Crops News SmartNews

Farmer agrees to $1.2M settlement over insurance-fraud allegations

Published:

While insurance fraud may have seemed like a way to “work around” crop insurance payment limitations for a while, a Michigan farmer is now facing legal action based on accusations of insurance fraud through the False Claims Act.

Crop insurance can mitigate losses farmers suffer from extreme weather events such as droughts and floods. The insurance, purchased by producers, however, may come with limitations such as benefit program payment limitations. 

According to a U.S. Department of Justice news release, Gaylord D. Lincoln and G. Lincoln Farms LLC, located in Springport, Michigan, have agreed to pay $1,200,000 to resolve allegations that they violated the False Claims Act by causing the submission of fraudulent claims for federal crop insurance and federal farm benefit payments.

The settlement amount was negotiated based on the defendant’s ability to pay. U.S. Attorney Mark Totten stated, “Michigan farmers depend on federal programs to provide economic security, and these agricultural programs are essential to the national wellbeing. But, in turn, USDA relies on farmers, to tell the truth, and play by the rules. My office is committed to working with our law enforcement partners to root out fraud on these programs.”

»Related: Farmer’s Daughter: Crop insurance vital to keeping family afloat during down year

This settlement resolves civil claims the United States brought against the defendants in a December 2021 lawsuit. In its complaint, the United States alleged that the defendants defrauded the U.S. Department of Agriculture’s Farm Service Agency by operating a scheme to avoid benefit program payment limitations.

Specifically, the United States alleged that the defendants placed their farmland and crops in the names of their employees, who served as a façade for the defendants but had no financial risk or interest in the crops, and had them enroll in FSA benefit programs. These individuals then provided the FSA benefit payments to the defendants.

The United States further alleged that the defendants caused these individuals to take out fraudulent federal crop insurance policies for these crops, even though they had no insurable interest in these crops, and that the proceeds of the policies went to the defendants.

Shantel R. Robinson, Special Agent-In-Charge, United States Department of Agriculture-Office of Inspector General, said, “The United States Department of Agriculture is committed to combatting crop insurance fraud through civil enforcement under the False Claims Act. Fraudulent activity within the crop insurance program undermines its intent and misdirects taxpayer dollars from where they were intended. The United States Department of Agriculture, Office of Inspector General will continue its mission to investigate allegations of waste, fraud, and abuse in USDA programs.”

This settlement follows a related March 2022 civil settlement with the insurance agent and insurance agency that worked with the defendants. The resolutions obtained in this matter were the result of a coordinated effort between the U.S. Attorney’s Office for the Western District of Michigan, USDA-OIG, and USDA’s Risk Management Agency. Assistant U.S. Attorney Andrew J. Hull represented the United States.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Sponsored Content on AGDaily
Any views or opinions expressed in this article are those of the author and do not reflect those of AGDAILY. Comments on this article reflect the sole opinions of their writers.