What is in this article?:
2010 court decisions and congressional action impacted agricultural law. Among items covered:
- Crop insurance fraud
- Expense method depreciation and leased property
- Farms and medical reimbursement plans
- Roundup Ready alfalfa
In 2010, a bevy of court decisions and actions by Congress impacted agricultural law.
In mid-February, Farm Press spoke with Roger McEowen, director of Iowa State University’s Center for Agricultural Law and Taxation (CALT), about what he sees as the most significant agriculture-related developments over the past year.
In reverse order of importance, his top ten picks are:
10. Crop insurance fraud (United States v. Hawley)
This is an important case on the issue of what constitutes crop insurance fraud. The case is “still somewhat alive,” says McEowen “so we may see further development in 2011.”
The case “is really a result of the federal-private kind of partnership that exists for the provision of crop insurance.”
This dates back to 1938, when Congress created the Federal Crop Insurance Act (FCIC), which established the Federal Crop Insurance Corporation within the USDA. That system was changed substantially in the 1996 farm bill when the Risk Management Agency was created and tasked with the job of administering the FCIC.
“What we have now is a system of private crop insurance companies that are reinsured by the FCIC. So, it’s a partnership between private industry and the federal government. Farmers go out and buy a policy from a private insurance company that pays them for covered losses. Then, the insurance company seeks reimbursement by the federal government through the FCIC.
“What happened in this case is an Iowa crop insurance agent submitted fraudulent crop insurance claims. He knew the farmers didn’t have an interest for which they were claiming insurance. He sent the (claims) in and was reimbursed by the federal government.”
The government found out and then prosecuted the agent under the Federal False Claims Act, which “has a lot of teeth.”
The agent prevailed at the trial court level “because the government couldn’t prove that he intended for the government to rely on false documents to reimburse his company out of the claims. The reason for that is what he did was make the claim through a private company that turned around and sought reimbursement.”
However, on appeal, “the court said in essence what (the agent) did was make a false claim … and the tax-paying public was harmed.
“Part of the case is remanded back to the trial court for further developments consistent with what the U.S. Court of Appeals for the Eighth Circuit said. So, a bit of it stays alive. But it’s important as to what constitutes submission of a false claim under the FCA.”
Any idea what penalties the agent is facing?
“Potentially, criminal penalties. I don’t know the specific ones because they’ve not gotten to a sentencing phase, yet.”