Circuit Revives Crop|Insurance Fraud Case

ST. LOUIS (CN) - The 8th Circuit reinstated the government's claim that an insurance agent helped farmers commit crop insurance fraud by submitting false applications to a private insurer that got reimbursed by the federal government.

The government sued Russell Hawley and his company, Hawley Insurance, claiming he signed and submitted crop insurance applications for farmers who weren't eligible for federal coverage because they had no "insurable interest" in the crops.

The applications were sent to North Central Crop Insurance (NCCI), a private insurer that then requested reimbursement from the Federal Crop Insurance Corporation (FCIC).

The government said it relied on the information Hawley submitted when it reimbursed ineligible farmers hundreds of thousands of dollars in purported lost crops.

A federal judge dismissed the government's suit against Hawley, noting that he had submitted the claims NCCI and not directly to the government. The judge also found little proof that Hawley had intended for the government to rely on the false applications in making payments.

But the 8th Circuit reversed and remanded, saying the lower court erred in dismissing the case.

"We are satisfied that the government adequately preserved its argument that NCCI's reimbursement demands were the 'claims' presented to the government," Judge Steven Colloton wrote.

"[W]e believe a reasonable jury could find that Hawley intended, based on his experience selling federally reinsured crop insurance for NCCI, that NCCI would transmit a farmer's claim to the FCIC for reimbursement, and the FCIC would rely on that claim as a condition of payment."

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