Ellicott et al. v. Agricorp, 2001 ONAFRAAT 13

Agriculture, Food and Rural Affairs

Appeal Tribunal

1Stone Road West

Tribunal d’appel de l’agriculture, de l’alimentation et des affaires rurales

1 Stone Road West

Guelph, (Ontario) N1G 4Y2

Tel: (519) 826-3433, Fax: (519) 826-4232

Email: AFRAAT@ontario.ca

Guelph (Ontario) N1G 4Y2

Tél.: (519) 826-3433, Téléc.: (519) 826-4232

Email: AFRAAT@ontario.ca

AGRICULTURE, FOOD AND RURAL AFFAIRS APPEAL TRIBUNAL

APPEAL:

Ellicott et al. v Agricorp

Ellicott et al. v Agricorp [Preliminary Motion] 2001 ONAFRAAT 13

STATUTE:

Crop Insurance Act

HEARING:

February 23, 2001

DATE OF DECISION:

February 26, 2001

2001-13

NEUTRAL CITATION:

2001 ONAFRAAT 13

Ellicott et al. v Agricorp [Preliminary Motion]

IN THE MATTER OF: Ontario Regulation 140/96 under the Crop Insurance Act (Ontario) 1996, S.O. 1996, C. 17, Schedule C.

AND IN THE MATTER OF: An Appeal to the Agriculture, Food and Rural

Affairs Appeal Tribunal by Harriet Ellicott, Allan Smith, Lynn Caldwell, Gary Caldwell,

Bill Cook, Bill Davis, Glenn Davenport, James Davey, Simon Deboer, Don Dietrich,

Kevin Doyle, Lorne Faust, Joseph Hachey, Darcy Healey, William (Bill) Herron, Elmer

Herron, Blake Hyde, Harvey Kerr, Bev Kingston, Peter Kotzeff, Brent Kuhl, Lloyd Kuhl,

Chris Patchell, Paul Long, Don MacArthur, Rod MacGillivray, Eldon MacKinnon, Larry

McLeod, Henry K. Meyer, Merv. Misch, Bruce Patchell, Bruce and Heather Ribey, Dean

Ribey, Albert Sandink, Richard Slumskie, Howard Tedford, Murray Tedford, Doug

Trelford of decisions by AGRICORP to deny them payment of claims concerning their

1999 hay crop under Regulation 380/97 and the Crop Insurance Plan For Hay and Forage.

Before:

Paul Gillen, Vice Chair

Appearances:

Harriet Ellicott, appellant

Allan Smith, appellant

Fred Thomson, Senior Adjuster, AGRICORP

Background:

A pre-hearing conference was held via conference call on Friday, February 23, 2001. The purpose of the conference was to hear a motion for discovery of information by way of written questions to the respondent, AGRICORP.

The appeal comes to the Tribunal pursuant to the Crop Insurance Act (Ontario), 1996. Sections 5(1), (2), (4) of the Act state:

5. (1) AGRICORP shall fix the terms of contracts of insurance, or proposed

contracts of insurance, subject to section 4 and the regulations made under section 12.

(2) AGRICORP has all the powers necessary to perform its duties including the power to,

(a) determine the qualifications and requirements for a person to enter into a contract of insurance:

(b) enter into contracts of insurance:

(c) fix terms of contracts of insurance relating to replanting benefits and unplanted acreage benefits;

(d) fix premium rates payable by insured persons;

(e) fix the duration of contracts of insurance;

(f) specify the circumstances in which an insured person may terminate a contract of insurance and the methods that the person may use to terminate the contract;

(g) specify penalties imposed on an insured person who breaches the terms of a contract of insurance;

(h) reinsure with any other insurer the risk or any portion of the risk under its contracts of insurance; and

(i) terminate a contract of insurance on the terms that it considers appropriate.

(4)AGRICORP shall not enter into a contract of insurance with a person to insure an agricultural crop or a type of perennial plant if,

(a) the contract insures less than the entire crop or all the plants of the type of perennial plant, as the case may be, in respect of which the person could enter into a contract of insurance under this Act; or

(b) a contract of insurance is already in effect to insure the crop or the type of perennial plant, as the case may be, in which the person has an interest.

