Counsel for hurricane damage in Louisiana is suspended by the Supreme Court
The attorney who oversees the McClenny Moseley & Associates office in New Orleans had his or her law license suspended by the Louisiana Supreme Court for an indefinite period of time. This is the latest setback for the firm, which spent close to $14 million on client leads and more than 1,600 lawsuits over the course of three days.
William R. Huye III’s law license was temporarily suspended by the Supreme Court on Friday after the Office of Disciplinary Counsel reported that he “appears to be actively engaged in a pattern of serious and harmful ethical misconduct involving client fraud, insurance fraud, and deception toward the federal judiciary…”
The suspension is “absolutely justified,” according to Matthew Monson, an insurance defense attorney in New Orleans whose after-hours inquiry convinced federal judges to intercede to stop MMA’s “bulk filings.”
“I congratulate the Supreme Court for taking such unusual action,” he stated.
In recent months, three federal judges have sanctioned MMA for filing duplicate claims, some on behalf of homeowners who were already represented by other attorneys. Huye admitted to the judges that he told insurers he represented policyholders while in fact he represented Apex Roofing and other restoration companies during interrogation.
Last month, Louisiana Insurance Commissioner Jim Donelon issued a cease-and-desist order instructing MMA to stop breaking state insurance laws.
Last month, Louisiana Insurance Commissioner Jim Donelon issued a cease-and-desist order instructing MMA to stop breaking state insurance laws.
Monson discovered that MMA was generating client leads through an online marketing firm called Velawcity after his wife was solicited via text messages and sent to the company’s website. He claimed to have conducted research on his personal computer and discovered a website, HurricaneDamageLawsuit.com, run by Velawcity, a high-tech marketing agency that works with litigation finance organizations.
US District Court Judge James D. Cain Jr. in Lake Charles ordered MMA to submit copies of its contracts with Velawcity at Monson’s request. According to the documents, MMA promised to pay $3,000 to $3,500 for each “pre-screened client lead” delivered, for a total of $13.9 million.
Huye had previously informed Cain that Velawcity did not offer client leads, just marketing and advertising services.
Cain barred MMA from practicing in the Western District of Louisiana on Saturday. Huye will also be barred from practicing in Louisiana state courts as a result of the Louisiana Supreme Court’s judgment.
According to the Office of Disciplinary Counsel’s report to the Supreme Court, Cain expressed worry that MMA may have falsified signatures in order to deposit payments made out to homeowners and mortgage holders. Kermith Sonnier, a mortgage holder, testified that he had never seen the profits of a $89,522.67 check made payable to Accord Services, a mortgage firm he controls, and that he had not granted MMA approval to deposit the check.
Magistrate Judge Michael North, another federal court, chastised MMA for launching a case on behalf of homeowner Tricia Franatovich, despite the fact that she had already obtained counsel. Huye confirmed that his business represented Apex Roofing, which had convinced Franatovich to sign documents while traveling door to door in her hurricane-damaged neighborhood.
North demanded that MMA disclose papers revealing that the legal firm had filed 856 cases on behalf of property owners while really representing Apex. Questioning by North revealed that MMA was soliciting clients through a call center that used non-attorneys to explain the terms of retention contracts, according to the Disciplinary Counsel’s report.
The office said MMA seeks to take as high of a percentage as possible of any recovery from policyholders who contracted with Apex. Insurance companies that fail to pay policy benefits on time face a 50% penalty under Louisiana law.
“MMA may opt to bring suit and may become attorney costs per law in addition to any recovery made against the carrier,” according to the article. “This method involves runner-based soliciting.”
einsteineruploaded with. MMA, on the other hand, has not always disbursed payments to homeowners, “at least not in a timely manner,” according to the study.
“The amount of benefits left over is typically inadequate to complete repairs on the home in question given that MMA and Apex have already taken a considerable portion of the policy proceeds,” the report says.
The Supreme Court’s one-page ruling suspending Huye’s law license also permits the Office of Disciplinary Counsel to appoint a trustee to preserve MMA’s clients’ interests. Huye was ordered by the court to furnish a spreadsheet with the names, addresses, and contact information for MMA’s Louisiana clients.
Insurance defense attorney Steve Badger, a partner with the Zelle law firm in Dallas, Texas, said in an email that no reputable attorney will agree to represent homeowners solicited by MMA and share attorney fees with the law firm. He claims that the Supreme Court appears to have acknowledged the issue, as seen by the court’s decision to approve the appointment of a trustee.
“As an insurance industry defense attorney who has seen a lot of improper behavior in storm damage claims, the most disturbing aspect for me is how these cases were recruited through the marketing business Velawcity,” said Badger. “In his statement, Huye virtually acknowledges that the solicitation occurred and was wrong. You cannot pay a third party to bring you clients. That is Lawyer Ethics 101.”
On Tuesday, neither Huye nor William Gibbons, a criminal defense attorney engaged by MMA to represent it, replied to a request for comment from Claims Journal.