Plaintiffs filed a qui tam action under the False Claims Act (FCA) alleging that the Defendants fraudulently received crop insurance payments by insuring their corn as grain, even though the majority of crop was routinely harvested as silage. As a result of certifying the corn as grain and not silage, the plaintiffs claimed defendants received bigger crop insurance payouts. Plaintiffs, on behalf of the US government, sued defendants for fraud and common law unjust enrichment.

The district court determined that the defendants made a false claim each time they certified their corn as grain, but they did not “knowingly” make a false claim. This is because the defendants relied upon the advice of their insurance agents and passed audits. Therefore, the plaintiffs’ FCA claim failed.  However, the district court did find the defendants were unjustly enriched by applying for grain corn crop insurance and not silage corn crop insurance. Therefore, the court found in favor of the Plaintiffs’ unjust enrichment claim and awarded damages.

The United States then intervened and moved for post-trial relief arguing the plaintiffs did not have standing to bring common law claims on behalf of the US government. The district court agreed and vacated the unjust enrichment judgment due to lack of subject matter jurisdiction. The plaintiffs appealed, arguing that the district court errored by granting the post-trial motion by the US and in finding that the Plaintiffs did not knowingly make a false claim.

The Eight Circuit Court found that certifying the corn as grain on the application was not a materially false statement for FCA purposes. The court first found that insurance application is not a claim under the FCA. Second, the court ruled the plaintiffs failed to prove initially insuring a crop mostly intended for silage as a grain lead to a false claim for payment. The court noted the government is aware of the practice and routinely pays this type of claim. Finally, the court found that, “all the record establishes is that Defendants received the crop insurance coverages they paid for.”

On the issue of unjust enrichment, the court affirmed the district court’s vacating their prior judgment. A subject-matter jurisdiction argument can be raised at any time. Since the US government was the real party in interest, they had the right to bring the motion even though it was after the district court’s initial verdict. The court also noted there are numerous court actions that establish that the FCA does not allow qui tam actions for common law claims.  

US ex rel Kraemer v United Dairies, L.L.P., No 22-3306 (8th Cir. Sept. 20, 2023).