What began as a routine workers’ compensation insurance premium audit mushroomed into a 20-year dispute that wound through nine separate decisionmaking bodies, including two state appellate courts, two federal courts, and a bankruptcy court. At its core, the case asked a deceptively simple question: did nurse-staffing agency ReadyLink Healthcare, Inc. owe State Compensation Insurance Fund (SCIF) an additional $555,327.53 in premiums for the 2005 policy year?
ReadyLink operated by paying its nurses wages far below the California average — in many cases just above minimum wage at $6.75 per hour — while supplementing their pay with large, tax-free daily “per diem” payments. Under workers’ compensation insurance, premiums are calculated based on payroll. If per diem payments counted as payroll, ReadyLink owed more in premiums. For five consecutive policy years (2000–2004), SCIF’s auditors reviewed ReadyLink’s records, which openly disclosed the per diem program, and said nothing. Then, during the 2005 audit, a SCIF auditor — who had never seen an agency pay more than 50 percent of compensation in per diem form — demanded documentation. ReadyLink provided none. SCIF included the per diem payments in payroll and invoiced ReadyLink for $555,327.53 in additional premiums.
ReadyLink refused to pay and challenged the audit through a cascade of proceedings. An administrative law judge (ALJ) ruled against it, finding the per diem payments did not qualify for exclusion from payroll under the California Workers’ Compensation Uniform Statistical Reporting Plan (USRP), because ReadyLink had paid nurses without verifying whether they actually incurred duplicate living expenses — and, notably, 108 of its 257 nurses lived within 20 miles of their job assignments, with 11 living in the same zip code.
The Insurance Commissioner adopted the ALJ’s decision as precedential. The Los Angeles County Superior Court denied writ review. The Second District Court of Appeal affirmed in ReadyLink Healthcare, Inc. v. Jones (2012) 210 Cal.App.4th 1166. A federal class action was dismissed on abstention grounds, and the Ninth Circuit affirmed that dismissal in ReadyLink Healthcare, Inc. v. State Compensation Insurance Fund (9th Cir. 2014) 754 F.3d 754.
Still, ReadyLink did not pay. SCIF filed a breach of contract action in Riverside County Superior Court in 2015. In defending that suit, ReadyLink made a significant discovery: the prior proceedings had all assumed that the USRP governed premium calculation, but ReadyLink claimed that SCIF had filed its own “rate deviation” with the Insurance Commissioner that set a different — and ReadyLink argued more lenient — standard for excluding per diem payments from payroll.
Under the SCIF rate filing, per diem could be excluded if based on “actual or documented expenditures” of a type not normally assumed by an employee, rather than the USRP’s requirement that expenditures be “reasonable” and supported by records showing the employee worked at a location requiring additional expenses. ReadyLink argued its payments qualified because they tracked IRS federal CONUS reimbursement tables. In 2020, the Fourth District reversed an earlier judgment on the pleadings, holding in State Compensation Insurance Fund v. ReadyLink Healthcare, Inc. (2020) 50 Cal.App.5th 422 that the amount actually owed had never been fully litigated and that ReadyLink was entitled to present its defenses at trial.
When the case returned to the Riverside County Superior Court, the court navigated a thicket of pretrial motions. It denied SCIF’s motion for summary judgment, finding a triable issue on ReadyLink’s estoppel defense, but granted summary adjudication dismissing ReadyLink’s fraud and Insurance Code section 381 defenses. It sustained demurrers to ReadyLink’s amended cross-complaint on all claims except breach of contract. It then granted motions in limine and a bifurcation motion that excluded evidence about the SCIF rate filing from the jury trial, sent SCIF’s breach of contract claim and ReadyLink’s waiver defense to the jury, and reserved ReadyLink’s estoppel defense for post-verdict determination.
At trial, SCIF presented two witnesses — a 30-year premium collection specialist and an independent certified public accountant — who each confirmed that the $555,327.53 additional premium had been correctly calculated. ReadyLink did not rebut the testimony and affirmatively stipulated that the mathematical calculations were correct. The jury was instructed that it could not revisit the determination that per diem payments constituted payroll. Both opening and closing arguments by ReadyLink’s counsel framed the sole remaining question as whether SCIF had waived its right to collect the additional premium by accepting ReadyLink’s exclusion of per diem payments in the five prior policy years.
The jury answered “No” on waiver — against ReadyLink — but then awarded zero damages. After the verdict, the trial court also found against ReadyLink on its estoppel defense. SCIF moved for judgment notwithstanding the verdict (JNOV) and for a new trial. The court granted both motions and entered an amended judgment awarding SCIF $555,327.53.
The Fourth District Court of Appeal affirmed the amended judgment in favor of SCIF in the unpublished case of State Compensation Insurance Fund v. ReadyLink Healthcare, Inc., Case No. D083359 (May 2026).
1. Exclusion of the SCIF Rate Filing Evidence. ReadyLink argued the trial court committed reversible error by excluding evidence about SCIF’s rate filing and by dismissing its rate-filing-based defenses and cross-claims before trial. The court disagreed. Even accepting ReadyLink’s interpretation of the rate filing’s “documented expenditures” standard as permitting reliance on CONUS tables, the ALJ had already found — in findings affirmed through multiple prior proceedings — that ReadyLink had made no effort to ascertain the distance between nurses’ homes and their job assignments and had kept no documentation of how per diem funds were actually spent. The court concluded that “documented,” however broadly construed, cannot mean blanket, per-employee application of CONUS table amounts without any individualized record-keeping to verify eligibility. Because the factual deficiencies were the same under either standard, the exclusion of rate-filing evidence was not prejudicial.
2. The JNOV Was Proper. The court applied the well-established standard that JNOV is appropriate when no other reasonable conclusion is legally deducible from the evidence — citing In re Lances’ Estate (1932) 216 Cal. 397, 400. The analysis was straightforward: SCIF presented unrebutted expert testimony that the additional premium owed was $555,327.53; ReadyLink stipulated to the accuracy of the calculations; the jury rejected ReadyLink’s only liability defense (waiver); the trial court rejected the remaining defense (estoppel); and no other defenses remained. Under those circumstances, a jury verdict of zero damages was unsupportable. ReadyLink’s argument — that SCIF suffered no “real” harm because it could have chosen not to collect the premium or could have enforced its rights only prospectively — misunderstood contract damages law. Once a breach is established and defenses are defeated, the measure of damages is the benefit of the bargain: the full amount promised under the contract. SCIF was owed $555,327.53, and nothing in the record supported any other figure.
3. New Trial Order Was Moot. Under Code of Civil Procedure section 629, subdivision (d), a new trial order entered alongside a JNOV takes effect only if the JNOV is reversed on appeal. Because the court affirmed the JNOV, the new trial order never took effect, and ReadyLink’s challenge to it was moot.
SCIF is entitled to costs on appeal. A separate appeal concerning $907,998.38 in prejudgment interest awarded by the trial court remains pending as Case No. D086045.