SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_____________

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Event Reported: ~~January~~March 420, 2006

PAULA FINANCIAL

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 0-23181 (Commission File Number ) 95-~~4640368~~4640638 (I.R.S. Employer identification number)

PAULA FINANCIAL

87 ~~East~~ E. Green Street, Suite 206

Pasadena, CA 91105

(Address of principal executive offices)

(626) 844-7100

(Registrant’s telephone number, including area code)

~~Item~~Check ~~5.02~~ the appropriate ~~Departure~~box ofbelow ~~Directors~~if orthe ~~Principal~~Form ~~Officers;~~8-K ~~Election~~filing ofis ~~Directors;~~intended to simultaneously ~~Appointment~~ satisfy the filing obligation of ~~Principal~~the ~~Officers~~registrant under any of the following provisions:

As__ Written ~~reported~~ communications inpursuant PAULA Financial’s (the “Company”) third quarter Form 10-QSB, the Board, as of the date of the filing, was comprised of four (4) directors, two (2) of whom were independent. NASDAQ rules require the majority of the directors on the Board be independent. The rules also provide if an issuer fails to ~~comply with~~Rule ~~this~~425 ~~requirement~~under ~~due to one vacancy,~~ the ~~issuer~~Securities ~~shall~~Act ~~regain compliance with the requirement by the earlier of its next annual shareholders meeting~~ (~~May 2006)~~17 ~~or one year from the occurrence of the event that caused the failure to~~CFR ~~comply~~ 230.425)

~~Effective~~__ Soliciting ~~January~~ material 4,pursuant ~~2006, Mr. Peter Beard was elected~~ to ~~the~~Rule ~~Company’s~~14a-12 ~~Board~~under ~~of Directors. Mr. Beard is~~ the ~~Senior~~Exchange ~~Vice~~Act ~~President~~(17 ~~of Policy, Information and~~CFR ~~Communications for the Fannie Mae Foundation~~ 240. ~~Mr. Beard was also appointed to the Audit Committee.~~14a-12)

~~The Company’s~~__ ~~Board~~Pre-commencement ofcommunications ~~Directors~~pursuant isto ~~now~~Rule ~~comprised of five~~ 14d-2(5b) ~~directors,~~under ~~three (3) of whom are independent as required. Additionally,~~ the ~~Company’s~~Exchange ~~Audit~~Act ~~Committee is now comprised of three~~ (3)17 ~~independent~~CFR ~~directors, meeting the minimum member requirements for this committee~~240.14d-2(b))

~~Effective January~~__ 4,Pre-commencement ~~2006,~~communications ~~the~~pursuant ~~Executive~~to ~~Compensation~~Rule ~~and~~13e-4(c) ~~Governing~~under ~~and Nominating Committees of~~ the ~~Board~~Exchange ~~were~~Act ~~reconstituted.~~(17 ~~These~~CFR ~~committees are now comprised of Mr~~240. ~~Beard, Mr. Lawrence Hayes and Mr. Harold Sandstrom, all independent directors of the Company.~~13e-4(c))

2Item 7.01 Regulation FD Disclosure

The information included in this section is being furnished pursuant to Item 2.02 “Results of Operations and Financial Condition” and is included under this Item 7.01 in accordance with SEC Release No. 33-8216 and 34-37583.

On March 20, 2006, PAULA Financial issued a press release reporting its earnings for the fourth quarter of 2005. The text of the release is attached as Exhibit 99.1 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits

99.1 Press release dated March 20, 2006

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: January 4, 2006 PAULA FINANCIAL By: /s/ Deborah S. Maddocks Vice President - Finance

Date: March 21, 2006	PAULA FINANCIAL
	By: /s/ Deborah S. Maddocks
	Vice President - Finance

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