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.