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UNITED STATES DEPARTMENT OF AGRICULTURE OFFICE OF THE
SECRETARY NATIONAL APPEALS
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In the Matter of |
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XXXXX |
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XXXXX |
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Case No.
2022W000079 |
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RISK MANAGEMENT AGENCY |
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APPEAL DETERMINATION
XXXXX (the Appellant) availed itself of the apiculture protections afforded under the Federal Crop Insurance Program (FCIP). XXXXX (the Approved Insurance Provider or AIP and Interested Party) did not receive the Appellant’s overpaid indemnity repayment by the due date established in the AIP’s notice of debt and the AIP notified the Risk Management Agency (the Agency). As a result, the Agency notified the Appellant that they were ineligible to participate in the FCIP. In support of its decision, the Agency argued that the Appellant failed to pay the debt associated with its crop insurance policy on time and that the Appellant was therefore also ineligible to participate in the FCIP.
In response, the Appellant did not contest the existence of the debt but rather argued that it signed and sent a payment agreement to the AIP by email and made the first scheduled payment prior to the due date established in the AIP’s notices of debt. Because of that, the Appellant reasoned, there was no delinquent debt, and it should not have been placed by the Agency on the Ineligible Tracking System (ITS) List.
The Appellant initially requested a record review on January 19, 2022. Later, on January 30, 2022, the Appellant requested an in-person hearing. Because I had been exposed to COVID-19 in the days prior to the scheduled in-person hearing, the Appellant agreed to convert the matter to a video-teleconference. I held the video-teleconference hearing on April 27, 2022, the earliest agreeable date for the parties as requested by the Appellant due to scheduling difficulties due to its apiary operations taking place in other states. I closed the case record on May 19, 2022. I notified the AIP of the appeal proceedings, but it did not participate or submit evidence or argument.
Based on the evidence and argument presented by the parties and the applicable program laws and regulations, I conclude that the Agency did not err when it declared the Appellant ineligible to participate in the FCIP.
STATEMENT OF THE
ISSUE
The issue in this appeal is whether the Agency, on December
14, 2021, correctly applied the applicable rules and regulations when it
decided to declare the Appellant ineligible to participate in the FCIP.
The specific questions I must address are:
1. Did the Agency correctly place the
Appellant on the ITS List, based on proper notice of the debt associated with
the Appellant’s 2020 crop insurance policy and the Appellant’s failure to pay
that debt on time?
2.
Do the
Appellant’s arguments regarding entering into a payment agreement with the AIP
show that the Agency erred?
FINDINGS OF FACT
(FOF)
1.
Interested
Party, an AIP, provided 2020 apiculture insurance to the Appellant under crop
insurance policies XXXXX and XXXXX (the 2020 insurance policies). As an apiculture crop policy, the
policy included the provisions found in the United States Department of
Agriculture Federal Crop Insurance Corporation Rainfall Index Apiculture (API)
Crop Provisions (20-RI-API), as well as the basic provisions found in the Rainfall
and Vegetation Index Plan Common Policy (20-RIVI). Agency Record (AR), Pages 2-3 and 17-52 and
Agency Exhibit 1.
2. In response to a complaint of a concerned
citizen, the Agency completed a review of several of the Appellant’s policies covering
multiple counties in different states pursuant to the provisions of the
Standard Reinsurance Agreement[1]
(SRA) between the Agency and the AIP. The
Agency found that the Appellant’s 2020 application for insurance and colony
reports associated with its insurance policies were not signed. On November 13, 2020, the Agency conducted an
interview with XXXXX (Member 1), a member of XXXXX. Member 1 reported to the Agency that he had
spoken with XXXXX, his agent at the AIP (the Agent), on the phone but that he
had not seen a 2020 application for insurance or colony report. Further, upon observing the signed copies of
the documents in question, Member 1 notified the Agency that the signature on
the documents was not his. In September 2021,
the Agency concluded that the Appellant’s 2020 insurance policies failed to
meet the requirement of an eligible crop insurance contract because neither the
application nor colony reports were signed by the Appellant or an authorized
party. The Agency therefore denied the
reinsurance for the 2020 insurance policies.
Agency Exhibit 1; AR, Pages
2-3 and 55-64; and Appellant Post-Hearing Exhibit B.
3. The AIP determined that it improperly issued
the insurance policies to the Appellant and, as a result, the Appellant
received indemnity payments it did not earn for six (6) claims. On November 1, 2021, the AIP notified the
Appellant by two letters that its 2020 insurance policies were invalid because
the application for insurance and colony reports were not signed by the
Appellant or an authorized representative.
