A civil service classified employee of the Louisiana Department of Insurance working in the Division of Fraud and Enforcement has sued LDI and Commissioner of Insurance Jim Donelon alleging that Donelon and other employees retaliated against her in response to her complaining that the defendants were engaging in what she claims is unlawful activity.
In the lawsuit, Nelda Lawrence alleged that Donelon and others delayed regulatory action against producers in the Lafayette area to bolster his 2023 campaign.
Lawrence filed the lawsuit on May 6 in the 19th Judicial District Court in Baton Rouge. She has claimed protection under the state’s whistleblower protection statute for public employees who reveal improper/illegal activity.
Lawrence has held the position of Investigator 5 at LDI since February 2019. The position requires the investigator to be an attorney with admission to any state bar, and she is admitted to the Florida bar.
Because she is still employed by LDI (as of June 16), Lawrence told the Reporter that she cannot “make any public comment” about the lawsuit as “no employees are allowed to comment.”
In addition to LDI and Donelon, Lawrence named as defendants five LDI employees: S. Denise Gardner, LDI chief of staff; J. David Caldwell, executive counsel; Staci Evans, Human Resources director; Nathan Strebeck, deputy commissioner of the Division of Fraud and Enforcement, and Dominique Jones, insurance administrator of the Division of Fraud and Enforcement.
Lawrence claims the defendants violated the Louisiana Insurance Code, the Louisiana Code of Ethics and the Labor and Workers’ Compensation statute R.S. 23:967 which provides employee protection from reprisal.
In her 31-page lawsuit, Lawrence alleges that making public the regulatory action taken against insurance carriers, producers and other licensees before the action is final and not appealable is a violation of the Insurance Code. The exception being in the case of a summary suspension.
Lawrence said she concluded two investigations of agents and issued license revocation and fine orders in August 2021. Both agents were located in Lafayette. When she inquired about the status of an appeal by one of the agents, she was told by Deputy Commissioner Matthew Stewart about a directive from Donelon and Caldwell to withhold issuing all regulatory actions against producers in Lafayette. Allegedly that was so Donelon could improve his popularity among voters in the Lafayette area.
She contends that Caldwell told her in October 2021 he was “the voice of the commissioner” and was “gearing up” for the next election with a “well-coordinated blitz of press releases of regulatory actions.” According to Lawrence, Caldwell referred to the political strategy as a “pre-election election campaign.”
Lawrence contends that “exploitation” of fraud investigations “probably was coercion” to participate in Donelon’s political activity and was “an abuse of power.”
Lawrence wrote in her lawsuit that about October 2021 Jones was promoted from being an attorney in the Legal Division, supervised by Caldwell, to the position of insurance administrator for the Division of Fraud and Enforcement where Jones was Lawrence’s supervisor.
According to Lawrence, Jones directed investigators to “conduct investigation analyses in a manner to increase the number of regulatory actions.” Lawrence alleges that notices were modified to avoid identifying documents and evidence with sufficient descriptions so producers could not “adequately respond to allegations waged against them.” The intent was to facilitate prosecutions.
In January 2022, investigators were ordered to “immediately prepare cease and desist orders, fines and summary suspensions wherever possible for the misappropriation files,” Lawrence wrote in her lawsuit.
According to Lawrence, under the Louisiana Administrative Procedures Act, no discovery is permitted by the producer, and there is no exchange of evidence prior to the imposition of a regulatory action, so the actual evidence relied on by the LDI is not available to the producer until an appeal is filed.
Jones explained to Lawrence that identifying and reporting the misappropriation cases was an emergency because the commissioner’s office was coordinating a media blitz to highlight Donelon taking action to protect policyholders, Lawrence wrote in the lawsuit.
Lawrence balked and told Jones that actions taken at this point would be “premature, illegal, immoral and unethical, and have detrimental consequences for producers.” Jones responded that she was merely following orders, according to the lawsuit.
On Jan. 20, 2022, Lawrence submitted an in-house complaint to Gardner and at a meeting later, Lawrence was told that Caldwell would be overseeing the Fraud Division.
In February, Strebeck replaced Stewart as deputy commissioner of the Division of Insurance Fraud and Enforcement.
The defendants retaliated in response to her formal complaint, Lawrence contends. They did so by excluding her from fraud management team meetings, criticizing her work performance and professionalism, taking corrective action to begin the process of termination, imposing weekly supervisory evaluations, directing her to accept additional duties and denying her request for additional compensation. They also denied a medical doctor’s disability order, regarding Lawrence’s workers’ comp injuries, to work from home and contacted an adjuster to change the disability order. Lawrence says she was given ultimatums to return to the office to work with accommodations or face termination.
In April, Lawrence’s access to the LDI computer system was denied, including her work files, emails and documents. Also in April her status was demoted from essential employee to non-essential employee.
According to Lawrence, her injury originated as a fractured foot that happened at work and developed into plantar fasciitis. After denial of the doctor’s disability order to work from home, Lawrence developed a meniscal tear “while attempting to ambulate around the office.” Since she exhausted her annual and sick leave bank hours for workers’ comp leave days, Lawrence has to use FMLA leave for surgery, recovery and physical therapy, which was to occur in May, she wrote in the lawsuit.
Concurrent with computer access denial in April, Lawrence says, LDI hired an attorney to replace her.
Because of the defendants’ actions, Lawrence wrote that she had to retain legal counsel to respond to the reprisals.
She is seeking damages, including attorney’s fees and costs, loss of income and benefits, physical injury, aggravation to an existing physical injury, present and future medical, emotional distress and injury, present and future pain and suffering, demotion, loss of employability, loss of enjoyment, damage to reputation, embarrassment, threats, verbal abuse, censored work activity, loss of employability and inconvenience.
Lawrence indicated that prior to her Jan. 20, 2022, complaint she had never been the recipient of any corrective or disciplinary action.
Donelon disputes the accuracy of Lawrence’s claims and the propriety of the avenue she chose to vet her grievance.
“The claims in Ms. Lawrence’s lawsuit are false. Her legal complaint is rife with factual inaccuracies, distortions and outright fabrications. When I took office in 2006, the office of the insurance commissioner had been plagued by criminal activity and bad behavior resulting in three consecutive insurance commissioners being sent to federal prison. One of my top priorities since taking the job has been to return this position to respectability, and I believe I have done that,” Donelon said in a statement issued May 31, the day after nola.com published a news story about Lawrence’s lawsuit.
“Ms. Lawrence, who is a licensed attorney in Florida, should know the proper legal avenue to resolve an employment matter, even a frivolous one, is to first vet her alleged grievance privately with the Civil Service Commission, then to proceed through the Equal Employment Opportunity Commission. Unfortunately, she chose to file this suit on her own behalf in district court in an attempt to garner negative publicity for the department and to further her own ends. Most disturbingly, Ms. Lawrence’s defamatory suit questions the integrity of multiple dedicated public servants who have done nothing wrong. Additionally, the department will now be forced to waste its time and divert resources to address this matter while we are attempting to help Louisianans recover in the aftermath of two of the most devasting (sic) hurricane seasons on record,” he added.
“Ultimately, I am confident the process will show these allegations are false. In the meantime, I will not allow this issue to distract me or my staff from our work as we continue to help policyholders prepare for another hurricane season,” Donelon concluded.