In 2009, the plaintiff bought two multi-peril crop insurance policies (one for each of the plaintiff's two farms) that the defendant reinsured through the federal crop insurance corporation (FCIC). The policies each provided a tobacco crop yield guaranty which guaranteed a minimum yield at $1.85/lb. The plaintiff's 2009 tobacco crop harvest did not meet yield and quality expectations and the losses were reported to the defendant as attributable to plant disease. The policy paid on one of the farms, and after an investigation, the defendant attributed losses on the other farm to various diseases and adverse weather conditions. The defendant made a final decision with respect to this policy that no indemnity payment was due because the plaintiff failed to timely harvest the crop and failed to purchase and apply the proper fungicides. The defendant also found that the plaintiff had inadequate barn space to cure all of its tobacco, which led to the untimely harvesting resulting in deterioration of the crop in the field. The plaintiff sought mediation and administrative review, but mediation did not resolve the matter. The defendant issued a revised final decision again finding that the lack of timely harvest and the failure to purchase and apply the proper fungicides contributed to the loss. The revised decision recalculated the production lost due to uninsured causes, but the result remained that no indemnity would be paid. The plaintiff sought administrative review, which resulted in a finding that there were both insured and uninsured losses, and the matter was remanded the matter for a calculation of the final indemnity amount. The plaintiff appealed the matter to the defendant's National Appeals Division (NAD) and requested a hearing. The result of the NAD hearing was that the outcome remained unchanged. The plaintiff sought director review of the NAD decision, which upheld the NAD decision. From the director review of the NAD decision, the plaintiff appealed for judicial review. On review, the court determined that substantial evidence did not support the NAD Director's decision that plant disease did not contribute to the plaintiff's crop losses. The court determined that the NAD Director failed to explain how the plaintiff's failure to timely harvest undermined the plaintiff's claim that the tobacco crop suffered from plant disease. The court reasoned that plant disease and untimely harvesting are not mutually exclusive causes of loss. The court denied the defendant's motion to dismiss and remanded the matter to the defendant to determined whether there is evidence that the plaintiff's crop suffered from plant disease and whether any disease entitled the plaintiff to an indemnity payment and whether proper methods were used to calculate the indemnity payment. J.O.C. Farms, LLC v. Rural Community Insurance Agency, Inc. et al., No. 4:12-CV-186-D, 2015 U.S. Dist. LEXIS 124266 (E.D. N.C. Sept. 17, 2015).
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