Can I still file a GMO corn lawsuit against Syngenta if crop insurance covered part of my loss?

  • The collateral source rule is a rule of law designed to prevent a tortfeasor who causes a loss from benefiting when a victim had purchased third-party insurance
  • The collateral source rule means farmers may still file suit and recover their losses from Syngenta even if crop insurance covered part of the loss
  • Minnesota’s common law collateral source rule provides that the compensation a plaintiff receives from a third party such as a crop insurer “will not diminish recovery against a wrongdoer”
  • By statute, however, the Minnesota Legislature partially abrogated the collateral source rule, but did so only with respect to physical injury claims, not as to those claims for property damage
  • Generally, evidence of insurance payments is not relevant in a tort claim, but exceptions exist when offered to impeach credibility concerning the cause of the loss

Whether crop insurance payments must be repaid out of a farmer’s recovery is a right available to crop insurers under federal law, but depends on the language embedded within the crop insurance contracts
The Federal Crop Insurance Act (FCIA) was adopted in 1938 to “promote the national welfare by improving the economic stability of agriculture through a sound system of crop insurance and providing the means for the research and experience helpful in devising and establishing such insurance.” 7 U.S.C. § 1502 (1986). The act created the Federal Crop Insurance Corporation (FCIC) as an agency within the U.S. Department of Agriculture. In 1980, Congress amended the FCIA. The amendments provided authorization for the FCIC to offer an expanded reinsurance program to insurers. When crop yields or crop prices plummet, farmers may file crop insurance claims to recover their lost corn income. Farmers who have collected crop insurance proceeds have put forth the question, “Can I still file a lawsuit against Syngenta is crop insurance covered part of my loss?” The answer in Minnesota state courts is “yes.”

The Minnesota Supreme Court proclaimed more than seventy years ago that “it is well settled by the decisions of this state that insurance coverage of the plaintiff has no effect on the liability of a defendant for a tort.” Donahue v. Acme Heating Sheet Metal & Roofing Co., 214 Minn. 424, 425-26, 8 N.W.2d 618 (1943). Minnesota’s “common law collateral-source rule provides that “the compensation a plaintiff receives from a third party “will not diminish recovery against a wrongdoer.” Hubbard Broadcasting, Inc. v. Loescher, 291 N.W.2d 216, 222 (Minn.1980). In Hueper c. Goodrich, 314 N.W.2d 828, 831 (Minn. 1982), the Minnesota Supreme Court declined “to abandon the collateral source rule or to create limitations on its application.” Specifically, “[p]ayments made to or benefits conferred on the injured party from other sources are not credited against the tortfeasor’s liability, although they cover all or a part of the harm for which the tortfeasor is liable.” Hubbard, supra, citing Restatement (Second) of Torts, § 920A(2) (1979). This rule acknowledges that the “tortfeasor’s responsibility to compensate for all harm that he causes, not confined to the net loss that the injured party receives.” Id., comment b. Furthermore, “[t]he law does not differentiate between the nature of the benefits, so long as they did not come from the defendant or a person acting for him.” Id. Thus, farmers should be permitted to pursue their claims against Syngenta, even if crop insurance proceeds have been paid for the drop in corn prices. Duluth Steam Co-op Ass’n v. Ringsred, 519 N.W.2d 215, 218 (Minn.Ct.App. 1994)

“In 1986, the Minnesota Legislature passed the collateral-source statute in order to prevent some double recoveries by plaintiffs.” Swanson v. Brewster, 784 N.W.2d 264, 269 (Minn. 2010). “The statute changed the rule on collateral sources and damage awards, essentially providing that a plaintiff cannot recovery money damages from the defendant if the plaintiff has already received compensation from certain third parties or entities. Procedurally, the statute prevents double recovery through a post-trial reduction by the district court of a plaintiff’s award. The statute allows a party to file a motion requesting a determination of collateral sources after a jury returns a verdict awarding damages to a plaintiff…. The court makes the reduction rather than the jury. To insure that the court determines the reduction, the statute prohibits the parties from informing the jury that the plaintiff has received compensation from another individual or entity.” Id., at 269-270 (citations omitted). The Minnesota Supreme Court determined that the “collateral source-statute only partially abrogates the common-law collateral source rule.” Id., at 270. Yet Minnesota courts have determined it applied only to cases involving physical injury to the person. Duluth Steam Co-op Ass’n v. Ringsred, 519 N.W.2d 215 (Minn.Ct.App. 1994). Thus, in a case that “involves property damage, not personal injury, the statutory collateral source rule does not apply here.” See also Leamington Co. v. NonProfits’ Ins. Ass’n, 661 N.W.2d 674, 678 (Minn.Ct.App. 2003)(the statutory collateral source rule does not apply…to property damage). Lorisch v. Lowman, 2005 WL 4925533, ¶24 (Minn.Dist.Ct., September 8, 2005(Schellhas, Judge)(“The collateral source statute applies only to cases involving physical injury to the person, and was not created to protect damaged property.”). Consequently, in cases involving damage to property, it is the common law collateral-source rule that applies, not the statutory collateral-source rule which attempted to partially abrograte it in 1986.

