Kentfield Medical Hospital Corp. v. United States

ORDER.

Kentfield Medical Hospital Corp (Kent-field) initiated this action to recover taxes paid under protest. At issue is whether Kentfield properly treated its psychologists as independent contractors rather than employees. An IRS audit concluded that Kentfield’s psychologists were employees rather than independent contractors and assessed employee taxes (FICA and FUTA) on Kentfield. Kentfield moves for summary judgment on its claim for reimbursement of taxes paid. See Doc #6.

I

The following factual summary is undisputed except as specifically noted below.

In 1988, Continental Medical Systems, Inc (CMS) acquired Kentfíeld Medical Hospital Corp, a rehabilitation hospital in Marin County. After acquisition, Kent-field remained a separate, wholly-owned subsidiary of CMS. The IRS audited Kent-field and several other hospital subsidiaries of CMS. At issue in Kentfield’s audit was whether Kentfíeld properly treated its psychologists as independent contractors during tax years 1991 through 1995. A description of the relationship between Kentfíeld and its psychologists informs this determination.

Kentfield’s contracts with the individual psychologists were substantially similar,…