A leading US insurance company agreed to pay a multi-million dollar fine in order to settle charges that it issued policies not qualified for the US Department of Agriculture’s federal crop insurance program.
Fireman’s Fund Insurance Company, which agreed to the settlement with the Department of Justice Monday, is also accused of falsifying documents.
The claims against Fireman’s Fund were brought under the False Claims Act.
According to the allegations, the
Allianz unit falsified multiple documents out of six US offices between 1999 and 2002. Such falsehoods include:
- Backdating policies
- Forging the signatures of farmers
- Accepting late and altered documents
- Whiting out dates and signatures
- Signing documents after deadlines had passed.
The settlement between Fireman’s Fund and the Justice Department includes no determination of liability, and Fireman’s Fund spokesperson Richard Manson referred to the settlement as a “commercial decision.”
“While fully cooperating with the government’s investigation, Fireman’s Fund Insurance Company robustly defended its position and the settlement is not an admission by Fireman’s Fund Insurance Company of any liability.”
David Koehn, a former Fireman’s Fund underwriter of 25 years, told the
Marin Independent Journal he believes the allegations “sound worse than they are” and are more likely the result of oversight than a willful intent to deceive.
“It sounds to me like normal business practice when you’re working with the government,” Koehn said. “You’re running a 50-state operation and in addition to that, you’ve got another layer of government red tape in the middle and nobody can possibly process everything perfectly under those conditions.”
Government action against insurance companies is not rare, though the large size of the settlement with Fireman’s Fund is somewhat unusual.
“Federal crop insurance provides vital support for farmers suffering crop losses due to natural disasters,” said acting assistant attorney general Benjamin Mizer. “The Department of Justice will continue aggressively to pursue those who abuse this important program.”
The Fireman’s Fund policies involved were issued from offices in Modesto, California; Lambert, Missouri; Fargo, North Dakota; Lubbock, Texas; Prosser, Washington; and Overland Park, Kansas.
