Profits Are Where You Make Them
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Posted on April 29, 2022 by Barry Zalma
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On his 50th birthday Louie concluded he was a failure. For thirty years he sold insurance to the public. For a $40 commission Louie would often spend hours explaining a tenants’ homeowners policy to a client. The next year, because another broker promised to save the client $5 in premiums, they did not renew and he received no commission.
Louie had always been a dedicated and faithful insurance broker. He put his clients’ interest above his own. If he could save them money (even if it would cost him a commission) he placed them with the least expensive insurer. In return he saw nothing but derision and disloyalty.
Louie decided to change his life now that he was middle-aged and a member of the AARP. Considering his small earnings, retirement at age sixty-five seemed almost impossible. He needed a means to make sufficient money in a short time to retire. His knowledge of insurance and his salesman’s understanding of the greed of his customers brought him a solution.
EMPLOY IV YOU was born.
Louie went to each of his commercial insurance clients with his plan. He explained that if they allowed him to become the employer of their employees, the cost savings in benefit plans would offset his fee. The business’ overall employee cost, he explained, would be less. He would charge each customer 3% of the gross salary of each employee and the actual cost of their benefits. For the 3% fee, he would file all employment forms and issue W-4 and W-2 forms; collect from his customers all employment taxes and pass them to the government; fill out all the forms and give each employee a “cafeteria” plan of benefits. The employees would be happy and the employers would be happy. The employer would have absolute control over the employees and Louie would merely be their titular employer.
Although the idea sounded too good to be true, 80% of his customers decided to take Louie up on the proposition.
EMPLOY IV YOU then applied for, and obtained, a workers’ compensation insurance policy for all of its employees. Louie, being a frugal man, advised the workers’ compensation insurer that he had 400 employees all working in a clerical capacity (the lowest workers’ compensation rate available).
Other than paying the premium that he obtained in advance from each of his clients, Louie’s only other expense was issuing pay checks. A payroll service charged him only $300 a month to issue all the checks and prepair the reports for him. He paid a bookkeeper only $8 an hour to take care of all the other bookkeeping requirements of his business. EMPLOY IV YOU made more profits in the first two months of business than Louie had made in any one of the last five years.
By the time Louie was fifty-five, he had invested his profits into a portfolio of stocks, bonds and mutual fund shares conservatively valued at $3,000,000. The earning from the portfolio would support Louie in comfort through his retirement.
EMPLOY IV YOU’s workers’ compensation insurer, on receiving Louie’s reports of earnings, reduced his premium each year. Louie used the “audits” to increase his profits for five years in a row.
On the fifth anniversary of the business, Louie’s 55th birthday, he decided he had made enough money and offered the business for sale to a legitimate employee leasing business. Louie took the $2,000,000 he received from the purchase, added to it the cash from the sale of his stock portfolio and moved it to Kingston, Jamaica.
He purchased a villa overlooking the sea and is living out his retirement happily.
ZALMA OPINION
Insurance fraud is an equal opportunity crime. It is committed by every race, religion, national origin, gender, sexual preference or occupation, even an insurance agent. It is a crime regardless of who commits the crime or how successful the criminal. A lack of investigation and unwarranted trust allowed Louie to successfully defraud multiple insures and those for whom he sold his services. When something, like Louie’s deal, seems to be too good to be true, it is.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business. He is available at http://www.zalma.com and [email protected].
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Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Anti-Public Adjuster Clause Is Effective in New York
Post number 5301
Read the full article at https://www.linkedin.com/pulse/public-adjusters-attempt-represent-insured-subject-zalma-esq-cfe-rubfc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Insurers May Contractually Prevent an Insured from Hiring a Public Adjuster
In Peter Barbato & North Jersey Public Adjusters Inc. v. Interstate Fire & Casualty Company, et al, No. 25-cv-5312 (JGK), United States District Court, S.D. New York (December 15, 2025) the plaintiffs, Peter Barbato and North Jersey Public Adjusters, Inc. (“NJPA”), filed suit against several insurance companies, including Interstate Fire & Casualty Company, Independent Specialty Insurance Company, and certain Underwriters at Lloyd’s of London.
FACTS
NJPA is a New Jersey-based public adjusting firm licensed in New York. The dispute centers on ...
Proof of Highly Contaminated Water is Required for Extra Payments
Post number 5300
Read the full article at https://www.linkedin.com/pulse/acting-your-own-lawyer-foolish-barry-zalma-esq-cfe-mbg0c, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
Acting as Your Own Lawyer is Foolish
Evidence of Breach of Contract Survives Dismissal of All Other Charges
In Lee Lifeng Hsu and Jane Yuchen Hsu v. State Farm Fire And Casualty Company, C. A. No. N24C-09-020 CLS, Superior Court of Delaware (February 27, 2026) a claim to State Farm who paid approximately $61,000 after assessments but denied coverage for additional items including ceramic tiles, the kitchen floor ceiling, underlayment plywood, and numerous personal property items resulted in suit by the Hsu’s acting in pro per.
Facts
Lee Lifeng Hsu and Jane Yuchen Hsu (“Plaintiffs”) purchased a homeowners’ insurance policy from State Farm Fire...
Insurance Condition Requires Following the Intent of the Parties
Post number 5307
Principles of Contract Interpretation Compels Reading Contract as Written
Read the full article at https://www.linkedin.com/pulse/portable-storage-containers-buildings-barry-zalma-esq-cfe-fkg1c and at https://zalma.com/blog.
In Eastside Floor Supplies, Ltd. v. SCS Agency, Inc., Hanover Insurance Company, et al., No. 2024-01501, Index No. 609883/19, 2026 NY Slip Op 01488, Supreme Court of New York, Second Department (March 18, 2026)
In May 2019, a fire damaged business personal property belonging to the plaintiffs, which was stored in portable storage containers at their Manhattan premises. At the time of the fire, the plaintiffs were insured under a businessowners insurance policy (BOP) issued by the defendant Hanover Insurance Company which provided general coverage for business personal property, and which included a specific extension for “Business Personal Property Temporarily in Portable Storage Units” (the portable storage ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
ERISA Saves Fraudulent Claims Suit
Post number 5306
Read the full article at https://www.linkedin.com/pulse/failure-provide-well-pled-facts-defeats-most-action-zalma-esq-cfe-b4zuc and at https://zalma.com/blog plus more than 5300 posts.
Allegations of Fraudulent Insurance Billing Must be Pleaded with Specificity
In Genesis Laboratory Management LLC v. United Healthcare Services, Inc. and Oxford Health Plans, Inc., No. 21cv12057 (EP) (JSA), United States District Court, D. New Jersey (March 13, 2026) Genesis Laboratory Management LLC (“Genesis”), a New Jersey-based molecular diagnostic and anatomic pathology laboratory, provided COVID-19 related testing services and submitted claims for reimbursement as an out-of-network provider to United Healthcare Services, Inc. (“United”) and Oxford Health Insurance, Inc. (“Oxford”). Metropolitan Healthcare Billing, LLC (“Metropolitan”), owned by the same individual as Genesis, handled the billing for Genesis.
FACTUAL BACKGROUND
United and Oxford, who administer both ERISA and ...
