Houston law firm hit with $2M fine for insurance fraud
Louisiana Department of Insurance reported that the firm and its partners engaged in insurance fraud involving at least 850 policyholders.
Louisiana Insurance Commissioner Jim Donelon issued fines totaling $2 million against Houston law firm McClenny Moseley & Associates, its founding partners and their Louisiana managing partner.
The Louisiana Department of Insurance announced the fines Tuesday, May 2, 2023, stating that the firm and its partners engaged in unfair trade practices and insurance fraud involving at least 850 Louisiana homeowners and policyholders.
The law firm and its attorneys James McClenny, John Moseley and William Huye III were each fined $500,000, the maximum allowed under Louisiana law.
“The illegal insurance scheme perpetrated by McClenny Moseley & Associates is frankly one of the most egregious cases that has ever come through this department,” Donelon said in a release. “The $2 million in fines should put all bad actors on notice that fraudulent behavior will not be tolerated in Louisiana.”
The department’s actions and fines follow findings by two federal district court judges in the Western and Eastern Districts of Louisiana, who dismissed hundreds of cases brought by the law firm, an account of which was reported in February in Texas Lawyer.
A request for comment made to Moseley was not returned.
856 fraudulent misrepresentations
According to the findings from the Louisiana Department of Insurance’s ongoing investigation, McClenny Moseley & Associates admitted to at least 856 fraudulent misrepresentations that it had been retained by Louisiana policyholders to settle claims, when it did not represent those policyholders.
The law firm’s fraudulent behavior included presenting demands for payment pursuant to the consumer’s insurance policy, invoking the appraisal provision of the policy and receiving and negotiating insurance settlement checks without the authority to do so from the policyholder, regulators said.
Based on the insurance department investigation, these misrepresentations and unauthorized legal representations were made with the intent to injure, defraud or deceive Louisiana policyholders and insurers, and divert insurance claim proceeds to their benefit and collecting predatory professional service fees to which they were not entitled.
Cease and desist
The state insurance department previously issued a cease-and-desist order, notice of wrongful conduct and notice of investigative proceedings to the law firm on Feb. 17.
On May 1, the department issued four cease-and-desist order with notice of fine documents.
The insurance department declared that it had evidence the law firm and its principals, managers and partners participated in “a fraudulent scheme and/or trade practice” in collaboration with Apex Roofing and Restoration, an Alabama company.
Citing one example, the department said the firm admitted in court transcripts in the Eastern District before U.S. District Judge Michael B. North of having sent letters of representation to insurance companies on behalf of insureds, while McClenny Moseley & Associates did not represent those insureds, but rather represented APEX.
Any policyholder who believes McClenny Moseley & Associates might have fraudulently represented them is encouraged to contact the Louisiana Department of Insurance Office of Insurance Fraud at (225) 342-4956.
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