Telehealth Provider Misclassification: What the Cioppettini v. Mochi Medical Lawsuit Means for 1099 Clinician Contracts
A class action filed against a California telehealth company earlier this year is putting a pretty fundamental question in front of the digital health industry: when a platform calls its clinicians independent contractors but runs them like employees, which one are they actually? The case is one of the first of its kind to land in court and the outcome is going to ripple across how telehealth companies nationwide structure their clinician contracts.
Below is a walkthrough of what the case is about, the legal tests involved, and what’s actually at stake for the three groups who should be paying closest attention: telehealth founders, private practice owners, and the clinicians working inside these platforms.
What Is the Cioppettini v. Mochi Medical Lawsuit?
On February 11, 2026, Dr. Frank Cioppettini filed a proposed class and collective action in the Northern District of California against Mochi Medical CA, P.C., Mochi Medical, P.A., and Mochi Health Corp. The case is Cioppettini v. Mochi Medical CA, P.C. et al., Case No. 4:26-cv-01260, and it’s assigned to Magistrate Judge Kandis A. Westmore.
Mochi Health is a telehealth platform that provides weight management services. Dr. Cioppettini is a physician licensed in South Carolina who worked for Mochi as a contractor. His complaint alleges seven violations of California and federal labor law, including failure to pay overtime, failure to pay all wages, failure to reimburse business expenses, and improper wage statements. The claims are brought under both California wage and hour law and the federal Fair Labor Standards Act.
Dr. Cioppettini is represented by Marcus Bradley and Kiley Grombacher of Bradley Grombacher LLP. The Mochi entities are represented by Ogletree Deakins. Mochi has requested an extension to respond and has not yet filed its answer.
You can find the docket on Justia or through PACER.
The Quick Backstory on 1099 in Telehealth
Independent contractor classification has been the default in telehealth for years. It scales faster than a W-2 workforce, avoids benefits costs, and sidesteps a lot of employment law friction. For venture-backed platforms trying to move quickly across multiple states, 1099 is just how things have gotten done.
The assumption underneath that model has always been that physicians in particular were safe from misclassification risk. Conventional wisdom said doctors had enough professional autonomy, enough specialized training, and enough independent medical judgment that they could never really be employees. Cioppettini challenges that assumption directly.
How Worker Classification Actually Works
Every clinician a telehealth company pays is either a W-2 employee or a 1099 independent contractor, and the difference is significant.
A W-2 employee gets wage and hour protections, has taxes withheld, is eligible for benefits, and is covered by unemployment insurance and workers’ comp. A 1099 contractor handles their own taxes, obtains their own benefits, and in exchange has real control over how and when they do the work. Overtime rules, meal break rules, expense reimbursement, and most wage protections don’t apply to 1099s.
When a company classifies someone as a contractor but treats them like an employee, the exposure adds up fast. We’re talking back wages, unpaid overtime, unreimbursed expenses, payroll tax liability, and in some states statutory penalties on top of that. In a class action, those numbers stack across every provider in the class and can reach into the millions.
Which Legal Tests Apply
There isn’t one answer. The test that governs classification depends on the state, the agency, and the profession of the worker.
The IRS Three-Factor Test
The IRS looks at three things:
Behavioral control. Does the company control what the worker does and how they do it?
Financial control. Does the company control the business side, including how the worker is paid and whether expenses are reimbursed?
Type of relationship. Are there written contracts, employee-type benefits, or is the relationship permanent?
The DOL Six-Factor Test
The Department of Labor uses its own economic reality test, which looks at six factors:
The opportunity for profit or loss depending on managerial skill
Investments by the worker and the potential employer
The degree of permanence of the work relationship
The nature and degree of control
Whether the work is an integral part of the potential employer’s business
Skill and initiative
More from the DOL here.
The California ABC Test
California uses the ABC test for most workers. It was codified through AB 5 in 2019 and lives in California Labor Code Section 2775. Under the ABC test, a worker is presumed to be an employee unless the company can prove all three of these:
Prong A: The worker is free from the company’s control and direction, both under the contract and in actual practice.
Prong B: The worker performs work that is outside the usual course of the company’s business.
Prong C: The worker is engaged in an independently established trade, occupation, or business of the same nature as the work performed.
All three prongs have to be met. If the company fails any one, the worker is an employee. The test comes from the California Supreme Court’s decision in Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903.
