McClenny Moseley & Associates (MMA), the Texas-based regulation agency infamous for its mass hurricane declare solicitation practices in Louisiana, scored one vital authorized victory amongst many losses. Louisiana Administrative Legislation Choose Cazeline G. Hebert dominated that the Louisiana Division of Insurance coverage (LDI) lacked jurisdiction to high quality or subject cease-and-desist orders towards 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 technique and its eventual chapter submitting in McClenny, Moseley & Associates, aka MMA, Recordsdata Chapter: Texas Legal professionals Concerned With Mass Hurricane Promoting Scheme Search Reorganization.
This ruling provides one other chapter to the saga. It emphasizes a elementary authorized distinction that usually will get blurred when attorneys change into concerned in declare settlement processes. Legislation corporations are within the enterprise of regulation, not the enterprise of insurance coverage.
Based on the executive choice, 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 high quality of $500,000 towards every particular person legal professional concerned, James McClenny, William Huye III, John Moseley, and the agency itself. In whole, MMA confronted a staggering two million {dollars} in penalties.
The executive court docket rejected the LDI’s authority to implement such penalties. The choose 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 performing throughout the sphere of authorized providers, not insurance coverage. Due to this fact, 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 imagine MMA’s conduct harmed shoppers and sullied the integrity of hurricane claims dealing with. Nonetheless, the ruling underscores a necessary 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 could have escaped a $2 million high quality, however its popularity has already taken an enormous blow. This case serves as a warning, not solely to regulation corporations tempted to wade into mass-claims advertising 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. Aside from court docket Orders, I’m not conscious that any legal professional 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 mistaken, no matter who commits them. However the venue for justice issues. This ruling is a reminder that even when the details are damning, jurisdictional strains nonetheless decide who can deliver down the hammer. On this occasion, the Louisiana Division of Insurance coverage merely reached too far. Legal professionals are engaged within the enterprise of regulation and never insurance coverage.
Thought For The Day
“Data will provide 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).
