BULLETIN NO.: MGR-96-015 TO: ALL REINSURED COMPANIES FSA HEADQUARTERS, PROGRAM DELIVERY AND FIELD OPERATIONS ALL RISK MANAGEMENT FIELD OFFICES FROM: KENNETH D. ACKERMAN DEPUTY ADMINISTRATOR SUBJECT: REFERRALS FOR INVESTIGATION - PRODUCER MISREPRESENTATION, MISINFORMATION, AND SUSPECTED FRAUD (SUPERSEDES FCIC NOTICE N-9.2 DATED 06/01/92) BACKGROUND: With the passage of the Federal Crop Insurance Reform Act of 1994 (The Act), producers of insurable crops are now able to purchase catastrophic risk protection (CAT) coverage through a crop insurance agent or a local USDA field office. The Act also created the Noninsured Assistance Program (NAP) for producers of crops for which there is currently no insurance program. As a result of USDA field office involvement in the delivery of the CAT and NAP programs, the Federal Crop Insurance Corporation (FCIC) is reissuing the following guidelines to include provisions for Farm Service Agency (FSA) field offices (referring parties) as well as Reinsured Companies to follow if they suspect producer misrepresentation, misinformation, or fraud, waste and abuse in the course of conducting business under the Federal crop insurance program. This includes instances when the producer provides false or erroneous data, or intentionally misrepresents a material fact in an attempt to enhance potential program payments. This does not include unintentional reporting or certification errors. FCIC emphasizes that referrals must include adequate documentation as stated below under ACTION. ACTION: 1. General Procedures. Referrals must be sent to the Compliance Field Office (CFO) that is responsible for the area where the questionable activity occurred. Any matter referred to a CFO must be fully documented with copies of all policy-file information and the facts or findings identified. The referring party shall also advise the applicable CFO director, in writing, of any actions, interviews, contacts, etc., that the referring party has completed prior to referral. Concerns involving loss adjustment or service-related activities must be supported by sufficient facts and documentation that show that all necessary inspections and related activities have been completed consistent with FCIC-approved policy and procedure. Referrals must include enough information to adequately identify the subject of the alleged wrongdoing (e.g., full names, addresses, phone numbers, etc.). Complainants who wish to remain anonymous should be instructed to contact the respective CFO to file their complaint. 2. FSA Field Office Responsibilities. Field office personnel may become aware of acts of noncompliance regarding FCIC-approved policies and procedures or receive complaints of alleged intentional misrepresentation or program fraud, waste, and abuse from producers, insureds, other Federal agencies or the general public. These cases must be handled confidentially and with tact. The CFO responsible for the geographic area from which a complaint is initiated shall be immediately notified of suspected irregularities or alleged producer wrongdoing. A memorandum must be forwarded to the applicable CFO detailing the allegation or act of noncompliance, the principals involved, and any pertinent facts and/or documents which will aid the Compliance staff in resolving the complaint. The attached Compliance Complaint Form provides a format to follow when referring complaints to CFOs. All complaints involving fraud, waste and abuse of FCIC programs received at Regional Service Offices (RSO) will immediately be referred to the respective CFO. Due to the responsibility of Compliance to protect the confidentiality of complainants and the information they provide, resolution of complaints concerning program abuses will be the exclusive responsibility of the Risk Compliance Division (RCD). Additionally, all contacts with the Office of Inspector General (OIG), the U. S. Attorney's Office (Civil and Criminal), or the Federal Bureau of Investigation (FBI) concerning the crop insurance program must be coordinated through the appropriate CFO. This includes referrals for investigation and inquiries concerning crop insurance policies and procedures (see Compliance Office Responsibilities). 3. Reinsured Company Responsibilities. Reinsured companies must immediately notify the applicable CFO of suspected irregularities or alleged producer wrongdoing for any matter that is not procedurally correctable by the reinsured company. The company must, in all cases, immediately review and document cases of suspected misrepresentation, fraud, waste, and abuse of the multiple peril crop insurance (MPCI) program. Such cases must be forwarded to the appropriate CFO for further review and action if the company's preliminary review and documentation reflect misrepresentation, fraud, waste or abuse. If the preliminary review does not support any acts of wrongdoing, the company must maintain on file such complaints and actions taken in determining no program violations occurred. 4. CFO Responsibilities. A. Cases referred to the CFOs will be recorded and tracked according to procedure. CFOs will send a letter, acknowledging their receipt of information from the referring party and relate any other information, as appropriate. The CFO will refer to the appropriate OIG office those cases that appear to have reasonable cause for full investigation. B. Matters that must be referred to OIG if fraudulent activity is known, suspected, or alleged, include: 1. submission of false claims or false or fraudulent statements by employees, producers, contractors, or others; and, 2. violations of agricultural programs involving contractors, producers, cooperators, or others. C. A copy of the referral will be sent to FSA's OIG Liaison Officer and the RCD Director. D. OIG will decide whether to accept a matter for investigation based on consultation with the Department of Justice. Once a case is accepted by OIG, all subsequent administrative actions pertaining to the subject must be coordinated with OIG. CFO directors will inform the referring parties of any actions deemed necessary by OIG and ensure administrative actions do not interfere with OIG's investigation. E. In the event the OIG declines to investigate a matter that has been referred, FCIC will take any actions which have been determined to be necessary. The CFO that was originally contacted by the referring party will normally be responsible for any follow-up actions. Such actions will be pursued according to FCIC-approved policy, procedure and administrative sanction regulations. You should contact the RCD Director or respective CFO with questions concerning these procedures. CFO boundaries and their addresses and telephone numbers are included as an attachment to this bulletin. Attachments (Attachments unavailable in ASCII format. Refer to the file mgr96015.gif for the electronic map image. This file can be found in the /Managers_Bulletins/ directory on the RO Server or Actuarial web site.)