Lawsuit alleges Insurance Department stalled enforcement to help commissioner’s campaign | Courts

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

But the 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 as part of a media campaign to improve his popularity ahead of his 2023 re-election bid. 

Lawrence further alleged that Donelon and the other department officials violated state laws that protect employees from reprisals if they object to an illegal practice. She also claimed protection under the state’s whistleblower protection statute for public employees who disclose improper acts. 

Five-month delay

Her suit 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 and enforcement division. She recommended that Fox-Breaux’s license be revoked and that the agent be fined $10,000, for not sending a policyholder’s premium to the insurer, among other things. She revised the order in September, lowering the fine to $5,000.

But the Insurance Department delayed taking action on the case until January. Lawrence asserts the reason was to allow the commissioner to include the case in a media campaign showing he was holding agents to account, 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 further Donelon’s political goals.

Six defendants in suit

“Commissioner Donelon and J. David Caldwell’s exploitation of LDI Fraud investigations as part of a ‘pre-election election campaign’ violated the Louisiana Insurance Code,” Lawrence said in court records. Caldwell was named as the commissioner’s executive counsel in January 2021. 

The lawsuit was filed May 6. The Insurance Department has not yet filed 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 case, citing a policy that bars unauthorized comments to the news media.

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Insurance Department spokesperson John Ford also would not comment but acknowledged the agency was aware of the lawsuit.

Withhold ‘negative’ action

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

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

Lawrence said she voiced concerns about Donelon’s seeming “exploitation of cases to satisfy political objectives, and that the directive constituted illegal, immoral and unethical activity.”

In the months that followed, she said, she and other fraud investigators were directed by supervisors to “conduct investigation analyses in a manner to increase the number of regulatory actions to be taken, particularly cease and desist orders and summary suspensions, to further the cause of the political interests of Commissioner Donelon,” the lawsuit says.

Exclusion and reprimand

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

The reprisals continued at least until April, Lawrence alleged. She faced, among other things, weekly supervisory critiques, and her work duties were diminished. Another person was hired to replace Lawrence, but the department could not lawfully terminate her employment, according to the lawsuit. 

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

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