HOSPITAL LIABILITY
By Sylvester “Sly” James, Jr.
Hospitals were once considered mere buildings where physicians practiced their profession. They were thought of as charitable or public institutions of such value to the community that they were generally shielded from direct liability for torts. That is no longer the case. Public perceptions of hospitals have changed.
Hospitals now promote themselves as full service, commercial, for-profit institutions. They advertise and market their services. They offer specific services to a target audience and try to find ways to distinguish themselves from their competitors. They may spout that “their doctors” trained at the Mayo Clinic or that they are specialists in heart surgery or the like. They entice with promises of the best new equipment. “Think of our hospital first when you have a heart or lung problem or cancer.” In fact, potential patients may drive past one hospital to get to another in order to access a specific type of care that they have heard advertised by the hospital in some form or fashion.
In their zeal to market their specific services and separate themselves from their competition, hospitals may open the doors to expanded liability. Because their marketing often touts “our physicians” or “our new MRI facility,” hospitals may create an impression of agency relationships between hospitals and practitioners.
By the mere use of plural possessive pronouns, hospitals can create a public perception that “our” doctors, who have these marvelous special skills and/or training, are employees or agents of the hospital. Further, the public, indoctrinated by the well-done marketing piece, may actually believe that these doctors or facilities are the best available and, therefore, perceive that this is the “only” place to go when you have a specific illness or problem. For example, in emergency room situations, patients really do not care who treats them as long as they are treated well. If the hospital has, through an effective marketing campaign, argued that “its” emergency care facilities and doctors are the best, patients may actually believe it and insist on going there for treatment.
Patients do not have the opportunity to select emergency room physicians or other specialties such as anesthesiologists, radiologists, pathologists, or lab technicians. They just “come with the hospital.” It is, therefore, very plausible that a patient will simply assume that such doctors are the employees or agents of the hospital. Further, hospitals seldom take steps to dissuade the patients of that notion.
In order to appreciate how hospital marketing may expose the hospital to liability, it is necessary to understand the basic theories of hospital vicarious and direct liability.
Generally, hospitals can be held vicariously liable under theories of: (1) Respondeat Superior; (2) Apparent Authority; or (3) Joint Venture. Under some limited circumstances, hospitals can be held directly liable for their own corporate negligence.
1. Respondeat Superior.
Respondeat Superior relies upon a direct employee/employer relationship between the tort feasor and the hospital. Respondeat superior is “agency-based strict liability.” 1 The principal (hospital) does not need to be personally at fault in order to be held liable for the servant’s negligence.
If the plaintiff can produce evidence on several specific elements, they may be able to prevail on a respondeat superior theory. First, the plaintiff must establish the negligence of the physician, nurse or other servant. Second, plaintiff must prove that the tort feasor was, in fact, the agent and servant of the hospital. Finally, the plaintiff must prove that the negligent agent/servant was acting within the scope of their job at the time of the negligent act. 2
Health care providers have different forms of relationships with hospitals. Nurses are generally direct employees of most hospitals and, therefore, their negligent acts can be imputed to the hospital under the theory of vicarious liability. In contrast, however, physicians are often independent contractors rather than hospital employees. Where independent contractors are involved, hospitals are generally not vicariously liable.
In the case of non-nursing personnel, it may be necessary to determine whether they are, in fact, agent/servants or true independent contractors. The basic issue turns on the right to control the actions of the actor. Courts often look to several factors in order to make that determination. In Missouri, courts have referenced 3 Keller v. Missouri Baptist Hospital of Sullivan 4 when making this determination. In Keller, the court listed ten factors useful for establishing control or the right to control:
- the extent of control which, by the agreement, the master may exercise over the details of the work;
- whether or not the one employed is engaged in a distinct occupation or business;
- the kind of occupation with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
- the skill required in the particular occupation;
- whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
- the length of time for which the person is employed;
- the method of payment, whether by the time or by the job;
- whether or not the work is part of the regular business of the employee;
- whether or not the parties believe they are creating the relation of master and servant; and
- whether the principal is or is not in business. 5
Therefore, whenever there is an allegation that a hospital is vicariously liable under an agency or respondeat superior theory, the practitioner should develop factual support for as many of these factors as possible.
