A Texas law firm accused in a scheme to file thousands of lawsuits against insurers after major hurricanes in Louisiana has filed for bankruptcy protection.

MMA Law Firm, formerly known as McClenny Moseley & Associates, filed for Chapter 11 protection in the Southern District of Texas last week.

The firm, which was fined a record $2 million by the Louisiana Department of Insurance for unfair trade practices, reported between $10 million and $50 million in liabilities in bankruptcy filings. The Insurance Department is listed as a creditor that is owed $500,000 in fines. A host of attorneys, adjusters and other companies and government agencies are also listed as creditors.

MMA filed thousands of lawsuits on behalf of homeowners across Louisiana who suffered hurricane damage in 2020 and 2021, when hurricanes Laura, Delta and Ida caused billions of dollars in damage. The firm’s lawyers have since faced a slew of allegations that they forged signatures and mishandled client funds, among other things.

The firm is accused of claiming to represent policyholders when it was actually retained by a roofing company, then sending demand letters to the policyholders’ insurers and negotiating settlements without authorization from the policyholder.

Former Insurance Commissioner Jim Donelon called the company’s actions “one of the most egregious cases that has ever come through this department.”

The company went to court in August to try to convince a judge to lift their suspension. At the hearing, one of the firm’s founding partners, Zach Moseley, said the law firm had raised a total of $40 million in private investment, at least some of which came from the Equal Access to Justice hedge fund, which is based in West Palm Beach, Florida, and managed by B.E. Blank & Co. The investors later unsuccessfully tried to recoup their investments in disciplinary proceedings. 

While Moseley did not specify how exactly the money was used, court documents showed that the firm paid internet marketing company Velawcity $13.9 million to find clients, at $3,000 to $3,500 for each “prescreened client lead.” The law firm then filed thousands of lawsuits, in at least some cases, without the plaintiffs expressed permission or knowledge, raising red flags with federal judges in Lake Charles and New Orleans.

Over the span of a year, federal courts across the state issued a series of sanctions against the firm, eventually banning its attorneys from practice in those courts and advising plaintiffs interested in pursuing their cases to seek new representation, leaving MMA unable to collect attorney’s fees on many of the cases it filed.

A lawyer representing the firm didn’t immediately respond to an email about the bankruptcy Monday.

The company has defended its practices in the past, saying it was deploying technology to help an unprecedented number of homeowners get a fair shot at recovering the funds needed to repair their homes. 

Staff writer Alena Maschke contributed to this report.