Tag: 2025 News

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.

A Huntington Park-based medical practice and its physician have agreed to pay more than $6.73 million to resolve allegations that they violated the False Claims Act by submitting false claims for medically unnecessary vascular interventional procedures on 20 Medicare beneficiaries.

The United States alleged that, from 2016 to 2024, Dr. Feliciano Serrano of Serrano Kidney & Vascular Access Center performed medically unnecessary dialysis access interventions, including angioplasty and stent procedures, on 18 patients, purportedly to treat stenosis in patients’ dialysis segments.

Dr. Serrano scheduled interventions on a routine basis, without waiting for complications to present, and he frequently repeated procedures on patients every few days or weeks despite that the procedures were not effective and did not result in any clinical benefit. One Medicare patient received approximately 42 stents in the dialysis segment between 2016 and 2023, including during a period when Dr. Serrano informed the patient he did not need dialysis.

The United States also alleged that from 2019 to 2024, Dr. Serrano performed medically unnecessary peripheral artery disease interventions, including stent and atherectomy procedures, on 17 patients, purportedly to treat stenosis in patients’ legs. Dr. Serrano performed interventions on patients who had only mild or no stenosis and who had only minor symptoms.

Although patients complained of pain only in one leg, he performed procedures on both legs and then repeated procedures on both legs every few months. Dr. Serrano told patients that if they did not receive the procedure, their legs would need to be amputated, when, in fact, there was little risk of amputation for mildly symptomatic peripheral artery disease. One Medicare patient received approximately 16 atherectomies in his legs between 2019 and 2023.

The United States alleged that across both categories of procedures, Dr. Serrano performed interventional procedures on vessels that did not qualify for treatment under accepted standards of medical practice; overstated the degree of stenosis to make the procedures appear to meet generally recognized medical standards when, in fact, they did not; falsely documented patient symptoms and conservative therapy measures in medical records to justify the procedures; and performed procedures in excess of accepted standards of medical practice.

As a result of the settlements, Dr. Serrano will pay nearly $6.51 million to the United States and nearly $229,000 to the State of California.

The civil settlement includes the resolution of claims brought by Lincoln Analytics, Inc. under the qui tam or whistleblower provisions of the False Claims Act. Under the act, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States and State of California ex rel. Lincoln Analytics, Inc. v. Dr. Feliciano Serrano, et al., Civil Action No. 23-cv-04178 (C.D. Cal.).  Lincoln Analytics, Inc. will receive approximately $976,000 as its share of the federal recovery.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, the United States Attorney’s Office for the Central District of California, and the California Department of Justice, with assistance from the Department of Health and Human Services, Office of Inspector General.

Assistant United States Attorney Karen Y. Paik of the Civil Frauds Section and Justice Department Trial Attorney Tiffany L. Ho of the Civil Division’s Commercial Litigation Branch, Fraud Section handled this case.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Salud Para La Gente, is a nonprofit network of primary care clinics serving low-income individuals and families in Santa Cruz County and Monterey County. Salud was founded in 1978 as a single free clinic offering healthcare primarily to farmworkers living and working on California’s Central Coast. Since that time, Salud has become a federally qualified health center (FQHC), and grown to five clinics and four school-based health centers providing healthcare to nearly 27,000 patients.

Among the services it provides, Salud offers contraceptive care, including etonogestrel marketed under the brand name Nexplanon, to Medicaid beneficiaries. Nexplanon is a thin rod that is inserted under the skin of a patient’s upper arm that, once implanted, works to prevent pregnancy. It is a prescription birth control for the prevention of pregnancy for up to 5 years.

Salud has agreed to pay a total of $750,000 to resolve allegations that it submitted false claims for payment to the Medicaid program in connection with its purchase and administration of misbranded contraceptive implants.

United States Attorneys Office for the Northern District of California alleged that between May 17, 2017, and Sept. 11, 2020, Salud purchased misbranded Nexplanon from an unlicensed wholesaler and administered the misbranded Nexplanon to Medicaid patients. According to the United States, Salud knowingly submitted false claims for payment to Medicaid by using incorrect National Drug Code numbers, unique drug identifiers used by the FDA for reporting and patient safety purposes, for the misbranded Nexplanon and for its administration.

