Louisiana Department of Insurance Accuses Texas-Based Law Firm of Fraud and Unfair Trade Practices
The Louisiana Department of Insurance has taken the extraordinary step of filing an administrative action against a Texas-based law firm. I have been working in the first-party insurance claims business for over forty years. I have never seen anything like this.
Law firms and lawyers are usually governed and prosecuted by the State Bar Associations when allegations of wrongful conduct occur. Lawyers, like all citizens, can also be prosecuted by state and federal prosecutors for breaking criminal laws. This usually results in disbarment or suspension from the practice of law if the crimes are serious. I cannot recall an insurance commissioner ever bringing an action against lawyers in an administrative action. The allegations in this matter are very serious.
They include:
3.
The LDI has evidence that McClenny Moseley & Associates, PLLC, and its principals, managers and/or partners William Huye Ill, John Moseley and James McClenny (collectively referred to herein as “MMA”) participated in a fraudulent scheme involving fraudulent insurance acts.
4.
According to information and evidence now in the possession of the LDI, MMA, in connection with a contractual arrangement between MMA and APEX, fraudulently misrepresented to multiple Louisiana insurance companies that MMA had been retained by Louisiana insureds as their attorney and/or legal counsel related to the settlement of hurricane related insurance claims without the knowledge of the insureds MMA purported to represent.
5.
According to a transcript of the court proceeding held on February 1, 2023, by the United States District Court for the Eastern District of Louisiana, with The Honorable Michael B. North presiding, MMA admitted to having sent letters of representation to insurance companies on behalf of insureds, while MMA did not represent those insureds, but rather represented APEX. During the proceeding, when questioned by the Judge, MMA admitted to filing one lawsuit and settling eleven (11) claims on behalf of insureds without the insureds’ knowledge and consent.
6.
Upon the conclusion of the February 1, 2023, Federal Court hearing detailed above, The Honorable Michael B. North ordered MMA, through its counsel of record, William Huye Ill, to produce comprehensive lists related to specific instances where MMA provided legal representation to Louisiana insureds and also specific instances where MMA mispresented to Louisiana insurers that they represented insureds when in fact they represented APEX and not the insured.
7.
On February 13, 2023, via written responses to Orders issued by the Honorable Michael B. North, MMA admitted to 856 misrepresentations to Louisiana insurers that MMA was retained by the insureds/homeowners, when in fact MMA did not represent those insureds/homeowners relative to claims for payment and benefits under those insurance policies.
8.
In one of the 856 files, wherein MMA admitted to misrepresenting themselves to have been retained by insureds Michael and Holly Caffarel, in relation to a claim for benefits following Hurricane Laura, the LDI has learned via a complaint filed by counsel retained by the Caffarels that the Caffarels only learned of the fraudulent claim representation when Chase Bank, the mortgage holder and listed payee on the insurance proceeds settlement check, endorsed the check for damages sustained from Hurricane Laura and sent the check to the Caffarels.
9.
In a separate admission in response to the Order issued by Judge North following the February 1, 2023 hearing, MMA admitted to the Court that it had settled nine (9) claims while MMA did not represent the insureds connected to those claims.
10.
Transcripts obtained from the LDI of a court proceeding held on December 13, 2022, before the United States District Court for the Western District of Louisiana, with The Honorable James D. Cain, Jr. presiding, revealed that MMA received and deposited a check, dated August 24, 2022, from ‘Allstate’ representing proceeds from an insurance settlement. The settlement GileGk was made payable to MMA, Mel Addison and Adriana L. Addison (the insureds/homeowners) and Accord Services, Inc. Accord Services, Inc. is listed as the mortgage holder for the property for which the insurance benefits were claimed on and paid. According to the unrefuted testimony by Kermith Sonnier, the owner of Accord Services, Inc., MMA was never given permission to sign the name of Accord Services, Inc. to the settlement check at issue. Mr. Sonnier further testified that he had never spoken with MMA about the check….
The Louisiana Department of Insurance issued a Cease and Desist Order to the law firm. The law firm faces significant administrative penalties and has 20 days to file a response to the allegations. As always, just because allegations have been made, it does not mean that the allegations are true or that laws have been broken.
What is so different in this matter is that the facts are largely taken from legal proceedings involving the law firm. The Louisiana Department of Insurance did not have to conduct a special investigation. It simply read court filings and transcripts of hearings.
Lawyers cannot say that they represent somebody when they do not. Lawyers cannot sign checks for people without permission. Lawyers cannot settle insurance claims for non-clients. These are serious allegations of unethical conduct that must be investigated by the Louisiana and Texas State Bars.
The vast majority of all lawyers I come across are hardworking and ethical. The perception that all lawyers are making a fortune is simply not true. Lawyer jokes are not called for.
The vast majority of all lawyers I speak with and those I call colleagues, care about people and take a great deal of pride in the ethics of the profession. They worry about our reputations and expect others to act ethically. I received numerous emails and calls from lawyers about this on Friday and Saturday, most in disbelief. Many expressed outrage.
We will see what comes next. People are entitled to a presumption of innocence. But this story seems like it is just in the beginning stages, and there is a lot more that may become public as the entirety of this unfolds in very public forums.
Thought For The Day
Searching is half the fun: life is much more manageable when thought of as a scavenger hunt as opposed to a surprise party.
—Jimmy Buffett
