Farmer's Crop Insurance Claim Incomplete, Untimely
By John Allgood
A farmer in Pulaski County, Georgia, filed a crop insurance claim under
the terms of a policy he obtained in accordance with the Standard
Reinsurance Agreement with the Federal Crop Insurance Corporation [“FCIC”].
His 2008 crop had a low yield due to poor weather conditions. The farmer
notified the insurance agent of a possible claim under the policy. The
claimant and insurer disagreed on whether proper notice of the claim had
been timely filed, but after a factual review the insurer denied the
At the time it denied the claim, the insurer requested from the farmer
more information in order to assess the claim, while still asserting that
he filed the claim late. The insurer’s letter requested the information
from the farmer within 30 days. The facts were unclear when the farmer
submitted the requested information, but the insurer denied the claim, for
a second time, 40 days after the request. The insurer advised the farmer
that he could contest the denial in mediation or arbitration. The farmer
filed a demand for arbitration. The rules of the American Arbitration
Association were adopted.
After a hearing, the arbitrator denied the farmer’s claim, finding that
any additional information the farmer filed was untimely. And by denying
the claim based on timeliness, the arbitrator concluded, there was no need
for him to assess the facts of the claim.
The farmer petitioned the district court to vacate the arbitrator’s award,
claiming under the FAA (9 U.S.C. §10(a)(4)) that the arbitrator had
exceeded his powers. He also argued that the arbitrator, by entering the
award in 33 days, failed to abide by AAA Rule 41, which required the award
to be entered within 30 days of the hearing. In addition, the farmer
asserted that the arbitrator should not have interpreted the terms of the
policy, an act that under regulation is reserved to the FCIC.
The district court granted the farmer summary judgment and vacated the
arbitration award under 9 U.S.C. §10 for the reasons proferred by the
farmer. There was no specific deadline under the policy, the district
court concluded, for requests for additional information:
This finding raises the question of whether the arbitrator concluded that
[the insurer] could set deadlines not found in the policy and then use
those deadlines as a basis for denial of a claim for procedural
noncompliance. While it is unclear precisely how the arbitrator
interpreted the letter, it is clear that he interpreted the letter as a
procedural requirement regarding [the farmer’s] proof of claim.
The district court also found that the award was nullified when the
arbitrator exceeded his authority by interpreting the policy terms rather
than obtaining a required interpretation from the FCIC.
On appeal, Davis v. Producers Agricultural Insurance Company, No. 13-10648
(11th Circuit August 6, 2014), the 11th Circuit reexamined the standards
for vacatur under the FAA statute at issue, 9 U.S.C. §10(a)(4). It also
invited and received a brief from the FCIC on the issue of the
arbitrator’s interpreting the policy terms. The court also noted that
Section 400.768 provides that the FCIC “will not interpret any specific
factual situation or case,” while acknowledging also that Section 457.8
(Policy § 20(a)(1) requires parties disputing policy provisions or
procedure to obtain an interpretation from FCIC.
In its amicus brief, the FCIC stated that it had issued directives giving
insurers discretion to require insureds to provide requested documents
within reasonable deadlines. It stated:
Since the FADs [final agency determinations] are binding in all crop
arbitrations … the arbitrator could have reasonably concluded that [the
insurer] was authorized to issue a 30-day deadline for [the farmer] to
respond with the requested information and to deny [the farmer’s]
indemnity claim for failure to comply with that deadline. The FCIC had
already resolved that particular policy issue, and the arbitrator was not
required to seek another FCIC interpretation on the same issue. Id. at 20.
Final agency determinations should be accorded substantial weight, the
Because the FCIC has determined, as an interpretive matter, that insurer
imposed deadlines are compatible with the purposes of the statutory and
regulatory scheme, the individual factual determinations that such a
deadline was imposed and that, in specific circumstances of the
transaction, its imposition was reasonable, were matters for the
arbitrator. [emphasis supplied] Id. at 22.
The appeals court reversed the district court’s vacatur after concluding
that the arbitrator did not exceed his authority and did not render his
award late. Citing a 5th Circuit opinion, the court said it would not
penalize the award’s beneficiary because the beneficiary had no control
over the arbitrator’s actions. “This is especially true because of the
extreme shortness of the period,” the court said. However, the court also
found that the farmer, through his inaction, waived the arbitrator’s
violation of the filing deadline:
[The farmer] did not object at the expiration of the thirty-day period.
Nor did he object when the untimely decision was issued three days later.
Instead, he waited until he filed this action in the district court.
Moreover, he has made no effort to show that he was in any way prejudiced
by the delay. Accordingly, we see no basis for overturning the
arbitrator’s decision based on the failure to abide by the AAA rules
governing the time period for issuance of a decision. Id. at 25
Allgood is of counsel at Ford & Harrison. For more than 20 years he
has arbitrated and mediated cases in commercial, employment,
construction and securities law, as well as in real estate and
anti-trust matters. An adjunct professor of ADR at Emory University
School of Law, he was a member of the U.S. Olympic Committee panel of
arbitrators during the 1996 and 1998 Olympic Games.
Phone: 404-888-3832; fax: