Traditionally, hospitals could not be held liable for the negligence of EPs, because civil liability for damages was limited to only those individuals directly culpable for the injury. However, recent changes have eroded this protection.

“Until relatively recently, hospitals often enjoyed additional legal protection from liability under the well-recognized doctrines of charitable or sovereign immunity, depending upon the ownership of the facility,” explains Richard F. Cahill, Esq., vice president and associate general counsel at The Doctors Company, a Napa, CA-based medical malpractice insurer.

Courts gradually expanded the scope of entities that may be found legally culpable for the conduct of others under theories such as the borrowed servant rule and respondeat superior. This meant that hospitals could be held responsible vicariously for the conduct of the EPs they employed.

“However, even those doctrines often produced inequitable results, and denied recovery where the injured plaintiff suffered damages clearly as a result of someone else’s negligence,” Cahill says. For example, courts consistently determined that hospitals could not be held liable for the acts of EPs acting as independent contractors in treating patients. “The rationale was that the facilities had no right to control the nature or extent of the care being delivered by practitioners rendering treatment in EDs,” Cahill says.

Several recent changes have increased legal exposure for hospitals in the event someone sues an EP for negligence. “Appellate courts have systematically eroded the concept of independent contractor as a bar to hospital liability through the legal doctrine of apparent authority,” Cahill explains.

“Apparent authority” or “apparent agency” means that a person may be deemed an agent of the principal when that individual creates the appearance of authority, and when the person affected was reasonably justified in believing that the person was an agent, and then proves that such reliance was justified, explains Robert D. Kreisman, JD, a Chicago-based medical malpractice attorney.

Most jurisdictions, either by statute or through appellate decisions, have adopted the concept of apparent authority. “This creates another ‘deep pocket’ in the event of a favorable verdict for an injured patient-plaintiff,” Cahill adds.

Additionally, Congress and state legislatures nationwide have eliminated, or significantly modified, certain statutory protections, such as charitable and sovereign immunities.

“After decades of appellate decisions, hospitals no longer can avoid culpability for the negligent acts of physicians working in their EDs,” Cahill concludes.

Previously, hospitals escaped liability by asserting they had no control over the education, training, or experience of the providers or over the types of care and treatment rendered. This is no longer the case.

“If the patient-plaintiff establishes apparent authority or ostensible agency by a preponderance of the evidence as well as the underlying negligence of the treating physician, both the hospital and the provider may face significant exposure in the event of an adverse verdict,” Cahill says.

Appellate decisions have identified numerous considerations to determine whether “apparent agency” applies in a particular situation. Cahill offers these examples relevant to the ED setting:

  • Did the ED post signage indicating clearly that the treating personnel were independent contractors, and not employees of the hospital?
  • Does the facility’s website identify ED providers as hospital employees or independent contractors?
  • Did the patient sign a conditions of treatment form on arrival in the ED acknowledging that he or she understands that physicians and nurses rendering treatment are independent contractors, separate from the medical center?
  • Were discharge instructions or other paperwork provided to the patient on hospital stationery?
  • Did any of the ED providers wear clothing, such as lab jackets or scrubs, bearing the hospital’s name or logo?
  • What did any name badges worn by personnel display, in terms of name, title, or employer?

For a hospital to be held vicariously responsible for the alleged negligent acts of an EP independent contractor, the plaintiff must demonstrate these two things:

  • that there was some representation by the medical center to the public, either explicit or implied, that the EP is affiliated with, employed by, or rendering care on behalf of the hospital;
  • that the patient reasonably or justifiably relied on that representation, thereby sustaining injury.

“Not surprisingly, what constitutes a sufficient representation encompasses a wide spectrum,” Cahill says. California, for example, requires the hospital to bear the evidentiary burden of demonstrating that the patient was on actual or constructive notice that the provider was an independent contractor and, therefore, was not an ostensible agent of the hospital.

“Ultimately, whether apparent agency exists is a question of fact for the jury and, thus, often is not suitable for dismissal by summary adjudication,” Cahill notes. Traditionally, under Pennsylvania law, an employer could be vicariously liable only for harm caused by an employee’s negligence. “If the harm was caused by an independent contractor, then the employer traditionally would not be vicariously liable,” says A. Bryan Tomlinson, Esq., an attorney in the Philadelphia office of Post & Schell. The doctrine of apparent or ostensible agency is a common law exception to this rule, codified by the 2002 Medical Care Availability and Reduction of Error Fund Act. This permits a hospital to be found liable for the conduct of an EP who is not employed by the hospital in two situations.

“The first is when a reasonably prudent person in the patient’s position would be justified in believing that the care provided by the ED physician was being rendered by the hospital,” Tomlinson explains. The other is when the care at issue in the case was advertised or represented to the patient as care rendered by the hospital.

Kreisman explains, “A hospital can be held vicariously liable for the negligent acts of an EP, even if the EP is not an employee of the hospital, unless the patient knows, or should have known, that the EP is an independent contractor.”

This issue became a key focus in a recent malpractice case. Plaintiffs brought a lawsuit against a Chicago hospital after the premature birth of their daughter.1 “This case came to the Illinois Appellate Court by the request of the defendant, Northwestern Memorial Hospital, regarding the doctrine of apparent authority in the medical negligence context,” Kreisman says.

The question in that case was: “Can a hospital be held vicariously liable under the doctrine of apparent authority for the acts of the employees of an unrelated, independent clinic that is not a party to the present litigation?” The court turned to the seminal case in the state of Illinois.2 “Under the Gilbert decision, plaintiff must establish the three factors holding the hospital liable under the doctrine under apparent authority for acts of independent contractor physicians,” Kreisman explains. These are as follows:

  1. The hospital, or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital;
  2. Where the acts of the agent create the appearance of authority, the plaintiff also must prove that the hospital had knowledge of and acquiesced in them;
  3. The plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence.

Most patients coming to a hospital ED will believe that the physicians and medical staff are employees of the hospital, Kreisman says.

“The apparent agency argument for plaintiffs, where a patient is injured, harmed, or died because of alleged negligence in the ED, is that the nurses and physicians were identified by their jackets, hospital logos, and nameplates that they wear and, thus, are associated with the hospital,” Kreisman says. Kreisman has handled multiple cases in which the plaintiff has argued that the hospital should be held liable for an EP’s negligence. In most of these cases, the EP defendants were independent contractors working for a separate company hired by the hospital to service the ED.

“Nevertheless, the argument for apparent authority usually is a winning one, placing liability on the hospital,” Kreisman says.

REFERENCES

  1. Yarbrough v. Northwestern Memorial Hospital, 2016 IL App (1st) 141585.
  2. Gilbert v. Sycamore Mun. Hosp., 156 Ill.2d 511, 524-25 (1993).

SOURCES

  • Richard F. Cahill, Esq., Vice President & Associate General Counsel, The Doctors Company, Napa, CA. Phone: (800) 421-2368 ext. 4202. Fax: (707) 226-0370. Email: RCahill@thedoctors.com.
  • Robert D. Kreisman, JD, Kreisman Law Offices, Chicago. Phone: (312) 346-0045. Fax: (312) 346-2380. Email: bob@robertkreisman.com.
  • A. Bryan Tomlinson, Esq., Post & Schell, Philadelphia. Phone: (215) 587-1017. Fax: (215) 320-4703. Email: btomlinson@postschell.com.