Summary of a Recent
Judicial Development in
Crop Insurance

Plaintiffs Fail to Exhaust Administrative
Remedies in Crop Insurance Policy Dispute

Harrison M. Pittman
Research Assistant Professor of Law

In Ace Property & Casualty Insurance Company v. Federal Crop Insurance Corporation and Risk Management Agency, 357 F.Supp.2d 1140 (S.D. Iowa 2005), the United States District Court for the Southern District of Iowa dismissed an action brought by several crop insurers (plaintiffs) against the Federal Crop Insurance Corporation (FCIC) and the Risk Management Agency (collectively defendants) because the plaintiffs failed to exhaust their administrative remedies in accordance with 7 U.S.C. § 6912(e) prior to seeking judicial review. The plaintiffs brought an action for breach of contract and unjust enrichment against the defendants after Congress mandated changes in the Standard Reinsurance Agreement entered into between the plaintiffs and the FCIC. See id. at 1141. The defendants argued that the plaintiffs' action was barred because they failed to exhaust their administrative remedies because § 6912(e) is jurisdictional and thus the plaintiffs were required to exhaust their administrative remedies prior to bringing an action in federal district court. See id. at 1142. The plaintiffs argued that § 6912(e) is not jurisdictional and therefore a failure to exhaust to administrative remedies does not deprive the court of jurisdiction. See id. The court extensively examined multiple court decisions that had considered the issue and concluded that "[a]lthough both district and appellate courts have reached contrary conclusions regarding the nature of § 6912(e) exhaustion, the weight of authority indicates that § 6912(e) is jurisdictional [in] nature. This Court concludes that § 6912(e) exhaustion is jurisdictional." Id. at 1150. The court further held that even if it had determined that § 6912(e) was not jurisdictional, "‘[a]ll administrative appeals established by the Secretary of Agriculture must be exhausted before a lawsuit may be brought against an agency of the USDA, such as the FCIC.'" Id. (citation omitted).

The case was decided on February 10, 2005; this summary was posted July 29, 2005.