Section 10 of the Act states:

10 (1) If AGRICORP and a person disagree on a matter described in subsection (2)

or if AGRICORP and an insured person fail to resolve a dispute arising out of the adjustment of a claim under a contract of insurance, either may appeal the matter in dispute to the appeal board for the purpose of this section.

(2) Subsection (1) applies to a question whether a person qualifies for a contract of insurance except if the disagreement relates to the time during which a person may apply for a contract of insurance or file a final acreage report or its equivalent.

The role of the Tribunal is set out in Ontario Regulation 140/96. Specifically, clauses 2 and 3 of the regulation state:

2The Board has exclusive jurisdiction to hear and determine all disputes between the Commission and an insured person arising out of the adjustment of a loss under a contract of insurance.

3 (1) If the Commission and an insured person have failed to resolve any dispute arising out of the adjustment of a loss under a contract of insurance and have complied with all requirements respecting the filing of proof of loss forms, either party may appeal the matter in dispute to the Board.

(2) To appeal the matter in dispute, the appellant shall file a notice of appeal with the Board and send a copy of the notice to the other party within one year of filing the proof of loss form.

(3)Where a party has appealed in accordance with subsection (2), the Board shall fix a day, a time and a place for considering the matter in dispute and hearing the parties, and shall notify the parties accordingly.

(4)On the day, and at the time and place so fixed, the Board shall hear the evidence of the parties respect the matter in dispute, and shall make a decision on the matter.

The appellants in this matter were insured against drought by AGRICORP under an area-based insurance policy for hay and forage in 1999. The policy is based on a computer model, the “Soil Moisture-Based Simulation of Forage Yield” (SYMFOY) that simulates forage growth. The computer program is used to calculate an area average yield. This is

used as the insured grower’s yield for each crop year.

The SYMFOY simulation is based on the following variables:

• soil moisture at the beginning of the growing season
• rainfall
• temperature
• sunshine
• co-operator yields
• cutting dates

Each grower is tied to a main weather station and a substation in the geographic vicinity of the grower. Each grower has the opportunity to submit rainfall information for their farm. Twenty-five main stations in the province supply daily minimum/maximum temperature and sunshine data for the simulation. Approximately 175 substations in the province supply additional rainfall data for insured growers who do not report their own rainfall. The substation rainfall data is not used unless the insured fails to report the rainfall data for their farm.

For the purposes of the simulation, the SYMFOY model uses cutting dates that are the average of all of the insured growers’ first cutting date for each main station. Dates for the second and/or third cut are assumed thereafter, at fixed intervals, after the first and second cut respectively and are determined by the SYMFOY model by reference to the average date of the first cut. In Southern Ontario, it is assumed that three cuts of hay will be harvested. An insured grower’s actual rainfall records are used in the SYMFOY model to simulate growth for that grower.

A “cooperator” is a grower for a given area who works with AGRICORP field staff to provide actual first cut forage yields on an annual basis. An average of the measured cooperators’ yields within a 15 mile radius of the insured grower’s location accounts for 50% of the first cut growth and the SYMFOY simulated growth accounts for the other 50% of the simulated first cut growth. If there is no cooperator within a 15-mile radius of the client, AGRICORP may use the average cooperator yields from the county/district in which that particular grower is located.

The Evidence and the Findings

Mrs. Harriet Ellicott testified that:

• The appellants were concerned about the accuracy of environmental data used in the SYMFOY model.
• The appellants had compared data used by AGRICORP in 1999 to data obtained from the federal government Atmospheric Environment Services (AES).
• The appellants found 18% of temperature records and more than 20% of sunshine area records varied between these two sources.

Mr. Allan Smith testified that the appellants were concerned that data had been used from the Port Elgin AES station and that this was not appropriate, due to the lake effect at Port Elgin. Ms. Ellicott stated that the appellants were tied to the Paisley main station, but that it had been closed since 1992.

The appellants requested that the Tribunal order AGRICORP to provide information in response to six specific questions which were documented in their Notice of Motion.

