Lawyers Are Not Subject to Insurance Department Jurisdiction

McClenny Moseley & Associates (MMA), the Texas-based law firm notorious for its mass hurricane claim solicitation practices in Louisiana, scored one significant legal victory among many losses. Louisiana Administrative Law Judge Cazeline G. Hebert ruled that the Louisiana Department of Insurance (LDI) lacked jurisdiction to fine or issue cease-and-desist orders against MMA and its attorneys, despite substantiated claims of widespread unauthorized representation of policyholders. ¹

I have previously written about MMA’s controversial legal and marketing strategy and its eventual bankruptcy filing in McClenny, Moseley & Associates, aka MMA, Files Bankruptcy: Texas Lawyers Involved With Mass Hurricane Advertising Scheme Seek Reorganization.

This ruling adds another chapter to the saga. It emphasizes a fundamental legal distinction that often gets blurred when attorneys become involved in claim settlement processes. Law firms are in the business of law, not the business of insurance.

According to the administrative decision, MMA had sent over 800 letters of representation to Louisiana insurers, falsely asserting that those policyholders had retained it. The firm then negotiated settlements and collected proceeds without the insureds’ knowledge or consent. MMA attorneys admitted these acts in two separate federal court proceedings. The LDI, armed with these admissions, sought to regulate the firm under Louisiana’s Insurance Code and issued a fine of $500,000 against each individual attorney involved, James McClenny, William Huye III, John Moseley, and the firm itself. In total, MMA faced a staggering two million dollars in penalties.

The administrative court rejected the LDI’s authority to enforce such penalties. The judge reasoned that the statutes invoked by the LDI, specifically La. R.S. 22:1969 and 22:1924, apply only to entities engaged in the business of insurance. The court concluded that MMA and its attorneys, even if they engaged in deceptive or fraudulent conduct, were acting within the sphere of legal services, not insurance. Therefore, regulation and enforcement must come from the appropriate prosecutorial or disciplinary authorities, not the insurance commissioner.

This outcome may be frustrating to those who believe MMA’s conduct harmed consumers and sullied the integrity of hurricane claims handling. Nonetheless, the ruling underscores an essential legal boundary that only those in the business of insurance are subject to an insurance commissioner’s administrative powers. While MMA’s actions may be subject to criminal prosecution or bar discipline, they are outside the direct regulatory grasp of insurance authorities.

MMA may have escaped a $2 million fine, but its reputation has already taken a massive blow. This case serves as a warning, not only to law firms tempted to wade into mass-claims marketing without proper controls, but also to regulators who must work in concert with bar associations and prosecutors when legal practitioners abuse the trust of policyholders. Except for court Orders, I am not aware that any attorney involved with the MMA mess has been disciplined, prosecuted or found guilty of any wrongdoing by any Bar Association or criminal court.

Ethical misconduct and fraud are wrong, regardless of who commits them. But the venue for justice matters. This ruling is a reminder that even when the facts are damning, jurisdictional lines still determine who can bring down the hammer. In this instance, the Louisiana Department of Insurance simply reached too far. Lawyers are engaged in the business of law and not insurance.

Thought For The Day 

“Knowledge will give you power, but character respect.”
Bruce Lee

¹ In the Matter of McClenny Mosely & Associates, No. 2023-2886-INS (La. Div. of Admin. Law  Jan. 31, 2025).