“Patient safety must be at the forefront of medical decision-making,” said United States Attorney Craig H. Missakian. Using misbranded drugs jeopardizes public health and constitutes a serious False Claims Act violation. We will continue to hold violators accountable.”

“It’s clearly dangerous and unethical for health care providers to administer misbranded drugs obtained from unlicensed sources to their patients,” said Special Agent in Charge Robb R. Breeden of the U.S. Department of Health and Human Services Office of Inspector General (HHS OIG). “Working with our law enforcement partners, HHS-OIG will continue to aggressively protect the health and well-being of patients and the integrity of federal health care programs.”

Assistant U.S. Attorney Michelle Lo handled this matter. The resolution resulted from a coordinated effort between the U.S. Attorney’s Office for the Northern District of California, HHS-OIG, and FDA’s Office of Criminal Investigations.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Robert Toothman was hired by Apex Life Sciences, LLC, a temporary staffing agency, which placed him on assignment at Redwood Toxicology Laboratory, Inc. As a condition of that placement, Toothman signed both an Employment Agreement and a companion Arbitration Agreement with Apex. The Arbitration Agreement bound “Employee” (Toothman) and “Company” — defined as Apex and “its affiliates, subsidiaries and parent companies” — to arbitrate any dispute “arising out of or related to” Toothman’s employment with, or termination from, Company. It also waived class and representative claims.

Toothman’s Apex assignment ended in April 2018. Two days later, Redwood hired him directly — without any new arbitration agreement and without any reference to the Apex documents. Toothman worked for Redwood until June 2022. In September 2022, he filed a class action against Redwood alleging Labor Code violations covering the period of his direct employment, starting no earlier than September 26, 2018 — well after his Apex tenure had ended.

After Redwood subpoenaed Apex and obtained a copy of the Arbitration Agreement, Toothman filed an amended complaint that redefined the proposed class to exclude workers staffed by third parties while on assignment, but retained individuals like Toothman himself who had transitioned from staffed to direct employment.

Redwood moved to compel arbitration of Toothman’s individual claims and to dismiss his class claims, arguing three alternative theories: (1) it was a party to the Arbitration Agreement as an “affiliate” of Apex; (2) it could enforce the agreement as a third-party beneficiary; and (3) Toothman was equitably estopped from resisting arbitration. The Sonoma County Superior Court denied the motion in its entirety.

The First Appellate District affirmed the trial court’s denial of the motion to compel arbitration in the published case of Toothman v. Redwood Toxicology Laboratory, Inc. Case No. A171567 (May 2026). The court reviewed the matter de novo, as the material facts were undisputed.

The court first addressed who bore the burden of proof. Because Redwood was not a signatory to the Arbitration Agreement, it could not simply produce the agreement and shift the burden to Toothman to defeat it. Relying on Jones v. Jacobson (2011) 195 Cal.App.4th 1, the court held that a nonsignatory moving party must affirmatively establish its entitlement to enforce the agreement as part of its own initial burden — whether proceeding as a party, a third-party beneficiary, or under equitable estoppel.

Redwood argued it qualified as an “affiliate” of Apex and was therefore a “Company” party to the agreement. The court rejected this, applying standard California contract interpretation principles. The term “affiliates,” appearing alongside “subsidiaries and parent companies,” plainly connoted relationships of common ownership or corporate control — not arms-length commercial arrangements. The companion Employment Agreement used the separate term “Clients” to describe businesses like Redwood, and the parties never incorporated that term into the Arbitration Agreement’s definition of “Company.” Accepted dictionary definitions — including Black’s Law Dictionary (10th ed. 2014) at page 69 — confirmed that “affiliate” in a corporate context means entities related “by shareholdings or other means of control.” The court also noted the practical absurdity of Redwood’s theory: it would mean that Apex unilaterally prescribed dispute resolution procedures for its clients’ own direct-hire employees without those clients’ knowledge or consent.

Even assuming Redwood could qualify as a third-party beneficiary, the court held that Toothman’s claims still fell outside the Arbitration Agreement’s substantive scope. The agreement covered only disputes “arising out of or related to” employment with “Company” — i.e., Apex. Toothman’s claims arose entirely from his direct employment with Redwood, which began after his Apex employment ended. The court cited Vazquez v. SaniSure, Inc. (2024) 101 Cal.App.5th 139 for the principle that an arbitration agreement from one period of employment does not automatically govern disputes arising in a separate, subsequent period.

