Filed 12/17/15 State Compensation Ins. Fund v. Urgent Nursing Resources CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

STATE COMPENSATION INSURANCE 

FUND,

Plaintiff and Appellant,

v.

URGENT NURSING RESOURCES, 

INC.,

Defendant and Respondent.

 B258423

 (Los Angeles County

 Super. Ct. No. VC061989)

APPEAL from a judgment of the Superior Court of Los Angeles County. Raul A. 

Shogun, Judge. Affirmed.

Betty R. Quarles and Isabel C. Lallana for Plaintiff and Appellant.

Law Offices of Bennett A. Spector and Bennett A. Spector for Defendant and 

Respondent.

_________________________________
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State Compensation Insurance Fund (State Fund) appeals from the trial court’s 

judgment that Urgent Nursing Resources, Inc. (Urgent) does not owe it workers’ 

compensation premiums for some of Urgent’s nurses because the nurses were 

independent contractors, not employees. State Fund argues the nurses were Urgent’s 

employees and Urgent is therefore statutorily liable for the premiums. We affirm.

BACKGROUND

Urgent is a nursing registry. It provides hospitals with temporary nurses at

hospitals’ requests. After Urgent receives a hospital’s request for a temporary nurse, it

offers certain nurses in its registry, who have been preapproved by the hospital, the 

requested assignment. The nurses are free to reject the assignment without explanation or 

penalty. Once a nurse accepts an assignment, Urgent reviews with the nurse a checklist 

provided by the hospital of the assignment’s duties. If the nurse can perform the duties, 

the nurse reports to the hospital. The nurse provides his or her own uniform, shoes, 

stethoscope, watch, and occasionally other small supplies (such as pens and pen lights)

for the assignment, but does not provide any other equipment. After the hospital provides 

orientation, the nurse completes the assignment, usually a shift, under the supervision of 

hospital. Once the nurse completes the assignment, the hospital pays Urgent for the 

nurse’s and Urgent’s services. Urgent later distributes the nurse’s portion of the payment 

to the nurse.

Urgent allows nurses in its registry to choose whether to be designated as an 

employee or independent contractor. To be classified as an independent contractor, 

Urgent requires, in part, that the nurses sign an independent contractor agreement and 

provide their own liability insurance. These nurses receive Internal Revenue Service 

forms 1099 (1099 Nurses). Of Urgent’s nurses, 126 were 1099 Nurses. The remaining 

18 signed contracts as employees and received Internal Revenue Service forms W-2 (W2 

Nurses).

Urgent and the hospitals contracted for the 1099 and W2 Nurses’ services without 

distinction. Under these contracts, Urgent agreed to provide workers’ compensation

insurance for its nurses. Urgent obtained workers’ compensation insurance for the W2 
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Nurses only, not the 1099 Nurses, however. Urgent provided the hospitals with general

certificates of workers’ compensation insurance that did not specify which nurses were 

covered.

Urgent was audited by State Fund at the end of 2007 and 2008. State Fund 

determined Urgent owed it premiums for the 1099 Nurses. Urgent disagreed and refused 

to pay. State Fund sued Urgent for the premiums. State Fund did not sue or join the 

hospitals. The trial court held the 1099 Nurses were independent contractors and

consequently Urgent did not owe State Fund for the 1099 Nurses’ premiums. State Fund 

appealed.

DISCUSSION

On appeal, State Fund contends that Urgent owes it premiums for the 1099 Nurses 

because the 1099 Nurses were in fact Urgent’s employees and not independent 

contractors.

