Louisiana insurance commissioner rips ruling against insurance fraud fine

Louisiana Insurance Commissioner Tim Temple said his office will continue to pursue an insurance fraud case despite a Friday ruling against his office.

The Division of Administrative Law ruled that the Louisiana Department of Insurance (LDI) did not have jurisdiction to issue the cease-and-desist orders and fines former Insurance Commissioner Jim Donelon issued to Texas law firm McClenny, Moseley & Associates (MMA) and members of its senior leadership team in 2023.

“The LDI had authority to investigate and issue administrative actions against MMA in 2023 for committing fraud in the insurance claim process,” Temple said. “I respect the judge, but I disagree with her ruling in this case, and I will work with and encourage the Louisiana Department of Justice to pursue MMA for its criminal activities.”

On May 1, 2023, the LDI issued fines totaling $2 million to MMA, founding partners James McClenny and John Moseley, and Louisiana managing partner William Huye III, for engaging in unfair trade practices and insurance fraud involving over 850 Louisiana homeowners and policyholders. MMA, McClenny, Moseley and Huye were each fined $500,000, the maximum allowed.

“During the 2024 session, I supported successful legislation that reinforces the LDI’s authority to investigate and act against any entity that engages in insurance fraud,” said Commissioner Temple. “At my direction and under the authority granted to me by Louisiana law, our Office of Insurance Fraud will continue investigating entities that violate our Insurance Code and put Louisiana consumers at risk.”

The LDI took those administrative actions based on an investigation by its Office of Insurance Fraud that found MMA fraudulently misrepresented to multiple insurance companies that the Houston-based firm had been retained by Louisiana policyholders to settle hurricane claims when MMA did not represent those policyholders and that these misrepresentations were made with intent to injure, defraud or deceive Louisiana policyholders and insurers.

Insurance fraud is estimated to cost Americans $308.6 billion annually, including approximately $4 billion each year in Louisiana. Insurance fraud is a pervasive problem in our state that adds significant cost to the insurance premiums paid by consumers.