Where's the Money? Insurance scheme has Louisiana hurricane victims waiting on funds to repair
“They were like, ‘Well, you got it. You got some money that came in.’ And I'm like, ‘I don't know nothing about no money.’”
'I don't know nothing about no money'
Melvin Addison would do anything to protect the small home he and his wife Adriana own in Lake Charles -- even ride out a killer hurricane.
Hurricane Laura killed more than two dozen people in Louisiana when it slammed the Lake Charles area in August 2020. It didn’t kill Melvin Addison, but almost.
“I got a flesh-eating bacterial infection from the hurricane,” he said. “You can see it took my leg and it took part of my foot. And it actually got in my mouth and infected my mouth. I lost my teeth.”
He spent more than a year in the hospital in New Orleans after Laura. When he finally returned to Lake Charles, his house was in complete tatters from Laura and Hurricane Delta, which hit just six weeks later. He called Allstate to make an insurance claim. Then came the real rude awakening.
“They were like, ‘Well, you got it. You got some money that came in.’ And I'm like, ‘I don't know nothing about no money.’”
Court documents and testimony indicate the Addisons are one of thousands of Louisiana storm victims who have been caught up in what the state Department of Insurance calls a “massive insurance fraud scheme” by Houston-based law firm McClenny Moseley and Associates. The Addisons’ story may be among the most egregious, but it’s also instructive for other homeowners across Louisiana who are still wondering what McClenny Moseley, or MMA, has done with their insurance proceeds.
The Addisons hired Lake Charles injury lawyer Tom Filo to file a lawsuit against their insurance company last August, just days before a two-year filing deadline for all Hurricane Laura insurance litigation. Later, they learned MMA had already filed a lawsuit against Allstate for the Addisons, just one day earlier.
Rife with errors
MMA produced a purported agreement by Melvin Addison to hire the Texas law firm, but there are several glaring problems with the document.
First, it says Addison’s insurance claim was for damage to his home caused by Hurricane Ida, which hit eastern Louisiana in 2021, a whole year after Laura destroyed the Addisons' house on the opposite side of the state. Second, Addison’s signature on the document was created by a computer, as a federal judge later confirmed in a hearing. And third, it was dated in January 2022, while Addison said he was still in the hospital, fighting for his life.
In court, MMA argued Addison had filled out a DocuSign form online. Except, he said he had no way of doing that at the time because he didn’t own a computer or a smart phone.
Then there’s the insurance check for $89,522.67. Allstate issued it last August to “Mell Addison, Adriana L. Addison and Accord Services Inc.,” a home inspection firm in Lake Charles that held the Addisons’ mortgage. The check was endorsed by someone at MMA "as POA (Power of Attorney) for Mell Addison, Adriana L. Addison, Accord Services.”
Melvin Addison and Accord Services owner Kermith Sonnier later testified in federal court they never granted MMA any power of attorney. They allege in a separate state lawsuit that their signatures were forged on the insurance check.
The Addisons and Sonnier’s company are suing MMA; MMA’s former Louisiana managing partner William Huye; the Texas bank where MMA deposited the funds; and Arizona-based marketing firm Velawcity, which was paid $14 million to sign up thousands of storm clients for MMA, many of them without their knowledge.
Records also show MMA planned to keep more than $32,500 of the Addisons’ insurance proceeds to cover the firm’s legal fees and court costs. Court records show that MMA deposited those insurance funds into a trust account at Oakwood Bank in east Texas. But Huye also said in court that MMA normally transferred the portion of insurance payments earmarked for legal fees and expenses out of the trust account and into its operating account at the bank.
U.S. District Judge James Cain in Lake Charles, who oversees more than 1,600 cases filed in his court by MMA, said that kind of “commingling” of funds is what can get lawyers “in trouble.” He, along with U.S. Magistrate Judge Michael North in New Orleans, has been trying to figure out what happened to potentially millions of dollars in insurance payments MMA negotiated but never delivered to claimants or to the contractors they hired to fix storm-damaged properties.
