Hawkins, Hawkins & Burt LLP
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CROP INSURANCE DISPUTES
Insurance litigation involving crop-hail insurance generally must be brought in state or federal courts. The cases are governed by state law. In most states, a grower can recover, in addition to regular damages and pre-judgment interest, costs and attorney's fees from the crop insurer and, possibly, consequential damages. In addition, if the facts are egregious enough, the grower can recover punitive damages.
MPCI disputes, however, must be arbitrated (although the parties can agree to mediate the dispute first). The dispute usually involves only the insurance company, but if there is a large claim (over $500,000), the Risk Management Agency (RMA) has the right to step in and make all decisions. Although the grower can recover pre-judgment interest, the grower cannot normally recover costs, attorney's fees, or punitive damages.
The arbitration process normally begins with the filing of a demand for arbitration with the American Arbitration Association (AAA). The filing must be accompanied by a filing fee, which can be substantial. The AAA then notifies the insurance company of the filing and the insurance company then notifies the AAA who its representative(s) (attorneys) will be. There is a process for the selection of the arbitrator.
There is an alternative method of initiating the arbitration process. This process requires the grower and the insurance company to agree on an arbitrator. This alternative method saves the cost of the filing fee. Unless the grower is represented by an attorney such as Mr. Burt, this process may result in the selection of an arbitrator that is known only to the insurance company and this may not be in the best interests of the grower.
Arbitrators must be paid. Costs range upwards from $1,000 per day. Each side is responsible for one-half the cost of the arbitrator.
After the arbitrator is selected, the arbitrator holds a scheduling conference with the representatives of the parties. An arbitration date or dates are selected, and other procedural issues are decided. Usually, the parties agree on the exchange of witness information, when documents will be exchanged and when depositions (testimony) will be taken.
The parties present their cases to the arbitrator, who must make a written decision within thirty days. Only in very rare situations can the decision of the arbitrator be appealed.
The arbitrator does not have the authority to interpret the terms of an MPCI policy. If the arbitrator or the parties believe a policy interpretation is required, the arbitration will be suspended and the parties will submit a Request for Final Agency Determination (FAD) to RMA for a ruling. The arbitrator must follow the ruling by RMA.
Because most crop insurance disputes are resolved in mediation or arbitration, it is not necessary for the attorney to be licensed in the state where the dispute arises or the grower is located. It is only when the dispute goes to court that state licensure becomes an issue, and even then, Mr. Burt can become licensed before a particular court on a temporary, one-time basis, or can associate with local counsel.
Mr. Burt will review your case without charge and advise you of its merits. Mr. Burt will charge either an hourly rate or a contingent fee, depending upon the agreement between Mr. Burt and the grower. In some cases, the fee can be negotiated as part contingent and part hourly rate. Under any fee arrangement, the grower will be expected to pay any out of pocket expenses plus any filing fees, arbitrator fees, court reporter fees and other expenses associated with his representation.
If you have a claim, there are certain steps you either should take or you must take.
You MUST begin arbitration within ONE YEAR of the date of notification of the final determination by the insurance company as to the claim.
