July 26, 2011
FARMERS SETTLE FRAUD CHARGE RELATED TO CROP INSURANCE CLAIM
DENVER – United States Attorney John Walsh today announced an out-of-court settlement in which husband and wife potato farmers, Donald Boyd Bigelow and Janet Kerkman Bigelow (the Bigelows), their farms, located in Center Colorado, Bigelow Associated Farms (BAF) and J.B. Farms (JBF), and their insurance company, the Great American Insurance Company (GAIC), agreed to pay the United States $131,000 to settle claims for fraud related to crop insurance on the Bigelow’s potato farm. The United States alleged that the farms had submitted false crop insurance claims to GAIC. GAIC, in turn, was reimbursed by the U.S. Department of Agriculture, Federal Crop Insurance Corporation (FCIC), Risk Management Agency (RMA). The United States alleged that GAIC did not follow proper policy and procedure in adjusting the farms’ insurance claims. As a result of these lapses, the United States paid money that it should not have paid.
The FCIC was created by Congress in 1938 to help the agricultural industry recover from the combined effects of the Great Depression and the Dust Bowl. The FCIC established programs to protect farmers from crop losses. In 1996, the RMA was established to administer the FCIC programs and other programs that support agriculture. The federal crop insurance program provides protection to farmers from unavoidable perils caused by adverse natural events.
In February 2004, both BAF and JBF purchased crop insurance from GAIC to cover potential losses for their 2004 potato crops. Later that year, both BAF and JBF submitted claims to GAIC for losses they claimed to have sustained to their respective potato crops due to weather-related causes. Representatives for BAF and JBF signed certifications stating that they had destroyed all “zero value production” potatoes – potatoes with no commercial value – from their 2004 potato crops. However, BAF and JBF did not destroy all of the zero value production potatoes from their 2004 crop. BAF and JBF, in fact, sold some of those potatoes.
GAIC made indemnity payments of $270,607 to BAF and $307,982 to JBF to cover the crop losses. The United States then reimbursed GAIC for a portion of those payments. In adjusting the Bigelows' crop loss claims, however, GAIC did not follow proper policy and procedure. The United States alleged that GAIC's failure to properly adjust the Bigelows' claims for crop losses resulted in GAIC making overpayments to the Bigelows, and consequently, resulted in overpayments by the United States to GAIC.
The Bigelows have paid the United States $66,000, and GAIC has paid the United States $65,000.
The investigation leading to the settlement was conducted by the United States Department of Agriculture’s Office of the Inspector General, with assistance from RMA’s Central Regional Compliance Office.
The settlement agreement is neither an admission of liability by BAF, JBF, or GAIC, nor a concession by the United States that its claims are not well founded.
This matter was handled by Assistant U.S. Attorney Amanda Rocque.
####