At trial, the classification of a worker as an employee or independent contractor is 

a question of fact. (S. G. Borello & Sons, Inc. v. Department of Industrial Relations

(1989) 48 Cal.3d 341, 349 (Borello).) We review a fact-based decision for the 

sufficiency of the evidence under a substantial evidence test. (Bowers v. Bernards (1984) 

150 Cal.App.3d 870, 873–874.) Substantial evidence is “‘“relevant evidence”’” that is 

“‘reasonable in nature, credible, and of solid value’” such that “‘“a reasonable [person] 

might accept [it] as adequate to support a conclusion.”’” (Jensen v. BMW of North 

America, Inc. (1995) 35 Cal.App.4th 112, 134.) Under the substantial evidence test, we

give the prevailing party the benefit of every reasonable inference and resolve all 

conflicts in its favor. (Oregel v. American Isuzu Motors, Inc. (2001) 90 Cal.App.4th 

1094, 1100.) We consider only evidence favorable to the judgment and disregard

contrary evidence. (In re Michael G. (2012) 203 Cal.App.4th 580, 589.) If substantial 

evidence supports the judgment, we must sustain the judgment even though we might

have reached a different conclusion based on other substantial evidence. (Bowers, at pp. 

873–874.)
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In a workers’ compensation dispute, the reality of the parties’ relationship 

controls, not the label contracted for by the parties. (Borello, supra, 48 Cal.3d at p. 349.) 

The relationship is determined according factors laid out in Borello, the most important 

of which is the ability to control the manner and means of the worker’s performance. (Id. 

at p. 350; see also Lab. Code, § 2750.5.) The other Borello factors include: (1) right to 

discharge at will; (2) whether the worker is engaged in a distinct occupation or business; 

(3) whether the work is usually done without supervision by a specialist; (4) skill 

required; (5) who supplies the instrumentalities, tools, and place for work; (6) length of 

time services are performed; (7) method of payment (by time or job); (8) whether work is 

part of regular business of principal; and (9) whether the parties believe they are creating 

an employer-employee relationship. (Borello, at pp. 350–351.)

Urgent presented substantial evidence the 1099 Nurses were factually, and not 

merely contractually, independent contractors. Most important, in satisfaction of 

Borello’s central test, Urgent presented evidence the 1099 Nurses’ manner and means of 

work was not controlled by Urgent but rather by the hospitals. For example, the hospitals 

established the protocol the nurses operated under, determined the nurses’ duties, and 

supervised the nurses. This is in accord with the statutory requirement that temporary 

nurses must be supervised by the hospital in all their duties while working at a hospital. 

(Health & Saf. Code, § 1275, subd. (f); Cal. Code of Regs., tit. 22, § 70713.) The 

hospitals also did not allow the nurses to determine their own hours or the people they 

worked with or for. In contrast, Urgent merely offered the nurses temporary assignments, 

which the nurses were free to reject without explanation or penalty. Urgent had no input 

into the nurses’ execution of the hospitals’ assignments.

Urgent also presented substantial evidence the 1099 Nurses were independent 

contractors under the other Borello factors. For example:

1. The nurses were engaged in the occupation of nursing whereas Urgent is 

engaged in the distinctly different occupation of operating a nursing registry.

2. Performing nursing services is not part of Urgent’s regular business, which is to 

operate a nursing registry.
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3. Urgent supplied no instrumentalities, tools, or places for the nurses to perform 

their duties.

4. Nurses are highly skilled individuals. Of note, some of the hospitals’

assignments required additional specialties and Urgent offered those assignments only to

qualified nurses.

5. Urgent did not supervise the nurses’ work on the job.

6. Urgent did not provide the nurses with any continuing education or significant 

professional training.

7. The nurses were free to reject assignments without explanation or consequence.

8. The relationship between the 1099 Nurses and Urgent was not exclusive; in 

fact, many of the nurses were registered at other registries or worked for hospitals.

9. Urgent and the nurses thought they were creating an independent contractor 

relationship under a specific independent contractor agreement. To that end, the nurses’ 

purchase of liability insurance, as required by the agreements, suggests they knew they 

would not be covered by Urgent’s policies as employees.

10. The nurses chose whether to be categorized as employees or independent 

contractors in their contracts with Urgent. There is no evidence in the record to suggest 

the parties did not enter the contracts at arm’s length.

11. Urgent offered the nurses short, irregular assignments with no guarantee of 

sustainable future work.

It was for the trial court to weigh and balance the Borello factors. (See

CenterPoint Energy, Inc. v. Superior Court (2007) 157 Cal.App.4th 1101, 1119.) That 

other Borello factors may point toward an employment relationship is irrelevant. (In re 

Michael G., supra, 203 Cal.App.4th at p. 589.) The court had substantial evidence to 

conclude the weight of the Borello factors pointed toward an independent contractor 

relationship rather than an employment relationship.

