Court Opinion

ID: 9351793
Source: CourtListenerOpinion
Date Created: 2023-01-03 19:00:32.329611+00
Date Added: 2024-06-11T17:02:59.649509
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                               File Name: 23a0001n.06

                                       Case No. 22-1209

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

                                                                                   FILED
                                                     )                       Jan 03, 2023
EDGAR MILLER,
                                                     )                   DEBORAH S. HUNT, Clerk
       Plaintiff-Appellant,                          )
                                                     )
v.                                                   )     ON APPEAL FROM THE UNITED
                                                     )     STATES DISTRICT COURT FOR
UNITED STATES DEPARTMENT OF                          )     THE WESTERN DISTRICT OF
AGRICULTURE; RISK MANAGEMENT                         )     MICHIGAN
AGENCY; FEDERAL CROP INSURANCE                       )
CORPORATION,                                         )                                 OPINION
       Defendants-Appellees.                         )
                                                     )

Before: SUTTON, Chief Judge; SUHRHEINRICH and NALBANDIAN, Circuit Judges.

       SUTTON, Chief Judge. For years Edgar Miller purchased crop insurance, hoping to

protect his farm from poor harvests. While the insurance for the most part served that purpose, it

also brought him three federal lawsuits, an arbitration, and an adverse agency determination from

the Federal Crop Insurance Corporation. Today Miller challenges this last decision—the agency’s

decision—under the Administrative Procedure Act. The district court rejected the challenge.

We do too.

                                                I.

       “[T]he only possible guarantee of the future is responsible behavior in the present.”

Wendell Berry, The Unsettling of America: Culture & Agriculture 58 (3d ed. 1996). The point

has many components, and most farmers appreciate all of them. One of them is the imperative

each year to risk the “up-front costs” of sowing in return for the never-guaranteed prospect of
Case No. 22-1209, Miller v. U.S. Dep’t of Agric. et al.

“back-end revenue” from reaping. Helena Agri-Enters., LLC v. Great Lakes Grain, LLC, 988 F.3d

260, 266 (6th Cir. 2021). The Federal Crop Insurance Act helps farmers to manage these

uncertainties through a crop insurance system, which the Federal Crop Insurance Corporation

oversees. 7 U.S.C. §§ 1502(a), 1503. Under this federal program, farmers can purchase insurance

from the Insurance Corporation or from an approved insurance provider that the Insurance

Corporation reinsures. Id. §§ 1502(b)(2), 1508(a)(1).

       In either case, the Common Crop Insurance Policy, promulgated under the Act, governs.

7 C.F.R. § 457.8. The Crop Insurance Policy requires compliance with the Act, attendant

regulations, and the Insurance Corporation’s procedures. Id. It sets out the particulars of the

insurance coverage and the claims process. See id. § 457.8(3), (14). Certain provisions address

the readjustment and repayment of settled claims. Section 21(b)(3), for instance, allows for

repayment of overpaid claims if a farmer “knowingly misreported” yield information.                 Id.

§ 457.8(21)(b)(3). And § 21(f) contemplates repayment if a farmer fails “to maintain or provide”

certain records. Id. § 457.8(21)(f), (g).

       The Policy also requires the arbitration of disputed claims. See id. § 457.8(20)(a)(1). But

if a dispute involves policy interpretation, rather than mere application, the parties must turn to the

Insurance Corporation for a final agency determination interpreting the Policy. Id. Parties must

submit a request that “[i]dentif[ies] and quote[s] the specific provision” at issue.                Id.

§ 400.767(a)(3). From there, the Insurance Corporation issues a generally applicable interpretation

that binds all program participants. Id. §§ 400.766(b)(2), 400.768(e). Because these decisions

must be generally applicable, any requests for interpretation must not turn on or even invoke

“specific facts” or “alleged conduct.” Id. § 400.767(a)(8).

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Case No. 22-1209, Miller v. U.S. Dep’t of Agric. et al.

