§ 1515. — Program compliance and integrity.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1515]
TITLE 7--AGRICULTURE
CHAPTER 36--CROP INSURANCE
Sec. 1515. Program compliance and integrity
(a) Purpose
(1) In general
The purpose of this section is to improve compliance with, and
the integrity of, the Federal crop insurance program.
(2) Role of insurance providers
The Corporation shall work actively with approved insurance
providers to address program compliance and integrity issues as such
issues develop.
(b) Notification of compliance problems
(1) Notification of errors, omissions, and failures
The Corporation shall notify in writing an approved insurance
provider of any error, omission, or failure to follow Corporation
regulations or procedures for which the approved insurance provider
may be responsible and which may result in a debt owed the
Corporation.
(2) Time for notification
Notice under paragraph (1) shall be given within 3 years after
the end of the insurance period during which the error, omission, or
failure is alleged to have occurred, except that this time
limitation shall not apply with respect to an error, omission, or
procedural violation that is willful or intentional.
(3) Effect of failure to timely notify
Except as provided in paragraph (2), the failure to timely
provide the notice required under this subsection shall relieve the
approved insurance provider from the debt owed the Corporation.
(c) Reconciling producer information
The Secretary shall develop and implement a coordinated plan for the
Corporation and the Farm Service Agency to reconcile all relevant
information received by the Corporation or the Farm Service Agency from
a producer who obtains crop insurance coverage under this chapter.
Beginning with the 2001 crop year, the Secretary shall require that the
Corporation and the Farm Service Agency reconcile such producer-derived
information on at least an annual basis in order to identify and address
any discrepancies.
(d) Identification and elimination of fraud, waste, and abuse
(1) FSA monitoring program
The Secretary shall develop and implement a coordinated plan for
the Farm Service Agency to assist the Corporation in the ongoing
monitoring of programs carried out under this chapter, including--
(A) at the request of the Corporation or, subject to
paragraph (2), on its own initiative if the Farm Service Agency
has reason to suspect the existence of program fraud, waste, or
abuse, conducting fact finding relative to allegations of
program fraud, waste, or abuse;
(B) reporting to the Corporation, in writing in a timely
manner, the results of any fact finding conducted pursuant to
subparagraph (A), any allegation of fraud, waste, or abuse, and
any identified program vulnerabilities; and
(C) assisting the Corporation and approved insurance
providers in auditing a statistically appropriate number of
claims made under any policy or plan of insurance under this
chapter.
(2) FSA inquiry
If, within five calendar days after receiving a report submitted
under paragraph (1)(B), the Corporation does not provide a written
response that describes the intended actions of the Corporation, the
Farm Service Agency may conduct its own inquiry into the alleged
program fraud, waste, or abuse on approval from the State director
of the Farm Service Agency of the State in which the alleged fraud,
waste, or abuse occurred. If as a result of the inquiry, the Farm
Service Agency concludes further investigation is warranted, but the
Corporation declines to proceed with the investigation, the Farm
Service Agency may refer the matter to the Inspector General of the
Department of Agriculture.
(3) Use of field infrastructure
The plan required by paragraph (1) shall provide for the use of
the field infrastructure of the Farm Service Agency. The Secretary
shall ensure that relevant Farm Service Agency personnel are
appropriately trained for any responsibilities assigned to the
personnel under the plan. At a minimum, the personnel shall receive
the same level of training and pass the same basic competency tests
as required of loss adjusters of approved insurance providers.
(4) Maintenance of provider effort
(A) In general
The activities of the Farm Service Agency under this
subsection do not affect the responsibility of approved
insurance providers to conduct any audits of claims or other
program reviews required by the Corporation.
(B) Notification of providers
The Corporation shall notify the appropriate approved
insurance provider of a report from the Farm Service Agency
regarding alleged program fraud, waste, or abuse, unless the
provider is suspected to be included in, or a party to, the
alleged fraud, waste, or abuse.
