October 3, 2012

Many people who receive medical care in a hospital in the United States are often unaware that one or more of the individuals who provide them with treatment, care, and services are not employees of the hospital but instead are “independent contractors.” The relationship of the medical provider to the hospital is important because the hospital is usually held responsible for the negligent medical care provided by its employees but may not be responsible for the medical malpractice committed by independent contractors, even if the negligent care occurred on the hospital premises or even in the patient’s hospital room.

On September 19, 2012, the Court of Appeals of Indiana discussed whether the alleged negligent medical providers in a hospital setting were employees of the defendant hospital or were independent contractors. The issue was important to the litigants because the medical malpractice plaintiff did not sue the individual medical providers who were alleged to have been negligent, the statute of limitations as to those individuals had already run (expired) and therefore they could no longer be sued for the alleged negligent medical care, and the defendant hospital was arguing that those medical providers were not its employees but rather independent contractors working at the hospital.

The Facts Underlying The Indiana Case

On May 3, 2005, Moreen Amburgey was admitted to the defendant hospital by Dr. Michael Whitworth for revision of her intrathecal pump catheter. Moreen and her husband, Clyde, were told that Moreen would return home after the surgery. After the procedure, Dr. Whitworth informed Clyde that the surgery went well and that he could see Moreen in the outpatient surgery area in about twenty minutes.

At some point, Moreen experienced a decreased level of consciousness and suffered a seizure. Dr. Jiangming Xu, an employee of Southeastern Indiana Anesthesia which provides anesthesia services to the hospital, was on call for anesthesia and responded to a page. Dr. Xu then consulted with Dr. Donald Harris, whose wages were paid by Neurology & Sleep Sciences. Moreen died later that morning. At no time during the day, evening, or night did anyone ever inform Clyde that any care provided to Moreen was performed by independent contractors or persons not employed by the hospital. Clyde also did not have any knowledge of the relationship between the hospital and Drs. Xu and Harris.

Clyde Amburgey alleged that the hospital did nothing to inform Clyde or Moreen that any medical treatment provided to Moreen was being performed by an independent contractor and requested that Dr. Xu, the anesthesiologist who was on call at the hospital that afternoon, and Dr. Harris, a neurologist, be deemed by the court to be the apparent agents of the hospital.

The hospital, on the other hand, argued that Dr. Xu and Dr. Harris were independent contractors, that Clyde Amburgey failed to name either Dr. Xu or Dr. Harris as defendants, that the statute of limitations had since run on any claims he may have had against either Dr. Xu or Dr. Harris, and that there could be no basis for liability against the hospital without a basis of liability against either Dr. Xu or Dr. Harris.

The Present Appeal – “Vicarious Liability”

In deciding the case before it, the Court of Appeals of Indiana discussed a prior decision by the Indiana Supreme Court that held that where a medical malpractice plaintiff alleges that negligence was not committed by a hospital, but instead by a physician working at the hospital, the plaintiff must present a theory by which a court can find the hospital vicariously liable for the actions of a physician who practices there. Vicarious liability is a legal fiction by which a court can hold a party legally responsible for the negligence of another, not because the party did anything wrong but rather because of the party’s relationship to the wrongdoer.

Employee vs. Independent Contractor

Under respondeat superior, an employer, who is not liable because of his own acts, can be held liable for the wrongful acts of his employee which are committed within the scope of employment (“employer” and “employee” are often stated in broader terms as “master” and “servant,” respectively). One important aspect in applying respondeat superior is differentiating between those who are servants and those who are independent contractors.

A servant is one who is employed by a master to perform personal services and whose physical conduct is subject to the right to control by the master. It is the employer’s right to control that generally separates a servant from an independent contractor.

An independent contractor is a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking.

While a master can be held liable for a servant’s negligent conduct under respondeat superior, a master generally cannot be held liable for the negligence of an independent contractor. The theory behind non-liability for independent contractors is that it would be unfair to hold a master liable for the conduct of another when the master has no control over that conduct.

Apparent Agency

Apparent agency is a doctrine based in agency law. It is most often associated with contracts and the ability of an agent with “apparent authority” to bind the principal to a contract with a third party. Apparent authority is the authority that a third person reasonably believes an agent to possess because of some manifestation from his principal. The manifestation must be made by the principal to a third party and reasonably cause the third party to believe that an individual is an agent of the principal and to act upon that belief (which is referred to as “reasonable reliance“). The manifestations can originate from direct or indirect communication. They can also originate from advertisements to the community.

In certain instances, apparent agency can be a means by which to establish vicarious liability.

The Indiana Supreme Court has held in the past that a hospital will be deemed to have held itself out as the provider of care unless it gives notice to the patient that it is not the provider of care and that the care is provided by a physician who is an independent contractor and not subject to the control and supervision of the hospital. A hospital generally will be able to avoid liability by providing meaningful written notice to the patient, acknowledged at the time of admission. Under some circumstances, such as in the case of a medical emergency, however, written notice may not suffice if the patient had an inadequate opportunity to make an informed choice. If the hospital has failed to give meaningful notice, if the patient has no special knowledge regarding the arrangement the hospital has made with its physicians, and if there is no reason that the patient should have known of these employment relationships, then reliance is presumed.

In the appeal before it, the Court of Appeals of Indiana found that there was a genuine issue of material fact regarding the claim of apparent agency by Amburgey.


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