Final Agency Determination: FAD-197

Subject: Request dated August 30, 2013, to the Risk Management Agency (RMA) requesting a Final Agency Determination for the 2012 crop year regarding the interpretation of section 27(a) of the Common Crop Insurance Basic Provisions (Basic Provisions), published at 7 C.F.R. § 457.8. This request is pursuant to 7 C.F.R. § 400, subpart X.

Background:

Section 27(a) of Basic Provisions states:

27. Concealment, Misrepresentation or Fraud.

(a) If you have falsely or fraudulently concealed the fact that you are ineligible to receive benefits under the Act or if you or anyone assisting you has intentionally concealed or misrepresented any material fact relating to this policy:

(1) This policy will be voided; and

(2) You may be subject to remedial sanctions in accordance with 7 CFR part 400, subpart R.

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The requestor interprets section 27(a) of the Basic Provisions to mean that the term intentionally modifies only the term concealed.

The requestor is requesting FCIC’s interpretation of section 27(a) of the Basic Provisions of whether the term intentionally modifies both “concealed” and “misrepresented”, or just modifies “concealed.”

FCIC disagrees with the requestor’s interpretation. The term “intentionally” modifies both “concealed” and “misrepresented.” There are numerous instances in the Basic Provisions where inadvertent errors can be corrected and while there may be a penalty involved, it is not voidance of the policy. FCIC interprets the provision in this manner to avoid conflicting provisions and to recognize that voidance of the policy is an extraordinary measure that should only be taken when wrongdoing can be established.

In accordance with 7 C.F.R. § 400.765(c), this Final Agency Determination is binding on all participants in the Federal crop insurance program for the crop years the policy provisions are in effect. Any appeal of this decision must be in accordance with 7 C.F.R. § 400.768(g).

Date of Issue: November 26, 2013