Taking An Insurance “Award” at Face Value: When A Producer Stood His Ground

Recently, we handled a denial of insurance claim on behalf of a Nebraska Producer who experienced abnormally low yields as a result of an unprecedented drought. The Producer had a valid

Federal Crop Insurance Policy and submitted a claim to his insurance company for the loss, using grain scale tickets, where the Producer noted which loads came from certain fields in accordance with the Loss Adjustment Manual (“LAM”), as evidence. While the insurance company paid a portion of the Producer’s claim, $57,000, it unjustifiably denied the remainder of the claim by arbitrarily requiring that the Producer’s grain scale tickets be contemporaneous with the annotation of which fields the crop came from.  As a result, the insurance company calculated the Producer’s loss for commingled production under the LAM, which substantially lowered the Producer’s claim. The insurance company’s calculation of commingled production, despite the LAM not requiring contemporaneous annotation of the records, was simply an invented requirement to avoid paying the Producer’s claim. To hold the insurance company accountable, we petitioned the United States Department of Agriculture’s Risk Management Agency (“RMA”) for an interpretation of Subparagraph 932A(4) of the LAM. The crux of the dispute between the Producer and the insurance company revolved around whether the Producer was required to handwrite the unit and/or field identification from where the crop was harvested onto the grain scale tickets contemporaneously. Our argument focused on the plain language of Subparagraph 932A(4) of the LAM, wherein no requirement for the handwriting to be contemporaneous exists. The insurance company was attempting to insert their own language into the regulation to skirt their responsibility to the Producer. The RMA’s interpretation of Subparagraph 932A(4) was in line with our interpretation, and ruled that the insurance company’s attempt to insert their own language into the regulation was wrong. The Producer was awarded over $200,000, plus interest, for his claim. This case was a great example of how a Producer should not always take the insurance company’s denial at face value. Had the Producer not stood his ground on his claim, he would have left over $150,000 on the table, and the insurance company would have continued its practice of claim denial by inserting its own language into the regulations. The outcome of this case was a major win for the Producer, who was able to hold the insurance company accountable and collect the payout to which he was entitled. Should you face a similar circumstance, having attorneys who know federal crop insurance regulation is a powerful tool to utilize. If that's the case, please consult with an attorney who regularly handles these types of claims so you are protected.