November 6, 2020

The Court of Appeals of Indiana (“Indiana Appellate Court”) held in its opinion dated October 8, 2020: “Here, contrary to its repeated assertions, the Hospital was clearly on notice from the proposed complaint that Spencer was making allegations of vicarious liability, including physician negligence, as “proper diagnosis and treatment of medical conditions and diseases” is performed only by or at the direction of individual physicians. While none of the factfinding necessary to determine the agency relationship or lack thereof between the Hospital and the various physicians who treated Spencer has occurred at this juncture, the issue becomes whether Spencer’s failure to individually name or identify those physicians prior to the running of the statute of limitations is fatal to his claim. Other panels of this Court have made it abundantly clear that it is not.”

Indiana’s Medical Malpractice Act (“Act”), enacted in 1975, dictates the statutory procedures for medical malpractice actions. The medical review panel (“MRP”) stage of an Indiana medical malpractice proceeding is an informal process that parties must participate in within the medical malpractice framework. Before a plaintiff may pursue a malpractice complaint in court against a qualified healthcare provider, the Act requires the plaintiff to present a proposed complaint to an MRP, and the MRP must give its opinion as to whether the provider breached the standard of care. The MRP process is intended to be “informal” and “limited”: “there is little likelihood that a plaintiff “will incorrectly estimate the steps that should be taken in procuring and presenting evidence and authorities to the panel, and should he do so there is little or no risk that he will be harmed thereby” … ” to treat the MRP process as something more than it is would wholly defeat its purposes.”

The issue before the Indiana Appellate Court was whether a vicarious liability theory of recovery against a hospital is preserved at this informal stage of the proceedings regarding conduct of physicians not named in the proposed medical malpractice complaint and for which the statute of limitations has now run to add them as parties. The Indiana Appellate Court stated: “Specifically, Spencer alleged that the Hospital held itself out “as being capable of making proper diagnosis and treatment of medical conditions and diseases and invited the public, including [Spencer], to engage their services for remuneration to be charged by them” and that “as a direct and proximate result of the acts of negligence and malpractice on the part of [the Hospital], Spencer suffered damages and losses” … Under our broad principles of notice pleading, … this allegation falls squarely within our supreme court’s decision in Sword v. NKC Hospitals, Inc., 714 N.E.2d 142 (Ind.
1999), in which the court addressed vicarious liability of a hospital for the actions of individual physicians based upon the theory of apparent or ostensible agency.”

The Indiana Appellate Court held: “In this case, we agree with the trial court that, based upon these rulings, Spencer’s failure to name or identify any physicians individually prior to the running of the statute of limitations is not fatal to his vicarious liability claims against the Hospital. In other words, Spencer may proceed with his arguments and allegations of physician negligence/vicarious liability in his submission to the MRP even though those physicians are not named in the proposed complaint and are now individually immune from suit … We agree that the vicarious liability claims against the Hospital may be presented to and considered by the MRP.”

Source Anonymous Hospital v. Spencer, Opinion 20A-CT-393.

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