Crop Insurance is flying under the radar of most Insurance Coverage practitioners. It is reportedly a highly lucrative business, heavily subsidized by the Federal Government. See Ron Nixon, "Report Says a Crop Subsidy Cap Could Save Billions" p. A15, col. 3 (New York Times Nat'l ed., Thursday, April 12, 2012).
A mom and dad tried to set their son up with a Crop Insurance Policy, but the attempt was not successful when the Crop Policy was rescinded by a Federal Court. Among other evidence in the record of that case, the Federal Court pointed out that apparently the son did not invest very much in the crop which he was applying to insure before he made a claim for a big loss on it. Skymont Farms v. Federal Crop Insurance Corp., 2012 WL 1193407 *1 (E.D. Tenn. April 10, 2012), Download Skymont Farms v. Federal Crop Ins. Corp. (E.D. Tenn. Case No. 4.09cv65, Memorandum and Order of Lee, U.S.M.J.) PUBLIC ACCESS.
However, the Federal Court faced the task of defining what a "material" misrepresentation would be in an application for Crop Insurance, because Congress had not defined the term. Without a Federal definition, the Federal Court turned to State Insurance Law for a definition, held that the application for Crop Insurance at bar met the definition because the son just did not display an insurable interest for the Crop Insurance he was applying for, and ordered that the Crop Insurance Policy was rescinded -- without payment of the son's claim, of course. Id. at *8 - *10.
This decision is of interest at the present time for reasons beyond Crop Insurance and that extend to Health Insurance. The Patient Protection and Affordable Care Act, or "ACA," one provision of which is currently under constitutional review by the U.S. Supreme Court, contains a provision governing Rescission of Health Insurance policies and plans subject to the ACA. It does not contain any definition of what constitutes a "material" misrepresentation sufficient for Rescission of such Health Coverage.
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