THURSDAY, APRIL 2, 2015
Last week, the Department of Justice (DOJ) announced that Fireman’s
Fund Insurance Company agreed to pay the U.S. Government $44 million to settle
allegations that it violated the False Claims Act (FCA) when it knowingly sold
and serviced ineligible crop insurance policies under the U.S. Department of
Agriculture’s (USDA) federal crop insurance program.
In addition, the Government alleged that Fireman’s Fund
submitted forged documents to the USDA for federal reinsurance – documents that
were purportedly backdated, contained forged farmer signatures, whited out dates
and signatures, and documents that showed evidence of being accepted after the
deadline date.
This alleged abuse of the crop program is a serious
violation of the FCA, and undermined confidence in other crop insurance
policies submitted to the USDA, thereby causing undo harm on farmers that rely
on crop insurance as a means of survival. Taxpayers were also directly
affected by this alleged scheme.
Fireman’s Fund is an Allianz SE subsidiary headquartered in
Novato, California, and provides personal and commercial property insurance
throughout the United States.
As an active participant in the Federal crop insurance
program, between 1999 and 2002, Fireman’s Fund was required to adhere to the
rules and regulations of the program by providing crop insurance policies to
farmers as a means of vital support in the event farmers suffered crop losses
due to natural disasters.
However, these policies were insured by the USDA for
qualified policyholder only. Between Jan. 1, 1999 and Dec. 31, 2002, the
government alleged that Fireman’s Fund underwrote policies that did not meet
the qualifications outlined in the program and deliberately falsified documents
in order to get USDA to accept policies that appeared eligible but in fact were
not.
Fireman’s Fund alleged took insurance policies that were
eligible initially in past years, but no longer qualified, and submitted those
policies for reinsurance.
Policies that are a part of this $44 million
settlement were issued by Fireman’s Fund offices in Modesto, California;
Lambert, Mississippi; Fargo, North Dakota; Lubbock, Texas; Prosser, Washington;
and Overland Park, Kansas.
When a company intentionally ignores laws designed to
protect taxpayer dollars and takes advantage of government programs for
financial gain, it hurts the people these programs are designed to
assist. In this particular case, farmers that suffer from unforeseen crop
disasters, such as drought, floods, or fire and need reliable insurance.
So, to combat this type of fraud, provisions of the FCA
allow any person, who knows of an individual or company that has financially
defrauded the federal government, to file a “qui tam” lawsuit to recover
damages on behalf of the government.
Additionally, a whistleblower who files a case against a
company that has committed fraud against the government, may receive an award
of up to 30 percent of the settlement.