McClenny Moseley & Associates (MMA), the Texas-based regulation agency infamous for its mass hurricane declare solicitation practices in Louisiana, scored one important authorized victory amongst many losses. Louisiana Administrative Legislation Choose Cazeline G. Hebert dominated that the Louisiana Division of Insurance coverage (LDI) lacked jurisdiction to positive or concern cease-and-desist orders in opposition to MMA and its attorneys, regardless of substantiated claims of widespread unauthorized illustration of policyholders. 1
I’ve beforehand written about MMA’s controversial authorized and advertising and marketing technique and its eventual chapter submitting in McClenny, Moseley & Associates, aka MMA, Information Chapter: Texas Attorneys Concerned With Mass Hurricane Promoting Scheme Search Reorganization.
This ruling provides one other chapter to the saga. It emphasizes a basic authorized distinction that always will get blurred when attorneys turn into concerned in declare settlement processes. Legislation corporations are within the enterprise of regulation, not the enterprise of insurance coverage.
In line with the executive determination, MMA had despatched over 800 letters of illustration to Louisiana insurers, falsely asserting that these policyholders had retained it. The agency then negotiated settlements and picked up proceeds with out the insureds’ information or consent. MMA attorneys admitted these acts in two separate federal court docket proceedings. The LDI, armed with these admissions, sought to control the agency beneath Louisiana’s Insurance coverage Code and issued a positive of $500,000 in opposition to every particular person lawyer concerned, James McClenny, William Huye III, John Moseley, and the agency itself. In complete, MMA confronted a staggering two million {dollars} in penalties.
The executive court docket rejected the LDI’s authority to implement such penalties. The decide reasoned that the statutes invoked by the LDI, particularly La. R.S. 22:1969 and 22:1924, apply solely to entities engaged within the enterprise of insurance coverage. The court docket concluded that MMA and its attorneys, even when they engaged in misleading or fraudulent conduct, had been appearing throughout the sphere of authorized providers, not insurance coverage. Subsequently, regulation and enforcement should come from the suitable prosecutorial or disciplinary authorities, not the insurance coverage commissioner.
This final result could also be irritating to those that consider MMA’s conduct harmed shoppers and sullied the integrity of hurricane claims dealing with. Nonetheless, the ruling underscores an important authorized boundary that solely these within the enterprise of insurance coverage are topic to an insurance coverage commissioner’s administrative powers. Whereas MMA’s actions could also be topic to felony prosecution or bar self-discipline, they’re exterior the direct regulatory grasp of insurance coverage authorities.
MMA might have escaped a $2 million positive, however its popularity has already taken a large blow. This case serves as a warning, not solely to regulation corporations tempted to wade into mass-claims advertising and marketing with out correct controls, but additionally to regulators who should work in live performance with bar associations and prosecutors when authorized practitioners abuse the belief of policyholders. Apart from court docket Orders, I’m not conscious that any lawyer concerned with the MMA mess has been disciplined, prosecuted or discovered responsible of any wrongdoing by any Bar Affiliation or felony court docket.
Moral misconduct and fraud are flawed, no matter who commits them. However the venue for justice issues. This ruling is a reminder that even when the information are damning, jurisdictional traces nonetheless decide who can convey down the hammer. On this occasion, the Louisiana Division of Insurance coverage merely reached too far. Attorneys are engaged within the enterprise of regulation and never insurance coverage.
Thought For The Day
“Information provides you with energy, however character respect.”
Bruce Lee
1 Within the Matter of McClenny Mosely & Associates, No. 2023-2886-INS (La. Div. of Admin. Legislation Jan. 31, 2025).
