EXECUTIVE SUMMARY

Sometimes, hospitals are the only defendants in ED malpractice claims. In this situation, hospitals can:

argue that they are not liable for the EP’s negligence because the EP is not an employee;

sue the ED group to expose their insurance to a verdict or settlement;

enforce contracts that require the ED group to defend the claim and indemnify the hospital.


A hospital might find itself the only defendant named in a malpractice lawsuit, even though the entire focus of the claim is the care an EP provided.

“Plaintiff attorneys do it because they’ve determined that, strategically, they are better off not having an individual doctor named in the complaint,” says Scott O’Halloran, JD, a medical malpractice attorney in the Tacoma, WA, office of FAVROS, PLLC.

This legal maneuver is based on a simple assumption: It is easier for a jury to return a verdict against a hospital than a physician. Neither the EP nor the ED group are named. “It gives the impression that it’s more about suing a corporation with plenty of money than about suing an individual doctor,” O’Halloran says.

Hospitals can argue that they are not liable for the EP’s negligence because the EP is not an employee. Yet, it is increasingly difficult for hospitals to avoid this “vicarious liability.”

“In most jurisdictions, the hospital is responsible for the actions of the EP, if there is reason for the plaintiff to believe the EP was an employee,” explains Matthew P. Keris, JD, a shareholder in the Moosic, PA, office of Marshall Dennehey. Increasingly, courts are ruling that if the patient has a reasonable belief that the EP is acting on behalf of the hospital, then the hospital is liable for the EP’s negligence. “It’s extremely hard, and sometimes impossible, for the hospital to try and defend the case by saying, ‘This doctor is not our agent,’” O’Halloran observes.

The hospital ends up as the lone defendant in the malpractice lawsuit. “Now, the hospital is in a tough spot. The hospital is standing in for the EP, and they don’t even represent the doctor or the group,” O’Halloran notes.

Contracts between hospitals and ED groups usually are clear on this point. Typically, if the hospital is sued for something the EP did, then the hospital has the right to ask the ED group to defend the case. The ED group also has to indemnify the hospital from any verdict or settlement. “That’s where I’ve seen litigation occur,” O’Halloran reports.

To ensure the ED group takes responsibility, the hospital either has to sue to bring the doctor into the case, or “tender” the case so that the ED group accepts the defense and indemnity pursuant to the contract between the hospital and the ED group.

“Some hospital clients instruct the defense attorney to sue the ED group,” Keris says. This exposes the ED group’s insurance if there is a verdict or settlement.

O’Halloran represented a hospital named in a lawsuit involving the care provided by an EP, who was not named in the lawsuit. The contract with the ED group clearly stated that the ED group would defend the claim and indemnify the hospital. However, hospital leaders were hesitant to enforce this by suing the group. “They didn’t want to ruffle the relationship, knowing that the ED group would not look kindly on that,” O’Halloran says.

Ultimately, the insurance company for the ED group appointed counsel even though they were not named as a defendant in the case. That attorney entered a notice of association with O’Halloran, and the two jointly represented the hospital in the case. This meant that the ED group brought their own attorney to the table and had to find their own experts to defend the care. “If a defense verdict is returned, the two sides will just go their separate ways,” O’Halloran says.

The parties also agreed that if the verdict is against the EP (but within the ED group’s $1 million policy limit), the ED group’s policy will pay, not the hospital’s. If the verdict exceeds the policy limits, arrangements for how it will be handled will be worked out at that point, O’Halloran explains.

Regardless of the outcome of the lawsuit, this kind of situation causes significant tension between the two parties. “No hospital wants to tell the ED group, ‘You need to step up to the plate, or else we’re going to sue you,’” O’Halloran says.

Most of the time, the ED group and the hospital share mutual interests as joint defendants in malpractice litigation. “If the EP and hospital were sued in the same case, they would generally work together to defend the claim, and see where the case ended up,” says O’Halloran, adding that, typically, conflicts are worked out behind the scenes. “Then there is a unified front for the defense.”

Often, if the lawsuit ended in a verdict that exceeded the EP’s policy limits, the hospital would pay the additional amount. That is happening less often, O’Halloran observes. Typically, ED groups carry policy limits of about $1 million, which is the amount hospitals usually require. In cases in which there are no other claims against the hospital, and it is just limited to vicarious liability for the EP’s conduct, the hospitals are refusing to pay these excess verdicts.

“Even though it exceeds the $1 million limit, the hospital feels the ED group or the doctor is still liable for the entire amount,” O’Halloran says. The hospital tenders the claim to the ED group, with the expectation that the ED group will provide a full defense and indemnity to the claim.

In turn, the ED group is exposed beyond their policy limit, O’Halloran says: “It puts them in a position where they really didn’t expect to be.”

Refusing to pay the excess verdict or suing the ED group causes problems on the hospital side, too. “From an insurance perspective, it makes complete sense to do it. But from a practical, relationship standpoint, it creates animosity,” Keris says.

Hospitals may struggle to find an ED group they like. Entangling them in litigation could end the relationship. “The staffing company might say, ‘Hold on, you are putting our insurance in this claim? I don’t want to continue doing business with you,’” Keris offers.