LINCOLN, Neb. (DTN) -- A federal appeals court has affirmed a previous decision to dismiss a lawsuit filed by Zeeland, Michigan-based Boersen Farms against an insurance company and federal agencies for breach of contract for withholding crop insurance payments. The court said it made the ruling because the federal government is still investigating Boersen Farms for alleged crop insurance fraud.
In January 2024, the U.S. District Court for the District of Western Michigan dismissed a Boersen lawsuit against Great American Insurance Company, the Federal Crop Insurance Corporation and USDA. The suit alleged breach of contract, among other things, in connection with about $2.3 million in unpaid claims filed by the Boersen family for the 2019 growing season.
The U.S. Court of Appeals for the Sixth Circuit ruled the crop insurance claims cannot be paid to Boersen Farms because of a pending investigation.
New Heights Farm I LLC, operated by Stacy Boersen and her son, Nicholas, submitted crop insurance claims to Great American.
"A few road bumps emerged," the Sixth Circuit said in its ruling. "As the Boersens see it, Great American's insurance adjuster over-reported the amount of corn in storage. The (USDA) Department of Agriculture as a result investigated the farmers for suspected crop-insurance fraud. Making matters worse, Section 14(f) of the common crop insurance policy barred payment of the claim until the investigation's completion. That investigation remains ongoing."
The court said it believes to be ripe for review the Boersens' claims that the insurance company over-reported the amount of corn in storage and that the company "falsely accused" the farm of committing fraud.
The federal agencies have sovereign immunity, which means they cannot be sued without their consent.
On June 9, 2021, the IRS executed a search warrant at Boersen Farms in connection with an investigation of the troubled farm. Boersen Farms is owned by Dennis Boersen.
According to the Boersens' complaint, Stacy Boersen leased about 9,000 acres for the 2019 crop year.
The lawsuit filed by the Boersens alleged a claims adjuster for the insurance company "failed to properly measure the corn in the storage bins and submitted falsified storage bin summary records" to the company's office.
"Despite spending more than three years purportedly investigating the background of the claim, GAIC (insurance company), FCIC, USDA and RMA (Risk Management Agency) have failed to find facts upon which they would have a valid basis to deny NHF-I's claim," the complaint said.
The second Boersen Farms entity, operated by Nicholas Boersen, leased about 8,600 acres for the 2019 crop year, the lawsuit said. The complaint levels the same allegations against the insurance company as it relates to the second farming entity.
In leveling breach-of-contract allegations in the lawsuit, the Boersens claim several damages. These include "loss of goodwill" with their creditors and landlords, "loss of ability to lease acreage for farming," "inability to secure favorable financing" and "damage to standing and reputation in the community."
In another count, the lawsuit accuses the defendants of "intentional infliction of emotional distress" to Stacy and Nicholas Boersen.
Read more on DTN:
"Michigan Farm Raided by IRS Sues Feds," https://www.dtnpf.com/…
Todd Neeley can be reached at todd.neeley@dtn.com
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