2. Independent Contractor.
Hospitals have tried to skirt their liability for corporate negligence and vicarious liability by the use of independent contractors. One area of hospital services where independent contractors have become the norm as opposed to the exception is in the provision of emergency room services. The seminal case in Illinois, Gasbarra v. St. Jones Hospital, 6 dealt with such an issue.
In Gasbarra, the plaintiff brought her daughter into the hospital emergency room on several occasions. The child was misdiagnosed with measles, sent home and eventually died. Although the emergency room services were provided by an independent medical corporation, the plaintiff filed suit and alleged that the negligent physician was the hospital's apparent agent. The plaintiff's claim failed but the court implied that the plaintiff could have recovered had she demonstrated:
- conduct by the hospital which would have led a reasonable person to believe the physician was the hospital's agent;
- a good faith belief and reliance on those representations;
- physician negligence; and,
- a demonstration of causation i.e., that had the plaintiff known of the true hospital-physician relationship, she would have taken a different course of action. 7
Under the circumstances, even though a healthcare provider has labeled itself an "independent contractor," if that independent contractor has been represented as or reasonably appears to be acting with the apparent authority of the hospital, they may lose their independent contractor status.
One issue of note, however, is that, at least in the Illinois line of cases, the courts appear to require some form of detrimental reliance on the part of the plaintiff. They require that the plaintiff produce some testimony that had they known the truth of the situation, they may have taken different action.
How hospitals market their services might provide insight into how patients perceive the relationship between the emergency physicians and the hospital. For example, a patient could reasonably assume that physicians are agents or employees of Memorial Regional Hospital. It certainly does not appear to advise the patient to the contrary.
This marketing piece from Memorial Regional Hospital's website clearly entices the prospective patient to rely on the hospital and fails to indicate that the physicians and services they tout are anything other than employees or agents of the hospital.
3. Apparent or Ostensible Authority.
Apparent Authority is a theory that relies on the perception of the patient that the physician or other health care provider is, in fact, the agent of the hospital, even though the hospital may consider the actor to be an independent contractor. Although a health care provider may be labeled as an independent contractor, they may be perceived as agents of the hospital depending on the particular facts and circumstances of the case.
In the case of Uhr v. Lutheran General Hospital, 10 the plaintiff sued the hospital under the theory of apparent authority after the death of her daughter. In that case, the plaintiff pled detrimental reliance and asserted that had she known of the anesthesiologist's relationship to the hospital, she would have tried to obtain a list of other physicians or at least inquired as to his qualifications.
In Uhr, the court rejected the need to show a detrimental reliance and stated that to demand evidence of detrimental reliance would further perpetuate "the charade that limits the liability of certain healthcare providers." 11 That court went on to cite a growing number of cases from other jurisdictions and stated,
that in today's medical environment, it is natural for hospital patients to rely on institutions, not specific doctors, to provide their treatment, especially in emergency room situations. Thus, hospitals which enforce patient reliance by negligently representing the physicians as their agents should be held accountable for their misrepresentations without the strict causal requirement of detrimental reliance. 12
Another Illinois case Sztorc v. Northwestern Hospital 13 examined an issue of apparent authority of an x-ray technician's negligence in over-exposing a patient to radiation. In this case, the court discussed the elements that would lead a reasonable person to believe the hospital had represented a physician as an agent. They noted several factors including, "(1) the hospital's granting the technician staff privileges; (2) the x-ray department's physical location in the hospital; and (3) the lack of dress differentiation between hospital employees and independent x-ray staff." 14
Several factors have been listed to provide hospitals with guidance as to how to avoid apparent authority in their day-to-day practices. In their article, 15 Phoenix and Schlueter stated that hospitals may reduce their exposure to liability or avoid it all together in several ways:
- Print admission and consent forms which clearly indicate the hospital-independent contractors relationship;
- Have independent contractors wear different jackets and name tags from regular hospital employees;
- Physically separate non-hospital facilities such as x-ray, etc., where possible, and, where not, clearly distinguish with different names, signs, paint, etc., that this facility is operated by non-hospital personnel;
- Conduct training sessions for employees and instruct them on how to avoid affirmative indications that independent physicians are employees;
- Insure radio, television or billboard ads make reference to the contracting relationship;
- Make sure billing statements are separate and contain language that each source has provided independently; and
- (7) Insure that physician referrals clearly indicate the physician is not the hospital's employee and that, by its referral, a hospital is not guaranteeing the physician's abilities. 16
These factors should be considered and form the basis of discovery and depositions in cases where apparent authority may present a viable cause of action.