Finally, the court rejected Redwood’s argument that Toothman was equitably estopped from contesting arbitration. Equitable estoppel applies when a plaintiff’s claims are “dependent upon, or founded in and inextricably intertwined with” the underlying agreement containing the arbitration clause — as articulated in Goldman v. KPMG, LLP (2009) 173 Cal.App.4th 209. Here, Toothman’s Labor Code claims depended entirely on his employment agreement with Redwood, not on the Apex Arbitration Agreement. The court also rejected Redwood’s contention that Toothman’s amendment of the class definition was an implicit admission that his claims were intertwined with the Arbitration Agreement, finding no authority to support that proposition and noting that a plaintiff’s decision to narrow or limit claims does not constitute the kind of “artful pleading” that triggers estoppel.

The California Department of Insurance announced a major enforcement action against State Farm General Insurance Company after an expedited investigation uncovered significant mishandling of insurance claims filed by survivors of the 2025 Los Angeles wildfires. Acting on consumer complaints, Insurance Commissioner Ricardo Lara ordered a Market Conduct Examination that documented a pattern of unlawful behavior in more than half of the claims reviewed.

State Farm policyholders filed approximately 11,300 residential claims related to the Los Angeles wildfires, nearly one-third of the 38,835 claims filed across all insurers, according to the Department’s official claims tracker. The violations identified by the Department indicate that thousands of survivors may have been affected.

The Department’s enforcement action seeks millions of dollars in penalties, considered the largest amount pursued this century following a wildfire disaster. In addition to penalties, the Department is requiring State Farm to take corrective actions to speed up payments and resolve outstanding claims

Department examiners reviewed a sample of 220 claims and found 398 violations of state law in 114 of those claims, many of which contained multiple violations. Major violations mirror the delays and denials reported by wildfire survivors to the Department, including:

– – Slow and inadequate investigation: State Farm failed to begin investigating claims within 15 days, failed to accept or deny claims within 40 days, and failed to pay accepted claims or provide written notice of the need for additional time within 30 days, as required by law.

– – Underpayment of claims: State Farm made unreasonably low settlement offers and underpaid claims.

– – Multiple adjusters causing confusion: State Farm failed to assign adjusters within statutory timelines and reassigned adjusters repeatedly, creating what survivors described as “adjuster roulette.”

– – Smoke damage claim denials and delays: Smoke damage claims represented nearly half of all consumer complaints. Examiners found that State Farm failed to provide required written denials for hygienist and environmental testing, misclassified testing costs, and misrepresented policy provisions related to inspections.

– – Inadequate communication: State Farm failed to respond to policyholders, send required status letters, or provide notice when additional time was needed to determine claims.

Since last January, the Department has recovered more than $280 million from all insurance companies for survivors of the Eaton and Palisades fires through direct intervention. As of March 3, 2026, insurers have paid out more than $23.7 billion to residential, commercial, and auto policyholders impacted by the fires.

The Department has filed an Accusation and Order to Show Cause against State Farm — the first step toward a public hearing before an administrative law judge. The filing alleges violations of the Unfair Insurance Claims Practices Act and related regulations, including the 398 violations identified in the Market Conduct Examination and 34 additional violations based on consumer complaints.

Under California Insurance Code Section 790.035, penalties may reach $5,000 per violation, or $10,000 for willful violations. Penalties may be imposed by the Commissioner following the administrative hearing.

Wildfire survivors experiencing delays, disputes, smoke damage issues, or other claim problems are encouraged to file a formal complaint with the Department of Insurance at insurance.ca.gov or by calling (800) 927-4357.

Separate from today’s action, the California Department of Insurance, Consumer Watchdog, and State Farm General recently reached a three-party settlement agreement over State Farm’s emergency rate request, now set to be reviewed by an impartial Administrative Law Judge.  

State Farm said in a statement it rejected any suggestions it “engaged in a general practice of mishandling or intentionally underpaying wildfire claims” and called the state’s insurance market “dysfunctional.” The company said it has paid out more than $5.7 billion on 13,700 auto and home insurance claims related to the fires.

“The threat to suspend State Farm General’s ability to serve customers over primarily administrative and procedural errors is a reckless, politically motivated attack that could ultimately cripple California’s homeowners insurance market,” the statement said.