Law firm, partners fined $2 million for "massive insurance fraud scheme"

Law firm, partners fined $2 million for “massive insurance fraud scheme” | Insurance Business America

Catastrophe & Flood

Law firm, partners fined $2 million for “massive insurance fraud scheme”

Commissioner issues maximum penalty against individuals and firm

Catastrophe & Flood

By
Jen Frost

Louisiana Insurance Commissioner Jim Donelon has fined Texas law firm McLenny Moseley & Associates (MMA) and associated partners $2 million for hurricane-related insurance fraud involving at least 850 Louisiana homeowners and policyholders.

“The illegal insurance scheme perpetrated by McClenny Moseley & Associates is frankly one of the most egregious cases that has ever come through this department,” said Donelon. “The $2 million in fines should put all bad actors on notice that fraudulent behavior will not be tolerated in Louisiana.”

MMA, founding partners James McLenny and John Moseley, and Louisiana managing partner William Huye III were each fined $500,000, the maximum penalty permitted under current law.

MMA has admitted to at least 856 fraudulent misrepresentations that it had been retained by Louisiana policyholders to settle claims when it did not represent the individuals, as per an ongoing Lousiana Department of Insurance investigation (LDI), the LDI said in a press release.

The law firm’s fraudulent behavior included presenting payment demands, invoking policy appraisal provisions, and receiving and negotiating settlement checks without policyholder authorization, the LDI said.

“Based on the LDI’s investigation, these misrepresentations and unauthorized legal representations were made by MMA with intent to injure, defraud or deceive Louisiana policyholders and insurers for the purpose of diverting insurance claim proceeds to their benefit and collecting predatory professional service fees to which they were not entitled,” the LDI said.

The LDI urged policyholders who may have been “fraudulently represented” by the firm to contact its office of insurance fraud.