       Edgar Miller, a corn and soybean farmer, has experienced this “large regulatory regime”

firsthand. Helena Agri-Enters., 988 F.3d at 267. He purchased crop insurance from an approved

insurance provider, Farmers Mutual Hail Insurance Company of Iowa. After poor harvests in

2012, 2013, and 2014, Miller filed claims. He received payouts for 2012 and 2013. But Farmers

Mutual declined his claim for 2014. Making matters worse for Miller, Farmers Mutual realized it

had overpaid Miller for 2012 and 2013 due to his poor recordkeeping. It demanded repayment.

When Miller refused, the parties went to arbitration.

       Farmers Mutual secured a favorable arbitral award and filed a petition to confirm it. But

the district court nullified the award after finding that the arbitrator had stepped out of line and

interpreted the Policy in deciding that Farmers Mutual could readjust past claims and require

repayment from Miller. Farmers Mut. Hail Ins. Co. of Iowa v. Miller, 366 F. Supp. 3d 974, 978

(W.D. Mich. 2018); see 7 C.F.R. § 457.8(20)(a)(1).

       The parties returned to the Insurance Corporation. It issued “Final Agency Determination

287,” a title that brings with it the virtue of making everyday speech sound like poetry. The ruling

explained that multiple policy provisions require farmers to repay overpaid claims, and that

insurers have a duty to correct errors in claims. Final Agency Determination FAD-287 (Oct. 16,

2019), https://tinyurl.com/hyb4rzep. With Final Agency Determination 287 in its hand, if not its

ear, Farmers Mutual filed another petition to confirm the arbitral award. This time, the district

court granted it, and we affirmed. Farmers Mut. Hail Ins. Co. of Iowa v. Miller, No. 20-1978,

2021 WL 3044275, at *1, *4 (6th Cir. July 20, 2021).

       Having reached the end of the road on the arbitral award proceedings, Miller challenged

one premise of that ruling—Final Agency Determination 287—under the Administrative

Procedure Act. The district court rejected the challenge. This appeal followed.

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Case No. 22-1209, Miller v. U.S. Dep’t of Agric. et al.

                                                   II.

       All that’s before us today is whether Final Agency Determination 287 complies with the

Administrative Procedure Act. Only if the ruling is arbitrary and capricious may we set it aside

under the Act. 5 U.S.C. § 706(2)(A). This “standard requires that agency action be reasonable

and reasonably explained.” FCC v. Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021).

       Determination 287, for short, meets this modest standard. What did the parties ask the

agency to decide? Farmers Mutual wanted to know if § 21(b)(3) of the Crop Insurance Policy—

which requires repayment if a farmer “knowingly misreported any information related to any

yield”—sets out “the only circumstances” for recovering overpaid claims. R.12 at 2, 6. Miller, in

turn, asked whether an insurer could readjust claims outside of either § 21(b)(3) or “a failure to

provide and to retain records” under § 21(f). Id. at 53. The Insurance Corporation answered “no”

to the former question and “yes” to the latter. Final Agency Determination FAD-287, supra. It

added that insurers must “audit and correct any claim that was not adjusted according to [the

Insurance Corporation’s] loss adjustment procedures.”          Id.   Put differently, the Insurance

Corporation found that (1) multiple policy provisions require farmers to repay overpaid claims and

(2) insurers have a duty to correct such errors.

       The text of the Crop Insurance Policy and the regulatory framework support both

conclusions.

       Begin with the Policy’s text. It obligates a farmer to “repay any overpaid amounts,” e.g.,

7 C.F.R. § 457.8(21)(g), in a variety of circumstances. Included among them are: “misreport[ing]

any material information,” id. § 457.8(3)(g)(4); having an incorrect approved yield, id.; failing to

provide “verifiable records to support [a] yield in the database,” id. § 457.8(3)(h)(1); failing to set

out a “valid” agronomic basis for an approved yield, id.; changing “production method[s],” id.

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Case No. 22-1209, Miller v. U.S. Dep’t of Agric. et al.