Judge not pleased
Huye and MMA’s founding partner Zach Moseley were both called to testify last month in federal court in Lake Charles. Magistrate Judge Kathleen Kay dressed them down as they tried to explain “mistakes” that popped up after they used an automated system to sign up and file lawsuits on behalf of hundreds of clients at a time. She questioned why MMA filed lawsuits even after clients expressly told the firm not to file or after MMA sent clients messages seeking permission to sue and received no answer.
“Silence is not permission,” Judge Kay told Huye. “Failure to respond is not permission.”
Growing increasingly exasperated over a full day of hearings about MMA, Judge Kay finally said to Moseley, "You need to unplug your computer. No more robocalls. No more robo-messaging."
Judge Kay also recommended thousands of dollars in fines against Huye for filing more than a dozen lawsuits against the wrong insurance company.
For example, MMA sued State Farm for two Lake Charles homes owned by Albert Duplantis. He and his wife live in one that was insured by State Farm, but he also owns another storm-damaged house about a block away where his daughter lives. That one was insured by Centauri Insurance. Huye acknowledged that was an error in court. But because more than two years have passed since Hurricane Laura damaged the house, it's now too late to file a new lawsuit against the correct insurance company.
Duplantis said he didn’t know why he never received the money on the house where his daughter lives until he showed up at court last week. He said he had to borrow money to fix the house on Gentilly Street so his daughter could move back in.
“I had to mortgage my house that was already paid for,” he said.
Court officials said none of this would have happened if the court rules had been followed. When the Western District of Louisiana federal court was first hit with thousands of insurance lawsuits after Laura and Delta, Cain turned to Patrick Juneau to oversee a streamlined claims-negotiation process as special master.
The Lafayette-based mediator had served as a court-appointed administrator for several major cases across the country, including paying $12 billion to 175,000 claimants after the 2010 BP oil spill.
In the last two years, Juneau’s helped dispose of more than 90 percent of about 6,000 Hurricane Laura and Delta insurance disputes. But that doesn’t count the 1,600 cases filed by MMA, which were stopped by Cain when it became clear to him that the law firm had engaged in “misconduct.”
Juneau said that’s been a “nightmare” to deal with.
“We're going to try to figure out a system or expedite a way to bring those into the system and get these cases mediated, just like all of these other thousands that we've handled in the past two years,” he said.
Help sought
That’s easier said than done because of all the trouble MMA is in and how it continues to lay claim to pending cases. In March, the State Supreme Court suspended Huye, MMA's only Louisiana-licensed attorney. But text messages obtained this month by WWL-TV show some MMA employees are trying to keep the firm’s office in New Orleans going without any attorneys licensed to practice in Louisiana.
After Huye was suspended, MMA clients received emails and letters notifying them they must hire new attorneys. But New Orleans law firm Morris Bart, which has taken on more than 900 former MMA clients by advertising aggressively on TV and elsewhere, has now filed suit alleging MMA is still trying to communicate with Bart’s clients. Court records show MMA’s managing partner Zach Moseley is still seeking legal fees on some of the cases now being handled by Bart’s firm.
There are a few storm victims who have found relief with the court’s help, including the Addisons. In March, Judge Cain stepped in and ordered MMA to transfer the Addisons' insurance funds to their local attorney, Filo.
MMA did so. Finally, three years after Hurricane Laura, Addison can pay off his mortgage with Sonnier and get the balance of his insurance proceeds. Filo negotiated an additional insurance payment from Allstate. The Addisons are using that to comply with a city order to tear down their roofless eyesore and to pay a Lake Charles nonprofit, Project Build A Future, to purchase a newly repaired house across town.
“We’re finally seeing a light at the end of the tunnel,” Melvin Addison said. “And we're just average Joes. We're nobody special. And I'm just thankful that the community helped us out with this.”
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