“They want to sue the insurance agent, sue the company, sue someone because things are so bad. But the fact is, there’s no claim against the agent. It’s not their responsibility to know you’re caught up on past payments. So, on the sales closing date make sure you’re caught up.”

• Dispute resolution

A producer can’t haul a crop insurance company into court, says Ballard. It’s been tried many times without success, except in very unique circumstances.

Instead, for general breach of contract or failure to pay a claim a producer will go to mandatory arbitration, an alternative dispute resolution method. Both sides are represented by attorneys and there is an arbitrator or panel of arbitrators making a final decision.

“It’s an adversarial proceeding, similar to a trial but not as formal. The rules are more lax.”

Mediation is also available. “That’s a negotiation trying to settle a claim. No ruling is made under mediation. If no deal is struck, it’s on to arbitration.”

There are two routes to arbitration under federal crop insurance: the American Arbitration Association (AAA) or the insurance company and the producer can agree on a neutral arbitrator. Ballard says there are problems with each approach.

Going with the AAA is expensive. “The filing fee is about $6,000 that a producer has to pay out of pocket to just get the case heard. You’ll have at least that much in arbitration fees by the time it’s all over — and that’s before the attorney is paid.

“People have raised a lot of stink about the cost and the RMA has come back and said, ‘You can avoid AAA arbitration if you can agree on an arbitrator.’

“So, you may request arbitration from your insurance company. They turn it over to a lawyer and you don’t hear anything for three months. The delay game starts so that’s something to consider. You may spend more money with AAA but it will provide more prompt resolution.

“If I was in Congress looking for an issue to jump on, the RMA’s treatment of arbitration for producers is unfair. The AAA is expensive and crop insurance companies need incentives to settle claims in a timely manner. … You can win at arbitration, but it isn’t the ideal route and it isn’t less expensive than going to court, no matter what anyone says.”

If a producer’s claim is denied for not following good farming practices, he doesn’t get to fight that at arbitration. That circumstance requires an administrative review process before the RMA.

This is another weakness in the federal crop insurance program, says Ballard. “I had one Extension agent tell me an RMA hearing officer traveled to northeast Louisiana looking into a good farming practices issue. The officer didn’t even know what a cotton boll was. That’s the environment we find ourselves in on occasion.” 

dbennett@farmpress.com