Independent contractors: What are you liable for?

Elizabeth E. Hogue, Esq., Burtonsville, MD

Historically, courts generally have concluded that providers are liable for the actions of their employees but not for the actions of independent contractors. Consequently, providers sometimes attempted to avoid liability for their personnel's actions by using independent contractors. If risk management issues related to acts and/or omissions by independent contractors arose, providers were sometimes successful at avoiding liability based on the fact that the individuals involved were not their employees.

It appears, however, that this general rule may be changing so that providers may be liable for the acts of independent contractors after all. Providers need to know about these changes and the basis for them so that they can take steps to manage their risks. Pope v. Winter Park Healthcare Group Ltd., No. 5D04-3284 (Fla. Dist. Ct. App.) is a case involving Winter Park Hospital in Winter Park, FL, that illustrates likely changes in the general rule just described.

Pope gave birth to a son at the hospital who was suffering from fetal-maternal hemorrhage. Over the first few hours of his life, the baby's breathing became increasingly labored. Hospital personnel ultimately had to resuscitate the child. Despite these resuscitative efforts, the child suffered permanent brain damage. The baby's care was provided by Michael McMahon, the neonatologist on call, who was an independent contractor of the hospital.

The Popes subsequently sued both the hospital and McMahon. They claimed that Dr. McMahon and the hospital did not provide testing and resuscitative measures in a timely manner, which caused their son's permanent injuries. Even though McMahon was an independent contractor, the Popes claimed that the hospital was liable for his errors because the hospital had a duty to treat their newborn son with reasonable care, which could not be delegated to anyone else.

Specifically, the Popes claimed that an implied contract for treatment was entered into by Mrs. Pope and the hospital when she was admitted. They also argued that the consent form signed by Mrs. Pope upon admission constituted an express contract between her and the hospital to provide appropriate care to her and her child. This obligation, whether implied or express, could not be delegated by the hospital to McMahon or anyone else. In response, the hospital argued that it was not liable for the acts of independent contractors and could not, therefore, be responsible for McMahon's alleged mistakes. The trial court decided in favor of the hospital. The Popes appealed.

On appeal, the court reversed the initial decision by the trial court. The court agreed that providers are not generally responsible for the acts of their independent contractors. An exception to this general rule occurs when practitioners are the actual or apparent agents of providers. Liability for the negligence of independent contractors may also occur when providers fail to exercise due care in the selection and retention of independent contractors to provide care that providers would otherwise provide directly themselves.

"In other words," said the court, "where the contracting party makes it her or his duty to perform a task, that party cannot escape liability for damage caused to the other contracting party by the negligence of independent contractors hired to carry out the task…"

The court also based its decision on the fact that there was no language in the contract between Mrs. Pope and the hospital that showed that she agreed that the hospital could delegate its responsibilities to independent contractors and that the hospital would not, therefore, be liable for any injuries she or her child sustained related to care provided by independent contractors.

Although this case involves a hospital, it also is applicable to post-acute providers. When home health and private duty agencies, HME suppliers, and hospices agree to provide care to patients, they may not be able to delegate these responsibilities to independent contractors without further liability. An exception may occur if patients agree that providers have no liability for the acts or omissions of their independent contractors.

What should providers do?

Providers may wish to revise their consent forms to include language that says that patients understand that care may be delegated to independent contractors and that they agree that providers have no responsibility for the negligent acts of their independent contractors.

It may also be appropriate for providers to more closely monitor the quality of services provided by independent contractors. Since care provided by independent contractors is not usually monitored by providers' supervisors, rigorous review of care provided by independent contractors may be warranted.

The language in the decision about negligent hiring and retention of independent contractors is also instructive. Providers must scrupulously meet any regulatory requirements regarding hiring practices.

Providers dare not violate their own internal policies and procedures with regard to hiring and retaining independent contractors. Providers should immediately review their policies and procedures to make certain that it is realistic to comply. If not, revisions should be made immediately. The failure of providers to follow their own internal policies and procedures may be a "slam dunk" for attorneys representing patients and their families.

In conclusion, providers who have relied on independent contractors to manage liabilities should take a hard look at this risk management strategy in view of what may be substantial changes in long-standing rules.