4. Partnership/Corporate Negligence.
A potential cause of action for partnership or joint venture liability is illustrated by the case of Ritter v. BJC Barnes Jewish Christian Health Systems. 17 In examining the question of whether Christian Hospital acted as an agent of BJC, the court noted that ""generally two separate corporations act as distinct legal entities, even if one partly or wholly owns stock in the other." Mitchell v. KC Stadiums Concessions, Inc. 865 S.W.2d 779, 784 (Mo. App. W.D. 1993)." 18 There is, however, an exception to the rule that a parent corporation is not generally liable for the tortuous acts of a subsidiary when there is evidence to support a finding that would pierce the corporate veil.
In order to pierce the corporate veil, two factors must be met: (1) the corporation must be controlled or influenced by the other corporation; and (2) there must be evidence that the "corporate cloak" was used as a subterfuge to defeat public convenience, to justify wrong, or to perpetuate a fraud. 19 The control must be over more than money and should encompass policy and business practices with respect to the particular transaction at issue. The wrong must be the proximate cause of the injury to the party who dealt with the corporation. "If the purpose to be served by the arrangement is fair and lawful, then legal forms of relationships are to be observed and the case determined on the basis of separate and individual corporate existence." 20
5. Joint Venture
A plaintiff may show a joint venture by either an express or implied agreement. An express agreement occurs when the parties make explicit promises. However, courts will not imply a joint venture when evidence indicates that the parties created a different business form.
"A joint venture is essentially 'an association of two or more persons to carry out a single business enterprise for profit.'" 21 Joint ventures are based on express or implied agreements between participants to carry out a common purpose for money or profit. Each member of the venture must have a voice in how the venture is operated. 22 "Indications of a joint venture include: actively participating in sharing in the profits, all parties having joint and several control and having a duty to share the losses." 23
6. Conclusion.
Although these theories of hospital liability may open doors to potential causes of action, state legislatures are actively working to omit or eliminate them. For example, in Missouri, the legislature, in its infinite wisdom, added language to the medical malpractice laws that reads:
(3) No individual or entity whose liability is limited by the provisions of this chapter shall be liable to any plaintiff based on the actions or omissions of any other entity or person who is not an employee of such individual or entity whose liability is limited by the provisions of this Chapter.
R.S.Mo. 538.210.2(3) (2005)
Kansas law specifically denies sovereign immunity in the medical malpractice context. A health care provider who is qualified for coverage under the fund shall have no vicarious liability or responsibility for any injury or death arising out of the rendering of or the failure to render professional services inside or outside this state by any other health care provider who is also qualified for coverage under the fund. 24
No doubt, other states have adopted similar language in some of their tort reform statutes such that they deserve thorough and careful review before spending exorbitant amounts of time developing new and novel theories of hospital liability.
End Notes
1 Hospital Liability for Torts of Independent Contractor Physicians, 47 S.C.L. Rev. 431, 438 (Spring 1996).
3 See, e.g. Scott v. SSM Healthcare of St. Louis, 70 S.W.3d (Mo. App. E.D. 2002)
4 800 S.W.2d 35 (Mo. App. E.D. 1990)
5 Id. at 38-9 (quoting Restatement (Second) of Agency, 220(2) (1958)).
6 85 Ill. App. 3d 32 (1st District 1980)
8 http://www.memorialregional.com/mrh/EmergencyDepartmentTraumaCenter.aspx
9 http://www.memorialregional.com/mrh/MedicalSurgicalServices.aspx
10 26 Ill. App. 3d 236 (1st District 1992).
12 18 S. Ill. U.L.J. 195, 208 (Fall 1993) citing Uhr, 226 Ill. App. 3d at 249.
13 146 Ill. App. 3d 275 (1st District 1986)
15 G. Keith Phoenix and Anne L. Schlueter, Hospital Liability for the Acts of Independent Contractors; The Ostensible Agency Doctrine, 30 St. Louis U.L.J. 875 (1986)
17 987 S.W.2d 377 (Mo. App. 1999)
21 Eads v. Kinstler Agency, Inc. 929 S.W.2d 289, 292 (Mo. App. W.D. 1996).
