Source: http://openjurist.org/440/f3d/992/ace-property-and-casualty-insurance-company-v-federal-crop-insurance-corporation-a
Timestamp: 2013-12-06 08:23:38
Document Index: 356946375

Matched Legal Cases: ['§ 1501', '§ 1503', '§ 1507', '§ 1508', '§ 6901', '§ 1506', '§ 6912', '§ 6912', '§ 1506', '§ 1506', '§ 6912', '§ 6912', '§ 1506', '§ 1506']

440 F3d 992 Ace Property and Casualty Insurance Company v. Federal Crop Insurance Corporation a | OpenJurist
440 F. 3d 992 - Ace Property and Casualty Insurance Company v. Federal Crop Insurance Corporation a	Home440 f3d 992 ace property and casualty insurance company v. federal crop insurance corporation a
440 F3d 992 Ace Property and Casualty Insurance Company v. Federal Crop Insurance Corporation a 440 F.3d 992
ACE PROPERTY AND CASUALTY INSURANCE COMPANY, formerly known as Cigna Property and Casualty Insurance Company; Alliance Insurance Companies; American Agricultural Insurance Company; American Growers Insurance Company, In Rehabilitation; Country Mutual Insurance Company; Farm Bureau Mutual Insurance Company, of Iowa; Farmers Alliance Mutual Insurance Company; Great American Insurance Company; Hartford Fire Insurance Company; Nau Country Insurance Company; Producers Lloyds Insurance Company; Rural Community Insurance Company; Farmers Mutual Hail Insurance Company of Iowa, Plaintiffs-Appellants,v.FEDERAL CROP INSURANCE CORPORATION, A Corporation within the United States Department of Agriculture; Risk Management Agency, An Agency within the United States Department of Agriculture, Defendants-Appellees.
No. 05-2321.
P. John Owen, argued, Overland Park, KS (Michael E. Tucci, Washington, D.C., on the brief), for appellant.
The Federal Crop Insurance Act (FCIA), 7 U.S.C. §§ 1501-1524, established a federal crop insurance program in 1938 to be administered and regulated by the FCIC. 7 U.S.C. § 1503. Originally the FCIC directly provided crop insurance coverage to eligible farmers, but in 1980 Congress revised the FCIA to require the FCIC "to contract with private companies" for insurance "to the maximum extent possible." 7 U.S.C. § 1507(c). The FCIC was to "reimburse such companies. . .for [their] administrative and program expenses," id., and provide reinsurance "to the maximum extent practicable" to cover catastrophic loss. 7 U.S.C. §§ 1508(k)(1), 1508(b)(1). The FCIC now offers most federal crop insurance through private insurers which it then reinsures.
At issue between the FCIC and these insurers are two provisions of the 1998 SRA which provide Catastrophic Risk Protection (CAT) coverage. The Administrative Fee provision in the 1998 SRA allowed insurers to retain a portion of the administrative fee charged by the FCIA, and the Loss Adjustment Expenses (LAE) provision permitted insurers to recoup 14% of an imputed premium for each CAT policy provided to a farmer. These provisions were affected by congressional action in 1998. In that year Congress enacted the Agricultural Research Extension and Education Reform Act (AREERA), Pub.L. No. 105-185, 112 Stat. 523 (1998), which eliminated the right of private insurance companies to retain any administrative fees and capped LAE reimbursement at 11%. Then in 2000 Congress enacted the Agricultural Risk Protection Act (ARPA), Pub.L. No. 106-224, 114 Stat. 358 (2000), further lowering the LAE cap to 8%.
Disputes regarding the SRA are governed by the Federal Crop Insurance Reform and Department of Agriculture Act of 1994, Pub.L. 103-354, 7 U.S.C. §§ 6901-7014 (1994) (Reorganization Act), which created a mandatory administrative appeals process for SRA matters. Under the Reorganization Act, a party who believes that its SRA rights have been violated may request a final agency determination, which can then be appealed to the Department of Agriculture Board of Contract Appeals (the Board). Although the Act grants exclusive jurisdiction to federal district courts, 7 U.S.C. § 1506(d), parties are to exhaust their administrative remedies before pursuing a claim in federal court. 7 U.S.C. § 6912(e).
In February 2003 the insurers brought an action against the United States in the Court of Federal Claims for breach of contract, duress, and unjust enrichment resulting from the implementation of AREERA and ARPA. The government moved to dismiss, arguing that under § 6912(e) exhaustion of administrative remedies was a prerequisite to subject matter jurisdiction, and alternatively that § 1506(d) required complaints to be filed in federal district court. The insurers responded that neither § 1506(d) nor the exhaustion requirements contained in the SRA were binding; they did not directly address § 6912(e) because their suit was against the United States rather than the FCIC. In March 2004 the Court of Federal Claims dismissed the action for lack of jurisdiction under § 6912(e) because the insurers had not exhausted their administrative remedies, and alternatively because § 1506(d) grants federal district courts exclusive jurisdiction over suits against the FCIC. Ace Property & Cas. Ins. Co. v. United States, 60 Fed.Cl. 175, 184-85 (Fed.Cl.2004). Its decision was affirmed by the Federal Circuit on June 1, 2005, on the ground that the case had been properly dismissed since § 1506(d) provides for exclusive jurisdiction in the federal district courts and that there was therefore "no reason to revisit [the court's] superfluous finding regarding exhaustion of administrative remedies." Ace Property & Cas. Ins. Co. v. United States, 138 Fed.Appx. 308, 309 (Fed.Cir.2005).