§ 457.8(3)(h)(3); “incorrectly report[ing] any information on the acreage report,” id. § 457.8(6)(h);

having a harvested production that “exceeds the appraised production,” id. § 457.8(15)(b)(2);

“knowingly misreport[ing]” yield information, id. § 457.8(21)(b)(3); failing to “maintain” records,

id. § 457.8(21)(f); and failing to “provide records,” id.

       The Policy’s text also requires the correction of errors. The Crop Insurance Policy tells

insurers to comply with the Insurance Corporation’s loss adjustment procedures, id. § 457.8(14)(i),

and obligates farmers to retain and provide records upon the insurer’s “request,” id. § 457.8(21)(b).

These obligations bolster Determination 287’s finding of a duty to audit and correct claims.

       The crop insurance system’s broader regulatory framework supports these conclusions as

well. The Crop Insurance Policy requires insurers to comply with the Insurance Corporation’s

procedures, including its “handbooks, manuals, memoranda[,] and bulletins.” Id. § 457.8. And

the regulatory scheme binds all program participants. See Fed. Crop Ins. Corp. v. Merrill, 332

U.S. 380, 384–85 (1947).

       The Insurance Corporation’s procedures convey a similar set of obligations to the Policy.

The Loss Adjustment Manual outlines extensive processes that insurers must follow in adjusting

claims, including corrected claims. Loss Adjustment Manual Standards Handbook: 2018 and

Succeeding Crop Years 313 (Jan. 2018), https://tinyurl.com/yktejunc.             The bulletins and

informational memoranda subject insurers to periodic compliance reviews, Informational

Memorandum COM-17-004 (Aug. 7, 2017), https://tinyurl.com/5yarzkms, and direct insurers to

“reevaluate[]” claims after changes in guidance occur, Managers Bulletin MGR-19-029 (Dec. 23,

2019), https://tinyurl.com/269a62nh.

       Some of the Insurance Corporation’s other decisions confirm the point. Recall that these

determinations apply generally and bind all program participants. 7 C.F.R. § 400.766(b)(2). Past

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Case No. 22-1209, Miller v. U.S. Dep’t of Agric. et al.

determinations have set out a duty for insurers to correct claims. See, e.g., Final Agency

Determination FAD-136 (Apr. 20, 2011), https://tinyurl.com/3ra4e2ua (requiring insurer “to

correct claims when information is found to be incorrect in accordance with FCIC approved policy

provisions and procedures”); Final Agency Determination FAD-140 (May 10, 2011),

https://tinyurl.com/2p8yncjx (noting “any time there is not conformance with the approved policy

and procedures, [insurers] must take such actions as are necessary to achieve conformance”). Far

from announcing a novel obligation, Determination 287 echoed these prior determinations.

       All perspectives considered, the Crop Insurance Policy and the regulatory framework

support the two core holdings in Determination 287, making it anything but arbitrary and

capricious.

       Attempting to avoid this conclusion, Miller points out that the Insurance Corporation failed

to list all of the policy provisions that require repayment in Determination 287. But the regulations

put the burden on the requesting parties to “[i]dentify and quote” the policy provision that they ask

to be interpreted.    7 C.F.R. § 400.767(a)(3).      For its part, Farmers Mutual requested an

interpretation of § 21. But Miller requested “a determination based on the Basic Provisions, in

general.” R.12 at 52. Having failed to comply with the regulations on the front end, he cannot

complain about the agency’s determination on the back end.

       Miller objects that Determination 287 includes analysis that is irrelevant to his case. But

that should not come as a surprise. Recall that final agency determinations apply generally, bind

all participants, and are not permitted to consider specific facts or conduct.             7 C.F.R.

§§ 400.766(b)(2), 400.767(a)(8).

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Case No. 22-1209, Miller v. U.S. Dep’t of Agric. et al.