Prong B is worth pausing on because it’s the one that creates the biggest structural issue for telehealth. If your business is delivering healthcare through clinicians, it’s very hard to argue that the clinicians delivering healthcare are doing work outside your usual course of business. That single prong may be unwinnable for a lot of telehealth platforms.
The California Borello Test (For Physicians)
Here’s an important wrinkle. California Labor Code Section 2783 carves certain licensed professionals out of the ABC test entirely, including physicians, surgeons, dentists, podiatrists, psychologists, and veterinarians. For those professions, the older Borello test applies instead. Borello comes from S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341, and it’s a multifactor analysis that weighs control alongside a long list of other factors:
Whether the worker is engaged in a distinct occupation or business
Whether the work is a regular or integral part of the employer’s business
Who supplies the tools and workplace
The worker’s investment in the business
Whether the service requires special skill
Whether the work is usually done under supervision or by a specialist
The worker’s opportunity for profit or loss
The length of time the services are performed
The degree of permanence in the relationship
The method of payment
Whether the worker hires their own employees
The employer’s right to terminate at will
Whether the parties believe they’re creating an employer-employee relationship
Unlike ABC, no single factor decides it under Borello. The court looks at the whole picture. That makes Borello more flexible, but it also makes outcomes harder to predict. The California DIR has a detailed FAQ on both tests.
Which Test Applies in Cioppettini?
The case involves a physician plaintiff. That means Borello, not ABC. Because physicians are carved out of ABC by statute, one of the first legal questions in the case will almost certainly be which test actually applies to the physician plaintiffs in the proposed class. That threshold question could shape everything that comes after it.
For more analysis, Reed Smith published a client alert in February 2026, and Law360 covered it in an April 8, 2026 piece by Paul Pitts and Ashley Shafer.
What the Plaintiff Is Arguing
According to the complaint, Dr. Cioppettini says Mochi maintained uniform, standardized scheduling and timekeeping practices for all its providers regardless of what state they lived in. He alleges the services were performed remotely but pursuant to Mochi’s policies, supervision, and contractual obligations directed out of California.
His argument is that Mochi fails all three prongs of the ABC test:
Prong A (control): Cioppettini alleges Mochi required providers to monitor its mobile app, online forum, and email, respond to patient requests in specific time windows, and submit to supervision and performance evaluation.
Prong B (outside the usual course of business): Cioppettini alleges that providing medical services was Mochi’s ordinary course of business as a telehealth company, so his work could not have been outside it.
Prong C (independent business): Cioppettini alleges he was not running an independently established medical practice while working for Mochi.
He’s also alleging Mochi failed to meet California’s General Professional Exemption salary threshold and the Licensed Physician Exemption hourly rate.
What Defenses Mochi Might Raise
Mochi hasn’t filed its response yet, but legal commentators have pointed out a few defenses the company is likely to put on the table:
Borello, not ABC. Since Cioppettini is a physician, Mochi will probably argue that Borello governs, and that the multifactor Borello analysis tilts in Mochi’s favor.
The providers were genuinely independent. Mochi is expected to argue that providers set their own schedules, used their own judgment, and ran their own practices.
Class certification. Mochi may argue that the differences between providers, such as different states, different professions, and different working arrangements, make this case a poor fit for class treatment.
Arbitration. If the provider contracts included arbitration clauses, Mochi may try to compel individual arbitration and break up the class.
Why This Matters for Telehealth Founders
If you’re building a telehealth company, Cioppettini is the case that tells you whether the model you’ve built actually works.
Most digital health platforms are running on a set of operational assumptions that this case tests directly: that you can require clinicians to use your EHR, set their response times, monitor their quality metrics, discipline them for performance, and still legitimately call them independent contractors. If the court agrees with the plaintiff, those operational practices become evidence of employment, and your 1099 workforce becomes a misclassified W-2 workforce overnight.
The financial exposure on a misclassification judgment isn’t just the back wages. It includes employer-side payroll taxes, unemployment insurance contributions, workers’ compensation premiums, and benefits the workers should have received. For a platform with hundreds of providers over multiple years, the exposure is material. It can affect your cap table, your valuation, and your ability to raise.