(C) Response
An approved insurance provider that receives a notice under
subparagraph (B) shall submit a report to the Corporation,
within an appropriate time period determined by the Secretary,
describing the actions taken by the provider to investigate the
allegations of program fraud, waste, or abuse contained in the
notice.
(5) Corporation response to provider reports
(A) Prompt response
If an approved insurance provider reports to the Corporation
that the approved insurance provider suspects intentional
misrepresentation, fraud, waste, or abuse, the Corporation shall
make a determination and provide, within 90 calendar days after
receiving the report, a written response that describes the
intended actions of the Corporation.
(B) Cooperative effort
The approved insurance provider and the Corporation shall
take coordinated action in any case where misrepresentation,
fraud, waste, or abuse is alleged.
(C) Failure to timely respond
If the Corporation fails to respond as required by
subparagraph (A), an approved insurance provider may request the
Farm Service Agency to assist the provider in an inquiry into
the alleged program fraud, waste, or abuse.
(e) Consultation with State FSA committees
The Secretary shall establish procedures under which the Corporation
shall consult with the State committee of the Farm Service Agency for a
State with respect to policies, plans of insurance, and material related
to such policies or plans of insurance (including applicable sales
closing dates, assigned yields, and transitional yields) offered in that
State under this chapter.
(f) Detection of disparate performance
(1) Covered activities
The Secretary shall establish procedures under which the
Corporation will be able to identify the following:
(A) Any agent engaged in the sale of coverage offered under
this chapter where the loss claims associated with such sales by
the agent are equal to or greater than 150 percent (or an
appropriate percentage specified by the Corporation) of the mean
for all loss claims associated with such sales by all other
agents operating in the same area, as determined by the
Corporation.
(B) Any person performing loss adjustment services relative
to coverage offered under this chapter where such loss
adjustments performed by the person result in accepted or denied
claims equal to or greater than 150 percent (or an appropriate
percentage specified by the Corporation) of the mean for
accepted or denied claims (as applicable) for all other persons
performing loss adjustment services in the same area, as
determined by the Corporation.
(2) Review
(A) Review required
The Corporation shall conduct a review of any agent
identified pursuant to paragraph (1)(A), and any person
identified pursuant to paragraph (1)(B), to determine whether
the higher loss claims associated with the agent or the higher
number of accepted or denied claims (as applicable) associated
with the person are the result of fraud, waste, or abuse.
(B) Remedial action
The Corporation shall take appropriate remedial action with
respect to any occurrence of fraud, waste, or abuse identified
in a review conducted under this paragraph.
(3) Oversight of agents and loss adjusters
The Corporation shall develop procedures to require an annual
review by an approved insurance provider of the performance of each
agent and loss adjuster used by the approved insurance provider. The
Corporation shall oversee the conduct of annual reviews and may
consult with an approved insurance provider regarding any remedial
action that is determined to be necessary as a result of the annual
review of an agent or loss adjuster.
(g) Submission of information to Corporation to support compliance
efforts
(1) Types of information required
The Secretary shall establish procedures under which approved
insurance providers shall submit to the Corporation the following
information with respect to each policy or plan of insurance offered
under this chapter:
(A) The name and identification number of the insured.
(B) The agricultural commodity to be insured.
(C) The elected coverage level, including the price
election, of the insured.
(2) Time for submission
The information required by paragraph (1) with respect to a
policy or plan of insurance shall be submitted so as to ensure
receipt by the Corporation not later than the Saturday of the week
containing the calendar day that is 30 days after the applicable
sales closing date for the crop to be insured.
(h) Sanctions for program noncompliance and fraud
(1) False information
A producer, agent, loss adjuster, approved insurance provider,
or other person that willfully and intentionally provides any false
or inaccurate information to the Corporation or to an approved
insurance provider with respect to a policy or plan of insurance
under this chapter may, after notice and an opportunity for a
hearing on the record, be subject to one or more of the sanctions
described in paragraph (3).
