In a recent False Claims Act settlement, a prominent insurance company has agreed to pay a staggering $44 million to the federal government to settle claims it unlawfully certified certain crop insurance policies as eligible for coverage by the United States Department of Agriculture. The settlement involves the Fireman’s Fund Insurance Company, which operates field offices in several states and maintains its headquarters in Novato, California. While there is no direct whistleblower involved in this particular settlement, the efforts of several federal agencies helped bring the misconduct to light.
Details of the settlement involving Fireman’s Fund Insurance
For American farmers, the unpredictability of weather and water supplies presents a palpable risk in the financial stability of both the farm operation and the owner’s exposure to hardship. As such, many farmers – both large and small – turn to crop insurance policies to help protect against an unexpected drought, deep freeze, or similar meteorological catastrophe.
Crop insurance is typically offered by private insurance carriers with the USDA agreeing to bear a portion of the risk. To qualify for the federal guarantee, policyholders must meet certain criteria, file certain paperwork in a timely manner, and adhere to proper crop management requirements to ensure the health and stability of the acreage.
According to the Department of Justice, Fireman’s Fund grew very lax in its approval process and eventually began cutting corners and seeking government guarantees for policies that were
not properly compiled. For a period spanning from 1999 through 2002, Fireman’s Fund is alleged to have committed the following misdeeds with regard to its crop insurance policies:
- Backdating policies that missed deadlines
- Forging farmers’ signatures
- Accepting late and altered documents from farmers
- Whiting out information and replacing with forged information
- Submitting documents past requisite deadlines
According to the Department of Justice, the policy problems occurred across several Fireman’s Fund field offices, including those in Modesto, California; Lambert, Mississippi; Fargo, North Dakota; Lubbock, Texas; Prosser, Washington; and Overland Park, Kansas.
Government issues its response to the fraud
In a concerted effort between several federal agencies, the costly insurance scam was exposed to allow taxpayers the opportunity to recoup the money lost as a result of the alleged scheme. The USDA said in a statement, “Today’s announcement shows how working alongside our partners in law enforcement, we will ensure the integrity of the crop insurance program for American taxpayers and producers alike….”
The Department of Justice similarly commented, adding “Federal crop insurance provides vital support for farmers suffering crop losses due to natural disasters….The Department of Justice will continue aggressively to pursue those who abuse this important program.”
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