The AIP further listed the individual claim numbers (XXXXX; XXXXX; XXXXX;
XXXXX; XXXXX; and XXXXX) that it determined were overpaid as
a result of the invalid insurance policies. The AIP determined that the Appellant had to
repay the AIP a balance of $40,791 for the indemnity overpayments. The letters informed the Appellant that
it had a right to an administrative review of the debts for the two policies shown
in the letters ($25,891 and $14,900) and that the Appellant had a right to
contest the debts if it believed they were incorrect. The letters also provided the Appellant
specific information regarding the procedure it needed to follow if it wanted
to review or contest the debts, which included mailing a written request within
30 days to the address provided on the letters and stating its basis for
contesting the debts. The letters also
noted that an administrative review would not take the place of or limit the
Appellant’s right to mediation, arbitration, or judicial review, as applicable,
according to the Appellant’s insurance policy.
However, the letters also made it clear that contesting the debts would not
delay, defer, or otherwise change the requirement that the Appellant pay the
entire debt or enter into a payment agreement prior to the due date established
in the letters (that is, 30 days from the date of the letter or November 30,
2021). Further, the letters explained
that the Appellant could enter into a payment agreement with the AIP and
included a blank payment agreement for the Appellant’s signature. The blank payment agreement listed four
monthly payments of $10,518.41 starting on December 20, 2021, that culminated
in a complete payment of the debts on March 20, 2022. The letters also explained that the Appellant
was required to enter into a payment agreement with the AIP prior to the due
date for the debts: 30 days from the date of the letter. Finally, the letters warned the Appellant
that it would be placed on the ITS List and would be denied future program
benefits under the FCIP if it failed to pay the total amount due within 30 days
of the date on the letters or enter into a payment agreement within the same
period. The AIP sent the letters and a
blank payment agreement to the Appellant’s address of record, and they were not
returned as undeliverable. AR, Pages 65-73,
80-86 and 93-94.
4. The AIP also sent the Appellant a billing
statement on November 1, 2021 (as an attachment to the letters described in FOF
3). The billing statement listed the two
2020 insurance policies as well as a statement that the Appellant had a debt
associated with overpaid indemnities ($40,791).
The billing statement further informed the Appellant that the debts were
due by November 30, 2021. The billing
statement also referred the Appellant to the AIP’s November 1, 2021, notices of
debt for additional information. The AIP
sent the billing statement to the Appellant’s address of record, and it was not
returned as undeliverable. AR, Pages 74-75.
5. Between November 1, 2021, and November 30,
2021, the AIP communicated with the Appellant about entering into a payment
agreement to avoid being placed on the ITS List. AR,
Pages 53-54 and Appellant Exhibit I.
6. On November 22, 2021, the Appellant sent a signed
certified letter to the address listed in the AIP’s November 1, 2021 letters. In that
letter, the Appellant simply stated the following: “This notice is to request
an administrative review of …[the 2020 insurance
policies]. Because our policy is not
voided the debt is incorrect[.] Your attention to this discrepancy and
explanation for it are necessary.” The certified
letter was received and signed for by the AIP on November 29, 2021. Appellant
Post-Hearing Exhibit A and Hearing Audio (HA) (Appellant Testimony) at 00:44:00-00:46:00.
7. Member 1 signed the payment agreement for
the Appellant on November 30, 2021.
Member 1 annotated on the payment agreement that he emailed the payment
agreement to “XXXXX (Agency Employee) @ RMA + XXXXX (AIP Employee).” However, Member 1 erroneously entered AIP
Employee’s email address and the AIP did not receive the intended email or the
signed payment agreement as an attachment.
AR, Page 97; Appellant
Exhibit A; Agency Post-Hearing Exhibit 1; and HA (Appellant Testimony) at 01:01:00-01:03:00.
8. The AIP sent the Appellant a second billing
statement on December 1, 2021. Since the
AIP considered the debt to be delinquent at this point, the billing statement no
longer indicated a due date of November 30, 2021. The billing statement listed the two 2020
insurance policies as well as a statement that the Appellant had a debt associated
with overpaid indemnities, now calculated to include interest ($41,300.89). The billing statement further informed the
Appellant that the debts were due by December 31, 2021, to avoid further
interest charges. The AIP sent the
billing statement to the Appellant’s address of record, and it was not returned
as undeliverable. AR, Pages 76-77.