Moreover, both the common law collateral-source rule and the subsequent statutory rule bar the admission into evidence of collateral-source payments. “Ordinarily, there is an evidentiary component to the [statutory] rule as well that ‘bars admission of evidence of the existence of the collateral source or the receipt of such benefits as irrelevant to the issue of damages, and liable to be misused by the jury. Swanson v. Brewester, supra, at 269, citing Scott v. Garfield, 454 Mass. 790, 912 N.E.2d 1000, 1011 (2009)(Cordy, J., concurring). “Evidence of the existence of insurance “may not be shown to defeat or diminish recovery,” by insurance may “become [] relevant to prove or rebut an issue arising in the trial of the case, [and thus] may be admissible even though it is prejudicial.” Wilson v. Home Gas Co., 267 Minn. 162, 168, 125 N.W.2d 725, 729 (1964). Thus, when relevant to show the cause of a loss, the trial court may introduce into evidence crop insurance forms. Ptacek v. Earthsoils, Inc., 844 N.W.2d 535, 540 (Minn.Ct.App. 2014)(“One of the central issues at trial was the cause of appellants’ lost yield. Signed statements by appellants that the lost yields was caused 100% by drought were certainly relevant on the issue of causation.”). See also Zutz v. Case Corp., 422 F.3d 764, 773 (8th Cir. 2005) (“Case did not solicit evidence regarding the Zutzes’ insurance proceeds for the purposes of mitigating the Zutzes’ loss or reducing the damage award to the Zutzes. Rather, Case offered evidence of the Zutzes’ insurance proceeds on the issue of the Zutzes’ credibility. The Zutzes alleged they were seeking damages caused only by the Drills, but evidence in the insurance records demonstrated they actually were seeking a double recovery from Case for damage to their fields caused by weather and insects. We conclude the district court did not abuse its considerable discretion in receiving into evidence the Zutzes’ receipt of collateral source benefits.”). Consequently, unless the farmer’s crop insurance application has a statement by the plaintiff concerning why the loss occurred which is different than the allegations made here, there is no justification for the crop insurance application to be admitted into evidence.

Under federal crop insurance, where an insured is able to collect from a third party for a loss paid by the crop insurer, he must repay the crop insurer. 7 C.F.R. § 457(a)(30) (2007)(“ Since you may be able to recover all or a part of your loss from someone other than us, you must do all you can to preserve this right. If you receive any compensation for your loss, excluding private hail insurance payments and payments covered by section 35, and the indemnity due under this policy plus the amount you receive from the person exceeds the amount of your actual loss, the indemnity will be reduced by the excess amount, or if the indemnity has already been paid, you will be required to repay the excess amount, not to exceed the amount of the indemnity. The total amount of the actual loss is the difference between the value of the insured crop before and after the loss, based on your production records and the highest price election or amount of insurance avail- able for the crop. If we pay you for your loss, your right to recovery will, at our option, belong to us. If we recover more than we paid you plus or expenses, the excess will be paid to you.”). Whether crop insurance payments must be repaid out of a farmer’s recovery is a right available to crop insurers under federal law, but depends on the language embedded within the crop insurance contracts.

Written by*:
Mikal C. Watts
Four Dominion Drive, Bldg. Three, Suite 100
San Antonio, Texas 78257

* This information is provided to supply relevant information concerning the GMO corn lawsuit, and should not be received as legal advice. Legal advice is only given to persons or entities with whom Watts Guerra LLP has established an attorney-client relationship. If you have another lawyer in the GMO Corn lawsuit, you should consult with your own attorney, and rely upon his or her advice, rather than the information contained herein

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