It is of note other courts have similarly decided that nursing registries are agents

for independent contractor nurses. For example, in Avchen v. Kiddoo, the court reasoned 

that nursing registries’ “role was that of a commercial ‘matchmaker,’” where “a 
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commissioned go-between attempts to put buyers and seller of goods and services in 

contact with each other” and found that nursing registries are not employers. (Avchen

(1988) 200 Cal.App.3d 532, 537; An Independent Home Support Service, Inc. v. Superior 

Court (2006) 145 Cal.App.4th 1418, 1435 [recognizing Avchen’s applicability to 

workers’ compensation cases, for example, as in Riley v. Southwest Marine, Inc. (1988) 

203 Cal.App.3d 1242].) Statutes also support the court’s finding. For example, the 

Business and Professions Code defines “‘agent’” to include “a nurses registry.” (Bus. & 

Prof. Code, § 2732.05, subd. (c).) Similarly, the Civil Code defines “‘nurses’ registry’” 

as “a person who engages in the business of obtaining and filling commitments for 

nursing service.” (Civ. Code, § 1812.524, subd. (b).) The court’s finding also does not 

conflict with the Labor Code’s definition of an “‘independent contractor’” as “any person 

who renders service for a specified recompense for a specified result, under the control of 

his principal as to the result of his work only and not as to the means by which such result 

is accomplished.” (Lab. Code, § 3353.)

Due to the court’s supported determination that the 1099 Nurses were independent 

contractors, State Fund’s remaining arguments fail. For example, State Fund argues that 

a special employment relationship exists between Urgent and hospitals, making Urgent 

liable for the 1099 Nurses’ premiums. A special employment relationship exists when 

two employers and an employee agree for the original employer to lend the employee to 

the second employer. (Santa Cruz Poultry, Inc. v. Superior Court (1987) 194 Cal.App.3d 

575, 580.) A special employment relationship does not apply to independent contractors. 

(Caso v. Nimrod Productions, Inc. (2008) 163 Cal.App.4th 881, 888 [contrasting rights of 

special employees as compared to independent contractors].)1 Similarly, State Fund’s 

argument that as Urgent’s insurer it was exposed to risks every time a nurse was sent to a 

hospital fails because State Fund was exposed to risk only when Urgent’s employees, 

1 We also do not need to determine whether the 1099 Nurses were employees of 

the hospitals, as State Fund impliedly encourages us to do. Under this analysis, that 

relationship does not bear on Urgent’s liability for the 1099 Nurses’ premiums because

they are Urgent’s independent contractors.
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which did not include the 1099 independent contract nurses, were sent to hospitals. (Lab.

Code, §§ 3351, 3700; Global Hawk Ins. Co. v. Le (2014) 225 Cal.App.4th 593, 604

[employers purchase workers’ compensation coverage for employees, which does not 

include independent contractors].)

State Fund also argues that Urgent improperly gained a benefit from the 1099 

Nurses appearing to be insured and therefore should be estopped from refusing to pay the 

premiums. State Fund did not plead or argue estoppel below according to the documents 

in the record. We therefore disregard this argument. (Overgaard v. Johnson (1977) 68 

Cal.App.3d 821, 826.) We likewise disregard State Fund’s arguments for 

misrepresentation, deceit or negligent misrepresentation, or fraudulent intent, which were 

not pleaded. (Ibid.)

There was substantial evidence for the court to conclude the 1099 Nurses were 

independent contractors and not employees. State Fund did not meet its burden in 

establishing facts supporting its claim that the 1099 Nurses were employees of Urgent. 

We therefore affirm the trial court’s finding that Urgent is not liable to State Fund for 

workers’ compensation premiums for the 1099 Nurses.

DISPOSITION

The judgment is affirmed. Urgent Nursing Resources, Inc., is awarded its costs 

under California Rules of Court, rule 8.278.

NOT TO BE PUBLISHED.

LUI, J.

We concur:

CHANEY, Acting P. J.

JOHNSON, J.