9. On December 6, 2021, the AIP responded to
the Appellant’s November 22, 2021, certified letter in which it requested
“administrative review.” In that email
response, the AIP confirmed receipt of the Appellant’s request and stated:
“Because RMA make [sic] the determination on your policy, XXXXX has
sent your request to their office. I
will update [sic] on the status as I receive new
information.” The AIP never updated the
Appellant with additional information. Appellant Post-Hearing Exhibit A and HA (Appellant
Testimony) at 01:08:00-01:11:00.
10. After
the Appellant failed to pay the debt associated with the insurance policies by November
30, 2021, the AIP notified the Agency that the Appellant had a delinquent debt
that made it ineligible for the FCIP. Upon
receiving notice from the AIP and verifying that the Appellant had a delinquent
debt, the Agency notified the Appellant by letter dated December 14, 2021, that
it was ineligible to participate in the FCIP because it had failed to pay the
debt associated with the 2020 insurance policies on time. AR,
Pages 2-4 and HA (Agency Representative Testimony) at 01:52:00-02:00:00.
11. The
AIP did not receive an emailed copy of the payment agreement signed by Member 1
from the Appellant. However, the AIP did
receive a check dated December 20, 2021, for $10,518.41 from the Appellant on
December 28, 2021. The certified letter
was postmarked December 20, 2021, and it included a copy of the payment
agreement signed by Member 1 but not the AIP.
AR, Pages 53-54 and 96-98 and Agency Post-Hearing Exhibit 1.
13. On January 4, 2022, the AIP sent the
Appellant a third billing statement. Because
the debt was considered delinquent, the billing statement no longer indicated a
due date of November 30, 2021. The
billing statement listed the two 2020 insurance policies as well as a statement
that the Appellant had a debt associated with overpaid indemnities, now
calculated to include interest and a credit for the Appellant’s December 20,
2021, payment ($31,169.27). The billing
statement further informed the Appellant that the debts were due by January 31,
2022, to avoid further interest charges.
The AIP sent the billing statement to the Appellant’s address of record,
and it was not returned as undeliverable.
AR, Pages 78-79.
14. The Appellant satisfied its debt with the
AIP in full on March 17, 2022. AR, Page 99, and HA (Agency Representative
Testimony) at 01:54:00-01:56:00.
DISCUSSION
Part 11 of Title 7 of the Code of Federal Regulations (7 C.F.R.) governs appeals before NAD. The regulations governing the issue on appeal are found at 7 C.F.R. Parts 400 and 457. When appealing an adverse decision to NAD, an appellant has the burden of proving by a preponderance of the evidence that an agency's adverse decision was erroneous. 7 C.F.R. Section (§) 11.8(e). “[A] preponderance of the evidence … is evidence which is … more convincing than the evidence … offered in opposition to it .…” Greenwich Collieries v. Director, OWCP, 990 F.2d 730, 736 (3d Cir. 1993), aff’d, 512 U.S. 267 (1994). An agency’s adverse decision is erroneous when it is inconsistent with the laws and regulations of the agency or the generally applicable interpretations of those laws and regulations. 7 C.F.R. § 11.10(b).
1. Did the Agency correctly place the
Appellant on the Ineligible Tracking System (ITS) List, based on proper notice
of the debt associated with the Appellant’s 2020 crop insurance policy and the
Appellant’s failure to pay that debt on time?
Yes. The Agency
correctly placed the Appellant on the ITS List based on proper notice of the
debt associated with the Appellant’s 2020 crop insurance policy and the
Appellant’s failure to pay that debt on time.
Proper notice of debt
Prior to notifying the Agency that the Appellant had a delinquent debt that made it ineligible for the FCIP, the AIP was required to send written notice of the debt to the Appellant at the address shown on the Appellant’s insurance application on file at its crop insurance agent’s office. See 7 C.F.R. § 400.682(a); 20-RIVI, Preamble and § 28. The requirements for the contents of that notice include the period within which the debt must be paid, and that the Appellant be afforded a meaningful opportunity to contest the amount and existence of the debt. See 7 C.F.R. § 400.682(a).
On November 1, 2021, the AIP sent the Appellant two notices
of debt letters and one billing statement, each of which notified the Appellant
of the existence of the debt and the period in which the Appellant could pay
the debt or enter into a payment agreement.
FOF 3-4. The letters notified the Appellant that
it had the right to a complete review of the debt and the right to contest the
debt in accordance with the provisions contained in the Appellant’s insurance
contract. FOF 3. The letters also
provided the Appellant specific information regarding the procedure for
requesting a review and contesting the debt.
