INFORMATIONAL MEMORANDUM: R&D-95-014

TO:       All Reinsured Companies
          All Risk Management Field Offices
          CFSA Headquarters, Program Delivery & Field
          Operations

FROM:     Tim B. Witt
          Acting Director
          Research and Development Division

SUBJECT:  Policyholder Tracking System


ISSUE:

Questions have been raised regarding the operational status of the 
Policyholder Tracking System (PHTS) and its use in accepting applications and 
making loss payments.

BACKGROUND:

The PHTS was fully operational effective for crop year 1994 (refer to
R&D-94-007).  Without verification via the PHTS, there is risk in accepting
applications or making payments to producers who are ineligible due to
noncompliance of the Highly Erodible Land Conservation/Wetland Conservation
(HELC/WC) and Controlled Substance (CS) provisions of the 1990 Farm Act. This
is because the ASCS-423, 424, or 425 DO NOT indicate:  (1) when eligibility 
is the result of reinstatement via a Graduated Sanction provision of the 1990 
Farm Act, and (2) whether producers are ineligible due to violations of the 
CS provision.  NOTE:  When an insured's eligibility has been reinstated via a 
Graduated Sanction, crop insurance payments cannot be made until the Graduated
Sanction has been satisfied.

ACTION:

Use the PHTS as a standard routine in data processing to avoid accepting or 
paying a loss to someone who is ineligible for insurance.  The HELC/WC and CS 
files are updated approximately every 10 days.  Document the insured's 
eligibility status on the date the application or claim was assigned or 
processed by dating your diskette, tape, or hardcopy.  The PHTS record 
received from the Federal Crop Insurance Corporation will also be dated. 

Insureds' eligibility must be checked prior to assigning loss adjustment 
inspections or sometime during the inspection so an adjuster does not execute 
a proof of loss for an ineligible insured.  If using the PHTS delays the loss 
adjustment process, adjusters may use the ASCS-423, 424, or 425 to obtain 
insureds' eligibility status. However, if this is done, verification through 
the PHTS must be done PRIOR to making claim payments.  If the PHTS is used 
prior to assigning a final inspection, the PHTS does not have to be verified 
again if such payment is made within 30 days.