The United States Court of Appeals For the Seventh Circuit (“Federal Appellate Court”) held in its decision filed on February 27, 2019 that “given the nature of health care services today … a medical center cannot hold itself out to the public as offering health care services—and profit from providing those health care services—yet escape liability by creating a complex corporate arrangement of interrelated companies.”
The Underlying Facts
The plaintiff had a CT scan performed at CDI Indiana, LLC’s (“CDI”) diagnostic imaging facility in Carmel, Indiana. The radiologist, an independent contractor hired by Medical Scanning Consultants (“MSC”), missed the plaintiff’s cancer, which then festered for over a year before being diagnosed.
The plaintiff and her husband filed an Indiana medical malpractice lawsuit against CDI. CDI had not registered with Indiana’s Department of Insurance as a “qualified health care provider” pursuant to Indiana’s Medical Malpractice Act (“Act). The plaintiffs therefore sued CDI based on Indiana Code § 34-18-3-1 that states “[a] health care provider who fails to qualify under this article is not covered by this article and is subject to liability under the law without regard to this article. If a health care provider does not qualify, the patient’s remedy is not affected by this article.” The other defendants had registered as qualified health care providers under the Act and therefore the plaintiffs filed a separate Indiana medical malpractice complaint with the Indiana Department of Insurance against them.
CDI argued that the plaintiffs could not hold it liable because CDI did not directly employ the radiologist. The trial court applied Indiana’s apparent agency case law that instructs that a medical provider is liable if a patient reasonably relied on its apparent authority over the wrongdoer. MSC’s medical director testified at trial that CDI was responsible for every aspect of obtaining a patient’s radiological imaging study except for the actual interpretation of the study itself. Further, the parties jointly stipulated that CDI was responsible for the training, hiring, employing, supervising, disciplining, and discharging of the radiation technologists and nonphysician personnel at CDI’s Carmel location. They also stipulated that MSC does business as CDI and that MSC uses the trade name CDI and related trademarks to assist in marketing its services as part of a national provider network. The plaintiff testified that she had no idea about the relationships among MSC, CDI, and the radiologist who had misread her CT scan, and that she was never provided information or written notice about the different entities. The plaintiff, in fact, believed CDI had provided the health care services in relation to her 2014 CT scan.
The Federal Appellate Court stated “CDI’s position conflicts with [Indiana case law’s] explicit focus on the medical center’s manifestations and the patient’s reliance—as opposed to employment contractual formalities,” and held “CDI’s argument that [the radiologist] was an independent contractor hired by MSC, therefore, is of no moment unless [the plaintiff] was aware of any such contractual relationship … [s]he was not.”
Source Webster v. CDI Indiana, LLC, d/b/a CDI, No. 18-3080.
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