(2) Compliance
A person may, after notice and an opportunity for a hearing on
the record, be subject to one or more of the sanctions described in
paragraph (3) if the person is a producer, agent, loss adjuster,
approved insurance provider, or other person that willfully and
intentionally fails to comply with a requirement of the Corporation.
(3) Authorized sanctions
If the Secretary determines that a person covered by this
subsection has committed a material violation under paragraph (1) or
(2), the following sanctions may be imposed:
(A) Civil fines
A civil fine may be imposed for each violation in an amount
not to exceed the greater of--
(i) the amount of the pecuniary gain obtained as a
result of the false or inaccurate information provided or
the noncompliance with a requirement of this chapter; or
(ii) $10,000.
(B) Producer disqualification
In the case of a violation committed by a producer, the
producer may be disqualified for a period of up to 5 years from
receiving any monetary or nonmonetary benefit provided under
each of the following:
(i) This chapter.
(ii) The Agricultural Market Transition Act (7 U.S.C.
7201 et seq.), including the noninsured crop disaster
assistance program under section 196 of that Act (7 U.S.C.
7333).
(iii) The Agricultural Act of 1949 (7 U.S.C. 1421 et
seq.).
(iv) The Commodity Credit Corporation Charter Act (15
U.S.C. 714 et seq.).
(v) The Agricultural Adjustment Act of 1938 (7 U.S.C.
1281 et seq.).
(vi) Title XII of the Food Security Act of 1985 (16
U.S.C. 3801 et seq.).
(vii) The Consolidated Farm and Rural Development Act (7
U.S.C. 1921 et seq.).
(viii) Any law that provides assistance to a producer of
an agricultural commodity affected by a crop loss or a
decline in the prices of agricultural commodities.
(C) Disqualification of other persons
In the case of a violation committed by an agent, loss
adjuster, approved insurance provider, or other person (other
than a producer), the violator may be disqualified for a period
of up to 5 years from participating in any program, or receiving
any benefit, under this chapter.
(4) Assessment of sanction
The Secretary shall consider the gravity of the violation of the
person covered by this subsection in determining--
(A) whether to impose a sanction under this subsection; and
(B) the type and amount of the sanction to be imposed.
(5) Disclosure of sanctions
Each policy or plan of insurance under this chapter shall
provide notice describing the sanctions prescribed under paragraph
(3) for willfully and intentionally--
(A) providing false or inaccurate information to the
Corporation or to an approved insurance provider; or
(B) failing to comply with a requirement of the Corporation.
(6) Insurance fund
Any funds collected under this subsection shall be deposited
into the insurance fund established under section 1516(c) of this
title.
(i) Annual report on program compliance and integrity efforts
(1) Report required
The Secretary shall submit to the Committee on Agriculture of
the House of Representatives and the Committee on Agriculture,
Nutrition, and Forestry of the Senate an annual report describing
the operation of this section during the preceding year and efforts
undertaken by the Secretary and the Corporation to carry out this
section.
(2) Information regarding fraud, waste, and abuse
The report shall identify specific occurrences of waste, fraud,
or abuse and contain an outline of actions that have been or are
being taken to eliminate the identified waste, fraud, or abuse.
(j) Information management
(1) Systems upgrades
The Secretary shall upgrade the information management systems
of the Corporation used in the administration and enforcement and
this chapter. In upgrading the systems, the Secretary shall ensure
that new hardware and software are compatible with the hardware and
software used by other agencies of the Department to maximize data
sharing and promote the purpose of this section.
(2) Use of available information technologies
The Secretary shall use the information technologies known as
data mining and data warehousing and other available information
technologies to administer and enforce this chapter.
(3) Use of private sector
The Secretary may enter into contracts to use private sector
expertise and technological resources in implementing this
subsection.
(k) Funding
(1) Available funds
To carry out this section and sections 1502(c), 1506(h),
1508(a)(3)(B), and 1508(f)(3)(A) of this title, the Corporation may
use, from amounts made available from the insurance fund established
under section 1516(c) of this title, not more than $23,000,000
during the period of fiscal years 2001 through 2005, of which not
more than $9,000,000 shall be available for fiscal year 2001.
