can be especially important when disputes arise between producers and their insurance companies.

You might want to review RMA’s website (www.rma.usda.gov), which contains copies of all policy provisions and rules, as well as other useful information.

Welcome to Our Blog

Welcome to The O'Connor Law Firm's blog. Please also visit our website by clicking here. Most of our posts will deal with crop insurance law and veterans benefits law, two of our practice areas. Please review our website for other services that we offer, some of which we may blog about from time to time.