There’s also a corporate practice of medicine angle that most founders aren’t thinking about. In most states, non-physician-owned entities can’t employ physicians directly, which is why almost every telehealth platform uses a PC/MSO structure. When a platform exercises significant control over clinical operations, it’s not just an employment law problem. It’s also potentially a CPOM problem, because the MSO is reaching into territory the PC is supposed to own. The same facts that build a misclassification case can build a corporate practice challenge too. If you haven’t stress tested your PC/MSO separation recently, this case is a good reason to do it now.
The broader point is that “everyone in telehealth does it this way” is not a legal defense. If Cioppettini establishes that industry-standard 1099 practices constitute employment under California law, the plaintiffs’ bar will have a template to run against other platforms, and they will run it.
Why This Matters for Private Practice Owners
If you own a private practice, you might be wondering why a telehealth class action is your problem. It is, for two reasons.
First, many private practices use 1099 arrangements for their own staff. Associate physicians, locum tenens providers, part-time specialists, and even some NPs and PAs are often paid as independent contractors. The legal tests that will be applied to Mochi’s arrangements are the same tests that could be applied to yours. If Mochi’s model fails, practices running similar arrangements need to take that seriously.
Second, if you are credentialed on telehealth platforms or considering supplementing your practice income through them, the outcome of this case affects the terms under which you’d be doing that work. A platform that loses a misclassification case will restructure its provider relationships. That means different contracts, different economics, and potentially different operational constraints for you.
Why This Matters for Clinicians Contracting 1099
If you’re a physician, PA, NP, or other licensed provider contracting with a telehealth platform, this case has a direct impact on you.
You may have been misclassified. If the platform is controlling your schedule, dictating your workflow, monitoring your performance, disciplining you for metrics, and generally running you like an employee, the contract calling you a 1099 may not hold up. If that’s the case, you may be owed back wages, unpaid overtime, expense reimbursements, and potentially benefits you were excluded from. Depending on the state and how long you’ve been working, that can add up to a meaningful amount of money.
You may also have more leverage than you think. 1099 contracts typically give the platform most of the flexibility and the provider most of the risk. Courts starting to treat these arrangements as employment shifts that balance. It means providers can push back on unreasonable terms, negotiate better rates, and decline to work for platforms that are operating in legally shaky ways.
On the financial side, if you’ve been paying self-employment tax on income that should have been W-2, you’ve been paying both the employee and employer portion of payroll taxes out of your own pocket. You’ve also been covering your own malpractice, your own health insurance, and your own expenses with no reimbursement. If the classification was wrong, a good chunk of that cost should never have been yours.
There’s also a professional consideration. Clinicians who’ve built their career inside one or two telehealth platforms may want to think about what happens if those platforms have to restructure. A 1099 workforce suddenly converting to W-2 often comes with a much smaller headcount, because the economics don’t support the same volume. Providers who’ve diversified across platforms, or who’ve built relationships with private practices, are better positioned to weather that kind of shift.
What you should be doing now: save your contracts, your onboarding materials, your performance reviews, your scheduling directives, and any documentation of how the platform operationally controls your work. Those are the facts that matter if you ever want to bring a claim or evaluate whether you have one.
What’s Next for the Case
Cioppettini is early. Mochi hasn’t filed its answer, the classification test hasn’t been chosen, and the class hasn’t been certified. There are real open questions about whether California labor law reaches out-of-state providers, whether Borello or ABC governs the physician plaintiffs, and how the court handles a class that likely mixes physicians and non-physician clinicians.
Whatever the outcome, the case has already done something important. It’s taken the quiet assumption that telehealth 1099 contracting is durable and put it in front of a federal court. That conversation isn’t going back in the box.
References and Further Reading
Cioppettini v. Mochi Medical CA, P.C. et al., Case No. 4:26-cv-01260 (N.D. Cal.) - Justia docket
California Labor Code Section 2775 (ABC test)
California Labor Code Section 2783 (professional exemptions)
California DIR Independent Contractor FAQ
Dynamex Operations West, Inc. v. Superior Court (2018) 4 Cal.5th 903
S.G. Borello & Sons, Inc. v. Department of Industrial Relations (1989) 48 Cal.3d 341
IRS guidance on independent contractor vs. employee
DOL misclassification resource
Reed Smith client alert (February 24, 2026)
Law360 coverage (April 8, 2026)
This post is for informational purposes and isn’t legal advice. If you have questions about a specific contracting arrangement, talk to qualified counsel.
