Louisiana’s insurance commissioner has fined a Houston law firm and its partners $2 million for engaging in actions that Donelon said amounted to insurance fraud and unfair business practices involving more than 850 homeowners and policyholders.
Commissioner Jim Donelon fined McClenny, Moseley & Associates (MMA), founding partners James McClenny and John McClenny, and William Huye II, the firm’s former Louisiana managing partner, $500,000 each – the maximum allowed by state law.
The MMA firm in February was issued a cease-and-desist order from the Louisiana Department of Insurance (LDI) for alleged fraudulent representations the firm made to Louisiana policyholders who suffered property damage as a result of Hurricane Ida.
The department’s investigation of MMA indicates at least 856 fraudulent representations were made by the firm. The “fraudulent behavior” included receiving and negotiating insurance claims settlements even when MMA didn’t have the policyholder’s authority to do so, according to LDI.
“I took the unprecedented step of issuing regulatory action, including $2 million in total fines, against law firm McClenny, Moseley & Associates because the scope of their illegal insurance scheme is unprecedented,” Donelon said in a statement emailed to the Louisiana Record. “MMA’s fraudulent misrepresentations harm not only the hundreds of policyholders and insurance companies it targeted, but also the millions of Louisiana consumers who rely on a strong property insurance market.”
LDI said MMA intended to defraud policyholders in the state by diverting claims proceeds for the firm’s benefit and charging “predatory professional service fees” that MMA was not authorized to receive.
The $2 million in fines should deter bad actors in the state’s insurance market and demonstrate that fraud will not be tolerated in the state, Donelon said.
MMA is also the defendant in a lawsuit filed this week in the Eastern District of Louisiana by a New Orleans personal injury attorney, Morris Bart. Bart’s firm is urging the court to issue a temporary restraining order and injunction against MMA because the Houston firm allegedly continues to communicate with and advise former clients who fired MMA and hired Bart’s firm to represent their interests.
“Injunctive relief is appropriate here, because Morris Bart can show a substantial likelihood of success on the merits of its intentional interference with business relations claim and its claim for an injunction against the unauthorized practice of law,” the complaint says.