Insurance Contractor Sues Department of Agriculture Over Suspension

On Monday, the owner of Insure My Honey, Inc., Kevin Gubbels, sued the United States Department of Agriculture (USDA) and the United States Risk Management Agency (RMA) in the District of Nebraska.  The plaintiff is suing over an indefinite suspension given by the USDA that is preventing him and Insure My Honey from being able to sell and service federal crop insurance policies. The plaintiff is being represented by the New Civil Liberties Alliance.  USDA has additionally forbidden Gubbels’s independent agents from issuing or renewing any crop policies as well, even though they were not named in the suspension order and are not under his control.  The case has been assigned to Chief Judge John M. Gerrard.

Gubbels sold Apiculture Pilot Insurance and Pasture, Rangeland, Forage (PRF) programs through the Federal Crop Insurance Program (FCIP), which is administered by the USDA.  PRF policies help protect farmers from loss due to lack of precipitation, and are available in 48 states.  In 2019, Gubbels had 60 independent contractor agents through Insure My Honey that were operating in 25 states—selling more than $12 million in FCIP insurance premiums.  Insure My Honey had net revenue of approximately $1.7 million in 2019. 

The suspension arose from Gubbels allegedly misrepresenting the 2020 PRF policy deadline at a presentation with the Imperial County Farm Bureau in Imperial County, California on December 3, 2019.  The closing date to agents November 15, 2019, so as a result on February 21, 2020, “Martin R. Barbre, Administrator for the RMA, sent Mr. Gubbels a Notice of Suspension and Proposed Debarment from Participation in United States Government Programs.”

Three allegations were made by Administrator Barbe: “First, he alleged that Mr. Gubbels violated the catchall provision at Section IV(h)(2) of the Standard Reinsurance Agreement, when he “misrepresented the PRF application deadline as December 6, 2019, which is three weeks later than the actual deadline.” Second, he alleged that Mr. Gubbels “misrepresented FCIC policy and procedure during your presentation by falsely claiming that producers may double-insure their alfalfa crop through yield protection and rainfall index protection,” when “section 17 of the Rainfall and Vegetation Index Plan Common Policy, producers must not double-insure their alfalfa crop through yield protection and rainfall index protection.” Third, Administrator Barbre alleged that Mr. Gubbels “publicly advocated that the FCIP is not a risk management tool, but rather an investment tool.”

In the complaint, the plaintiff first alleges a violation of the Administrative Procedure Act (APA), 5 U.S.C. § 706(2)(A).  Specifically, he stated that USDA and RMA failed to adhere to their own regulations: “Failing to provide…adequate notice of the basis for suspension and proposed debarment as required by 2 C.F.R. §§ 180.700, 180.715, 180.800, 180.805, 417.800…an evidentiary hearing as required by 2 C.F.R. §§ 180.735, 180.830” among other claims.  Additionally, the plaintiff raised two violations of the Fifth Amendment and the APA under § 706(2)(C).  First, the defendants failed “binding regulations governing suspension and debarment procedures,” which were similar to the first allegation.  Second, the defendants failed to afford the plaintiff procedural due process by interfering with plaintiffs “protected liberty interest in not being suspended or debarred from government contracting based on mere allegations of wrongdoing and dishonesty.”  Again, citing to the lack of “adequate notice of the basis for suspension and proposed debarment,” the failure to provide an evidentiary hearing, a final decision concerning the temporary indefinite suspension and proposed debarment in a reasonable time, “a hearing before an impartial decisionmaker.”