On July 16, 2019, the Risk Management Agency (RMA) issued Managers Bulletin MGR-19-021, which provides guidance to approved insurance providers (AIPs) to conduct Agriculture Risk Protection Act (ARPA) list review standards. RMA states that it annually develops a list of crop insurance agents and loss adjusters with anomalous claims experience relative to their peers in the geographic area. RMA states the list is mandated by section 515(f)(1) of the Federal Crop Insurance Act (FCIA) and directs RMA to establish procedures to review agents and loss adjusters with disparate performance and report remedial action for potential fraud, waste, or abuse uncovered during the review. RMA states that being on the list does not mean that agents or loss adjusters committed or facilitated fraudulent or abusive actions but RMA believes that a higher level of scrutiny is warranted to ensure program integrity. RMA states that data mining has been used since 2001 to identify agents and loss adjusters whose performance warrants additional scrutiny. RMA is issuing review guidelines to provide clear expectations of what actions AIPs are to perform regarding the ARPA list data mining reviews, the actions AIPs must take with respect to agents and loss adjusters on the list and how those actions are reported to RMA.
ANALYSIS: RMA states that it has been using data mining since 2001 to identify agents and loss adjusters with anomalous claims. However, RMA is not clear who has been conducting the review of these agents or loss adjusters with anomalous claims since 2001 what guidance has been used in the past. Section 515(f)(2) of the FCIA states:
(A) REVIEW REQUIRED.—The Corporation shall conduct a review of any agent identified under paragraph (1)(A), and any person identified pursuant to paragraph (1)(B), to determine whether the higher loss claims associated with the agent or the higher number of accepted or denied claims (as applicable) associated with the person are the result of fraud, waste, or abuse.
(B) REMEDIAL ACTION.—The Corporation shall take appropriate remedial action with respect to any occurrence of fraud, waste, or abuse identified in a review conducted under this paragraph.
Under section 515(f)(2), RMA shall conduct the reviews of the agents and loss adjusters. Nothing in this bulletin explains the authority for RMA to delegate these reviews to the AIPs. The reviews that must be conducted appear to include underwriting reviews, acreage report reviews, production report and APH reviews, claims reviews, and quality control reviews. However, under the guidance, it appears the AIPs are to provide a written evaluation that summarizes the results of monitoring and review program that is submitted to RMA through the AIP HyDRA application maintained by the Center for Agribusiness Excellence (CAE). The AIP is then to provide appropriate notification to RMA Compliance for follow up on any issues relating to potential fraud, waste or program abuse. Further, the AIP is to take action to collect improper payments to resolve the questionable actions by the policyholder, agent or adjuster.
There is nothing in this guidance that describes any action RMA is to take in this process. All obligations appear to be delegated to the AIPs and it is unclear whether RMA even reviews the work done by the AIP to ensure that it has properly and completely conducted the reviews and identified the basis for the agent or loss adjuster anomalies. Further, AIPs are only to notify RMA of issues relating to fraud, waste and abuse but there are other actions that can adversely affect program integrity that do not arise to the level of fraud, waste or abuse but AIPs are not required to notify RMA of such actions. In addition, there is nothing in this guidance that describes the remedial action to be taken by RMA. On its face, this bulletin and guidance does not appear to comply with the requirements of section 515(f) of the FCIA and it is unclear whether it will really accomplish the goal to identify anomalous claims and prevent them in the future.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.