It should be axiomatic that an insurance agent should never assist a person to obtain insurance by fraud. In United States v. Hawley, No. 08-2992 (8th Cir. 08/23/2010), the Eighth Circuit Court of Appeals pointed out the danger such actions place on the financial well-being of an insurance agent who helped some crooked farmers obtain a crop insurance policy to which they were not eligible because they had no interest in the crop. The farmers went to jail for their fraud and the insurance agent who obtained the policy for them was sued by the government for three times the amount it paid. The agent obtained a summary judgment from the district court only to have the summary judgment reversed and sent back to the trial court.

Read Barry Zalma's previous column, “Contracts are sacrosanct.”

The U.S. brought a civil action against insurance agent Russell T. Hawley and his insurance agency, Hawley Insurance Inc. (collectively “Hawley”), alleging violations of the False Claims Act amended by the Fraud Enforcement and Recovery Act of 2009, and fraud under Iowa common law. The government stated that Hawley caused ineligible farmers to make claims against insurance policies that were issued by a private insurance company and reinsured by a government corporation. The district court granted summary judgment in favor of Hawley on all claims, and the government appealed. The Eighth Circuit Court reversed because the insurance agent was experienced and knowledgeable about crop insurance and should have known that the government would be damaged if the fraudulently obtained policy resulted in a claim.