FOF 3. The billing statement and letters were sent
to the Appellant’s address of record, as required. FOF 3-4. Therefore,
the AIP satisfied the requirement to provide the Appellant with written notice
of the debt and options to remedy the debt.
See 7 C.F.R. § 400.682(a).
Meaningful opportunity to contest
The Appellant averred
that it was not afforded a meaningful opportunity to contest the amount and
existence of the debt with the AIP. HA (Appellant Testimony) at 02:24:00-02:27:00
and see 7 C.F.R. § 400.682(a). I disagree.
The term
“meaningful opportunity to contest” is generally defined by the regulations as
“…the opportunity for the insured to resolve disagreements with a decision by
the insurance provider through requesting a review of the decision by the
insurance provider, mediation, arbitration, or judicial review, as applicable (emphasis added).” 7 C.F.R. § 400.677 (definition of Meaningful
opportunity to contest). Based on the Appellant’s insurance contract,
only mediation and arbitration were initial avenues allowed for the Appellant
to contest the amount of existence of the debt with the AIP, not AIP review. 20-RIVI, Paragraph 15. The Appellant was afforded the
opportunity to seek mediation or arbitration but has not.[2] FOF 6.
The Appellant did ask the AIP to review the debt, asserting
that it believed the policy was not voided and that therefore the debts
calculated by the AIP were not correct. FOF
6. However, based on the insurance
contract, the Appellant was limited to seeking either mediation or arbitration
if it disagreed with the AIP’s conclusion that the Appellant’s 2020 insurance
policies were voided and that the Appellant owed the AIP debts as a
result. 20-RIVI, Paragraph 15. In addition, notwithstanding any
disagreement with the AIP, the Appellant was obligated by the insurance
contract and program regulations to either pay the debt in full or enter into a
payment agreement prior to the due date established by the AIP, a fact admitted
by the Appellant. See AR, Pages 73
and 86; 20-RIVI, Paragraph 20; 7
C.F.R. § 400.677 (Definitions of Written Payment Agreement and Delinquent Debt);
and HA (Appellant Testimony) at 00:51:30-00:54:00. As
such, the fact that Appellant sought administrative review of the debt does not
show that the Appellant did not receive proper notice of the debt or as
discussed further below, or that the Appellant was somehow excused from either
paying the debt in full or entering into a valid payment agreement prior to the
due date established by the AIP. 20-RIVI,
Paragraph 20 and 7 C.F.R. § 400.677
(Definitions of Written Payment Agreement and Delinquent Debt).
Based on the evidence contained in the case record, the Appellant was afforded a meaningful opportunity to contest the amount and existence of the debt with the AIP. FOF 3-4 and see 7 C.F.R. § 400.677 (definition of Meaningful opportunity to contest); 7 C.F.R. § 400.682(a); and 20-RIVI, Paragraph 15.
Failure to pay debt on
time
A debt becomes delinquent if a participant does not pay the debt in full by the termination date listed in the policy or any other due date established by a notice of indebtedness. 7 C.F.R. § 400.677 (Definition of Delinquent Debt). A debtor may avoid a delinquency by entering into a payment agreement that is mutually agreeable to both the AIP and the debtor so long as all payments are made by the due dates specified in the payment agreement. 7 C.F.R. § 400.677 (Definition of Delinquent Debt). To be valid, the payment agreement must be in writing, signed and dated by both parties, and be executed prior to the underlying debt becoming delinquent. 7 C.F.R. § 400.677 (Definitions of Written Payment Agreement and Delinquent Debt).
In this case, the Appellant did not present any evidence or argument that it paid its debt in full by the date established in the notices of debt. However, the Appellant presented evidence that it emailed a signed copy of a payment agreement and attempted to send it to the AIP one day prior to the due date established for its debt. See Appellant Exhibit 1 and HA. However, the Appellant’s email was sent to an incorrect email address for the AIP and neither the email nor the attachment signed by the Appellant was received by the AIP. FOF 7. Unfortunately, even if the Appellant had submitted additional evidence that it had in fact emailed the signed payment agreement to a valid email address for the AIP or that the payment agreement was received by the AIP, it would still not have been valid. To be valid, the payment agreement must be signed by both parties prior to the underlying debt becoming delinquent. 7 C.F.R. § 400.677 (Definitions of Written Payment Agreement and Delinquent Debt) (emphasis added). The Appellant’s partially signed agreement to the AIP by unanswered email (that turned out to be sent to an incorrect email) just prior to the payment due date did not create a binding payment agreement that changed the due date originally listed in the notices of debt. FOF 7 and 11 and 7 C.F.R. § 400.677 (Definitions of Written Payment Agreement and Delinquent Debt).
