Insurance agent settles crop insurance fraud allegations after losing in Court of Appeals

by Ben Vernia | December 9th, 2011

In August, 2010, crop insurance agent Russell Hawley lost the summary judgment an Iowa district court had awarded him after the Court of Appeals held that genuine issues of material fact as to whether a private insurance company that had issued the policies submitted claims for losses to the federal government, whether Hawley’s lengthy experience justified a reasonable inference of scienter, and whether a conspiracy to submit false claims existed.

On December 9, the government announced that Hawley and his company had agreed to pay the government nearly $835,000 to settle the civil suit, which the government itself had commenced following an investigation. According to DOJ’s press release:

Russell Hawley and Hawley Insurance Inc. of Vail, Iowa, have agreed to pay the United States $834,897.50 to settle allegations that they caused false claims to be submitted to the Federal Crop Insurance Corporation, the Justice Department announced today.

The settlement resolves a lawsuit filed under the False Claims Act against Russell Hawley, the principal owner of Hawley Insurance, in federal district court in Sioux City, Iowa. The lawsuit alleged that Hawley submitted forged crop insurance applications and other false documents to a private insurance company designated by the United States to sell federally-reinsured crop insurance policies. The government was required to pay out on these policies when the insured crops failed.

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