       Miller claims that Determination 287’s reliance on two prior agency determinations—Final

Agency Determinations 106 and 281—cannot be squared with the text of the Crop Insurance

Policy. But Miller failed to challenge these decisions in the right way. A farmer must ask the

agency to decide if a determination is “subject to administrative review” before he may seek

judicial review of it. Id. § 457.8(20)(k); see also id. § 11.6. Miller followed this process for

Determination 287. But he never did the same for Determinations 106 and 281, as required. Id.

§ 457.8(20)(k). That’s one problem.

       Another problem is that, whatever the merits of Miller’s concerns about Determinations

106 and 281, Determination 287 stands on its own. The decision is well explained, reasonable,

and far from arbitrary and capricious.

       The third problem is that his objections to these earlier Determinations are unconvincing

anyway.    Miller objects to one sentence in Determination 106:        “When overpayments are

discovered as a result of non-compliance with any policy provision, the policyholder may be

required to repay such overpaid amounts.” Final Agency Determination FAD-106 (Jan. 21, 2010),

https://tinyurl.com/p534yhwd. This sentence, as he sees it, renders superfluous the phrase “repay

any overpaid amounts” found in § 21(g) and other provisions. Appellant’s Br. 23–24. But the

supporting examples listed in Determination 106—“incorrect yields, uninsurable acres reported

on the acreage report, overstated acreage, incorrect share,” Final Agency Determination FAD-106,

supra—all correspond to policy provisions that explicitly require repayment. See 7 C.F.R.

§ 457.8(3)(g)(4), (6)(h), (21)(b)(3). The broader regulatory system, as shown, supports this error

correction and repayment obligation.

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Case No. 22-1209, Miller v. U.S. Dep’t of Agric. et al.

       As for Determination 281, Miller objects to its conclusion that insurers and the Insurance

Corporation have a “duty to correct claims” in order to protect taxpayer dollars. Final Agency

Determination FAD-281 (Sept. 20, 2018), https://tinyurl.com/k53bcvac. This sentence, as he sees

it, lacks any basis in the Crop Insurance Policy. But the policy does not operate in a vacuum. The

Act requires the crop insurance system to be “sound,” 7 U.S.C. § 1502(a), and requires insurers

“to address program compliance and integrity issues as such issues develop,” id. § 1515(a)(2). The

regulations create administrative remedies to ensure “compliance and prevent fraud, waste, and

abuse” in the program. 7 C.F.R. § 400.451(a); see id. § 400.451(e) (requiring “protection of the

public interest”).   These provisions support the duty to protect the public fisc outlined in

Determination 281.

       Miller also faults the Insurance Corporation for citing Old Republic Insurance Co. v.

Federal Crop Insurance Corp., 947 F.2d 269 (7th Cir. 1991). That case, it is true, considered

repayments from an insurer to the Insurance Corporation, not from a farmer to an insurer. But the

Seventh Circuit held that the Insurance Corporation could collect overpayments from insurers

based in part on a provision in the reinsurance agreement allowing for the review and auditing of

records for paid claims. Id. at 274–75. The Crop Insurance Policy contains a similar provision for

reviewing records, as between farmers and insurers. 7 C.F.R. § 457.8(21)(b). Although the facts

differ in this case and that one, the Insurance Corporation could reasonably invoke the reasoning

of Old Republic to support the point that insurers must correct errors in claims.

       What of the district court’s statement in its prior order nullifying the arbitral award that a

paid claim “remains settled” unless § 21(b)(3) applies? Miller, 366 F. Supp. 3d at 979. That is

neither here nor there. It is not pertinent here because time and plenty of later proceedings have

long overtaken it. And it was not right there because it could not be reconciled with the multiple

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Case No. 22-1209, Miller v. U.S. Dep’t of Agric. et al.

other policy provisions requiring repayment, see 7 C.F.R. § 457.8(3)(g)(4), (3)(h),

(6)(h), (15)(b)(2), (21)(f); was inconsistent with § 21(b) and its carve-out of the right of the insurer

to request and inspect records, id. § 457.8(21)(b); and does not fit with the process for correcting

claims in the Loss Adjustment Manual, see Loss Adjustment Manual, supra, at 313.

       We affirm.

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