The Appellant also argued (discussed further above) that it requested AIP review of the debt. FOF 6. However, as discussed above, the Appellant’s argument does not excuse its failure to pay the debt on time or enter into a timely payment agreement. See AR, Pages 73 and 86; 20-RIVI, Paragraph 20; and 7 C.F.R. § 400.677 (Definitions of Written Payment Agreement and Delinquent Debt.)
After determining that the debt was delinquent, the AIP notified the Agency of the debt and provided the Agency the available information that established the existence and amount of the debt. FOF 10 and see 7 C.F.R. § 400.682(a). The Agency then complied with applicable regulations when it sent a notification letter to the Appellant that stated the criteria upon which the ineligibility determination was based, briefly stated the facts that supported the Agency’s decision, and notified the Appellant of the period during which it would remain ineligible for the FCIP. FOF 10 and see 7 C.F.R. § 400.682(c) and (d).
In summary, based on the evidence and argument presented, I conclude that the Appellant was afforded all required notice related to its debt. Because the Appellant did not pay the debt in full or enter into a valid payment agreement before the due date established for the debt, the debt became delinquent. Further, the Agency verified the existence and delinquency of the debt as required under the regulations. See FOF 10; 7 C.F.R. §§ 400.679(a)(1) and 400.682(e); and HA (Agency Representative Testimony) at 01:40:00-01:55:00. I conclude that the Agency did not err when it placed the Appellant on the ITS List based on its failure to pay its debt prior to November 30, 2021, the due date listed in the notices of debt and billing statement.
2. Do the Appellant’s arguments regarding
entering into a payment agreement with the AIP show that the Agency erred?
No. As discussed previously, the Appellant’s arguments regarding entering into a payment agreement with the AIP do not show that the Agency erred. The Appellant did not enter into a valid payment agreement as required under the regulations. See 7 C.F.R. § 400.677 (Definitions of Written Payment Agreement and Delinquent Debt).
While I am sympathetic to the Appellant’s plight, the
regulations governing the FCIP are quite strict and do not allow relief for
situations in which insureds make late payments, unintentionally or
otherwise. See e.g., 7 C.F.R. § 400.677 (Definition of Delinquent Debt) and 7
U.S.C. § 7996(a)(2)(B)(ii). The Appellant was certainly placed in a challenging
situation in which it was required to make difficult decisions about its legal
rights under a tight timeframe. See FOF 3-6.
However, while pursuing any
other recourse, at least for purposes of participation under the FCIP, the
Appellant was required by the regulations and its insurance contract to pay the
debt in full or enter into a valid payment agreement with the AIP by the due
date established by the AIP. See AR,
Pages 73 and 86; 20-RIVI, Paragraph 20; and 7 C.F.R. § 400.677 (Definitions of Written Payment Agreement and
Delinquent Debt.)
DETERMINATION
Pursuant to 7 C.F.R. § 11.8(e), the Appellant bears the
burden of proving that the Agency’s adverse decision is erroneous by a
preponderance of the evidence. In this
case, the Appellant has not met this burden.
The Agency’s decision was not erroneous.
This is a final determination of the Department of
Agriculture unless a timely request for review is filed.
Dated and mailed this 8th day of June 2022.
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/s/ |
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JUSTIN C. OLIVER |
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Administrative Judge |
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National Appeals Division |
[1] The SRA is authorized by the Federal Crop Insurance Act (7 United States Code Section 1501, et seq.).
[2] Even if I were to require a duty on the part of the
AIP to respond in some way to the Appellant’s request for administrative review
because the AIP offered administrative review as a way to contest the amount or
existence of the debt in its notification letters (see FOF 3 and 7 C.F.R. §
400.682(a)(2)), the only basis for contesting the debt articulated
by the Appellant in its request was the bald assertion that it believed the
policies were not void and therefore there was no debt. FOF 6. Such an unsupported assertion that was facially
inconsistent with information provided by Member 1 to the Agency (see FOF 2) would require very little evaluation on the part of the AIP prior to reporting
the existence and amount of debt to the Agency pursuant to 7 C.F.R. § 400.682(a). See
FOF 10 and 7 C.F.R. § 400.682(a)(2).