(2) Prohibition
None of the funds made available under paragraph (1) may be used
to pay the salaries of employees of the Corporation.
(Feb. 16, 1938, ch. 30, title V, Sec. 515, as added Pub. L. 103-354,
title I, Sec. 109, Oct. 13, 1994, 108 Stat. 3197; amended Pub. L. 106-
224, title I, Sec. 121(a), June 20, 2000, 114 Stat. 372.)
References in Text
The Agricultural Market Transition Act, referred to in subsec.
(h)(3)(B)(ii), is title I of Pub. L. 104-127, Apr. 4, 1996, 110 Stat.
896, as amended, which is classified principally to chapter 100
(Sec. 7201 et seq.) of this title. For complete classification of this
Act to the Code, see References in Text note set out under section 7201
of this title and Tables.
The Agricultural Act of 1949, referred to in subsec. (h)(3)(B)(iii),
is act Oct. 31, 1949, ch. 792, 63 Stat. 1051, as amended, which is
classified principally to chapter 35A (Sec. 1421 et seq.) of this title.
For complete classification of this Act to the Code, see Short Title
note set out under section 1421 of this title and Tables.
The Commodity Credit Corporation Charter Act, referred to in subsec.
(h)(3)(B)(iv), is act June 29, 1948, ch. 704, 62 Stat. 1070, as amended,
which is classified generally to subchapter II (Sec. 714 et seq.) of
chapter 15 of Title 15, Commerce and Trade. For complete classification
of this Act to the Code, see Short Title note set out under section 714
of Title 15 and Tables.
The Agricultural Adjustment Act of 1938, referred to in subsec.
(h)(3)(B)(v), is act Feb. 16, 1938, ch. 30, 52 Stat. 31, as amended,
which is classified principally to chapter 35 (Sec. 1281 et seq.) of
this title. For complete classification of this Act to the Code, see
section 1281 of this title and Tables.
The Food Security Act of 1985, referred to in subsec. (h)(3)(B)(vi),
is Pub. L. 99-198, Dec. 23, 1985, 99 Stat. 1354, as amended. Title XII
of the Act, popularly known as the ``Sodbuster Law'', is classified
principally to chapter 58 (Sec. 3801 et seq.) of Title 16, Conservation.
For complete classification of this Act to the Code, see Short Title of
1985 Amendment note set out under section 1281 of this title and Tables.
The Consolidated Farm and Rural Development Act, referred to in
subsec. (h)(3)(B)(vii), is title III of Pub. L. 87-128, Aug. 8, 1961, 75
Stat. 307, as amended, which is classified principally to chapter 50
(Sec. 1921 et seq.) of this title. For complete classification of the
Act to the Code, see Short Title note set out under section 1921 of this
title and Tables.
Prior Provisions
A prior section, act Feb. 16, 1938, ch. 30, title V, Sec. 515, 52
Stat. 77, provided for appointment and compensation of an advisory
committee, prior to repeal by Pub. L. 96-365, title I, Sec. 108, Sept.
26, 1980, 94 Stat. 1317.
Amendments
2000--Pub. L. 106-224 amended section generally, substituting
present provisions for provisions which had authorized establishment of
Advisory Committee for Federal Crop Insurance, described primary
responsibility, membership of Committee, and administrative provisions,
required annual report regarding progress toward implementation and
improved crop insurance coverage, soundness of program, and rate of
participation, and set forth termination of authority on Sept. 30, 1998.
Effective Date
Section effective Oct. 13, 1994, and applicable to provision of crop
insurance under Federal Crop Insurance Act (7 U.S.C. 1501 et seq.)
beginning with 1995 crop year, with such Act, as in effect on the day
before Oct. 13, 1994, to continue to apply with respect to 1994 crop
year, see section 120 of Pub. L. 103-354, set out as an Effective Date
of 1994 Amendment note under section 1502 of this title.
Section Referred to in Other Sections
This section is referred to in sections 1516, 8002 of this title.