Mr. Fred Thomson testified on behalf of AGRICORP. He stated that:

• AGRICORP met with the appellants a number of times to try to resolve this issue.
• Errors had been discovered in AES data purchased by AGRICORP. The simulation was re-run with corrected data in March 2000.
• The results of the second simulation showed that 47 or 48 insured growers had been overpaid. The aggregate amount of the overpayments was approximately $60,000. AGRICORP did not ask that these monies be repaid, due to an earlier agreement.
• SYMFOY used 30-year running averages of environmental data. Until recently, the 30-year averages were only updated every fifth year.
• The Paisley main station closed in 1992 and since then AGRICORP used data collected at Tara, a neighboring station approximately 22 km from the Paisley station.
• AGRICORP had the right to substitute data when data from the primary source is not available. Normally, there are a few items of information missing from main stations. Where data from a main station is not available, AGRICORP substitutes data from the closest station.
• Data from the Port Elgin AES station had been used in error in the first simulation run in 1999. This data was replaced with data collected at Tara for the second simulation.
• The boundaries of the area tied to each main station were fluid from year to year as the customer base changes.

With regard to the questions listed in the Notice of Motion, Mr. Thomson stated:

1. He could provide a map that defined the 1999 boundaries of the Forage Crop Insurance area known as 6126210 Paisley.

2. There were 160 insured clients in the Forage Plan in the 6126210 Paisley area in1999.

3. There was only one main station used for each year for each area. The Paisley AES station had been used until October 1992. After that date, data collected at the Tara AES station had been used almost exclusively. He believed that there was a misunderstanding of the terminology and that the appellants actually wanted a list of all sub-stations that were used by AGRICORP when data from the main station was not available.

4. AGRICORP did not have a paper trail of all the actual environmental data used in each year of its 30-year average for the Paisley area. No data from one source was used consistently, due to substitutions. This was an area-based plan and all of the data was collected from within this area. It would be a large task to assemble the data and AGRICORP believed it would serve any purpose to release it. AGRICORP was not prepared to release the SYMFOY software to the public.

5. The forage mix used in the Paisley area simulation was a 65:35 ratio of alfalfa to timothy. He did not believe that AGRICORP sales people were aware of this mix.

6. To obtain forage yields cooperator farmers AGRICORP:

• Selected volunteer cooperators who reflected the norm for hay production in the area.
• Selected an established hay field that was not too close to the end of its peak production. Fields that are to be harvested for dry hay rather than haylage are preferred.
• Measured the acreage of the field if the AGRICORP representative was uncertain of the owner’s acreage estimate, or if the owner did not provide information on the size of the field.
• Measured the bales harvested from the field. Weighed the bales unless the adjuster was comfortable that the grower-reported yield was correct.
• Visited each cooperator every year to check the yield.
• Selecting a different field if the original field is no longer typical.
• Converted haylage yield to 15% moisture to be comparable with dry hay.

Mr. Thomson explained that many cooperators have been with AGRICORP for several years and that the insurer depended upon their integrity to report data accurately. He said that cooperator yields are compared to their multi-year average. He believed there were 230 cooperators in the province but did not know how many were in the Paisley area, or their acreage.

Ms. Ellicott clarified that the appellants wanted to know which AES stations were used by AGRICORP and what data was collected and used in the SYMFOY simulation. She explained that the appellants were concerned that AGRICORP had used erroneous data. She said that it might not be necessary to view all the data collected in 30 years but that the appellants would like to see data used for at least 15 years. She said they were prepared to accept data on paper or electronically.

Decision and Reasons:

After careful consideration of the submissions, the Tribunal decided to grant the appellants some of the information that was requested.

The Tribunal understood that all of the environmental data requested by the applicants had not been retained by AGRICORP. However, the Tribunal finds that some of this data can be supplied and it finds that this data would be of use to the appellants in preparing for the Hearing on their appeal.

The Tribunal notes that information requested by the appellants on the number of insured clients in their area, the forage mix used in the simulation and the methodology used to gather yield data from cooperators was provided at the pre-hearing conference.

ORDER OF THE TRIBUNAL

The Tribunal orders AGRICORP to provide the following to the appellants, no later than March 30, 2001:

1. A map clearly marked to show the 1999 boundaries of the Forage Crop Insurance area known as 6126210 Paisley.

2. A complete list of substations from which data was collected, that was used by AGRICORP to substitute for data not available from the Paisley main station in the years 1970-1992 inclusive, and from the Tara main station in the years 1993-1999 inclusive.

3. Average growing season values of sunshine hours, maximum and minimum temperatures and rainfall used in the SYMFOY computer simulation for the Forage Crop Insurance area known as 6126210 Paisley for the years 1990-99 inclusive.