Lawsuit Alleges Insurance Department Blocked Law Enforcement to Aid Commissioner’s Campaign | Courts

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As a fraud investigator prepared to revoke a Lafayette insurance agent’s license and fine him $10,000, there was one last step before taking action: getting approval from the Louisiana Insurance, Jim Donelon.

But fraud investigator Nelda Lawrence alleged in a lawsuit filed this month in the 19th Judicial District Court in Baton Rouge that Donelon delayed the case so he could use it in the part of a media campaign to improve his popularity before his re-election in 2023. electoral bid.

Lawrence further alleged that Donelon and other department officials violated state laws that protect employees from retaliation if they object to an illegal practice. She also sought protection under the state’s whistleblower protection law for public employees who disclose wrongdoing.

Five months delay

Her lawsuit says she investigated allegations in 2021 against insurance agent Wendy Fox-Breaux and, in August, submitted the report to her supervisor in the Insurance Fraud Division and the law application. She recommended that Fox-Breaux’s license be revoked and that the agent be fined $10,000, among other things for failing to send a policyholder’s premium to the insurer. She revised the order in September, lowering the fine to $5,000.

But the insurance department delayed making a decision on the case until January. Lawrence claims the reason was to allow the commissioner to include the case in a media campaign showing he was holding officers to account, as part of an effort to improve his popularity in the Lafayette area.

In court records, Lawrence said a number of employees lined up behind the plan to use the agency’s work to advance Donelon’s political goals.

Six defendants on trial

“Commissioner Donelon and J. David Caldwell’s exploitation of LDI fraud investigations as part of a ‘pre-election campaign’ violated Louisiana’s insurance code,” Lawrence said in court records. Caldwell was appointed Executive Advisor to the Commissioner in January 2021.

The lawsuit was filed on May 6. The Department of Insurance has yet to file a response. Five other high-ranking employees were named as defendants, in addition to Donelon.

Lawrence, who remains employed in the department, would not comment on the matter, citing a policy that prohibits unauthorized comments to the media.

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Insurance Department spokesman John Ford also wouldn’t comment, but acknowledged the agency was aware of the lawsuit.

Withhold “negative” action

Records show Donelon signed the dismissal order and fine against Fox-Breau on Jan. 20. The enforcement action was later mentioned in a press release along with three other regulatory actions taken against other insurance agents.

In the months leading up to the announcement, according to Lawrence, it was made clear by his supervisor, the commission’s executive counsel, and Donelon that they were withholding any “negative” regulatory action in the Lafayette area. The reason, Lawrence said, was to use it as part of a later media campaign to show that Donelan was “tougher on insurance fraud crimes.”

Lawrence said she was concerned about Donelon’s apparent “exploitation of cases to satisfy political ends, and that the directive constituted illegal, immoral and unethical activity.”

In the months that followed, she said, she and other fraud investigators were instructed by supervisors to “conduct investigative analysis so as to increase the number of regulatory actions to be taken, in particular cease and desist orders and summary suspensions, to further the cause”. political interests of Commissioner Donelon,” the lawsuit states.

Exclusion and reprimand

Lawrence filed an internal complaint in January. After that, she claimed, she was barred from management meetings, criticized for her work and professionalism, and received a letter of reprimand.

The reprisals continued at least until April, Lawrence claimed. She faced, among other things, weekly criticism of her supervision and her duties were reduced. Another person was hired to replace Lawrence, but the department could not legally terminate his employment, according to the lawsuit.

Lawrence said she had never received such discipline before filing the internal complaint.

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