Holding Hospitals Liable for the Malpractice of Independent Contractor Physicians

/by

I. Introduction:
For many years hospitals were able to avoid vicarious liability for the negligent acts of physicians who are affiliated with them by pointing to the fact that, technically, such physicians were independent contractors.1 However, in recent years courts around the nation have recognized the fact that hospitals are no longer merely buildings in which independent doctors practice. Instead, hospitals have become comprehensive medical service providers that draw patients in through extensive advertising and marketing efforts and they should be held accountable for errors that are made within their walls.

For example, the Ohio Supreme Court has observed that
As an industry, hospitals spend enormous amounts of money advertising in an effort to compete with each other for the health care dollar, thereby inducing the public to rely on them in their time of medical need. The public, in looking to the hospital to provide such care, is unaware of and unconcerned with the technical complexities and nuances surrounding the contractual and employment arrangements between the hospital and the various medical personnel operating therein. Indeed, often the very nature of a medical emergency precludes choice. Public policy dictates that the public has every right to assume and expect that the hospital is the medical provider it purports to be.2
The Wisconsin Supreme Court has reached a nearly identical conclusion:
Modern hospitals have spent billions of dollars marketing themselves, nurturing the image with the consuming public that they are full-care modern health facilities. All of these expenditures have but one purpose: to persuade those in need of medical services to obtain those services at a specific hospital. In essence, hospitals have become big business, competing with each other for health care dollars. As the role of the modern hospital has evolved (much of it self induced), so too has the law with respect to the hospital’s responsibility and liability towards those it successfully beckons.3

These and other courts have backed up their observations by applying the law of apparent agency to hold hospitals liable for the negligence of independent contractor physicians. Other courts have imposed certain nondelegable duties on hospitals which prevent them from avoiding liability for errors committed by independent contractors.
To date, the New Hampshire Supreme Court has not been presented with a case in which a plaintiff sought to hold a hospital vicariously liable for the negligence of a staff physician. However, the general principles of law used in other jurisdictions to impose such liability have been recognized in this state. Given the opportunity, it seems clear that our Supreme Court would conclude that hospitals can be held vicariously liable for the negligence of independent contractor physicians under appropriate circumstances.
The following is a brief overview of existing New Hampshire law and the leading cases from other jurisdictions applying the apparent agency and nondelegable duty principles to hold hospitals vicariously liable.
II. Apparent Agency:
Under the doctrine of apparent agency, a principal may be held liable for the conduct of an independent contractor if the principal conducts its business in such a way as to give the impression to others that the contractor is acting on the principal’s behalf. Courts in most states have applied this rule to hold hospitals liable for the negligence of independent contractor physicians.4 However, the New Hampshire Supreme Court has never decided a case in which apparent agency was argued in a malpractice case.
In other contexts, our Supreme Court has explained that apparent agency exists when the principal has “so conducted its business as to give third parties the right to believe that the act in question is one the principal has authorized the agent to do…”5 That is precisely the rule that has been applied in other states to hold hospitals vicariously liable.
Perhaps the most comprehensive discussion of the theory of apparent agency (sometimes known as “ostensible agency” or “agency by estoppel”), was authored by the Ohio Supreme Court in the 1994 case of Clark v. Southview Hospital.6 In Clark, a twenty-six year old woman suffered an asthma attack and presented to the emergency room at Southview Hospital. As a result of the negligence of the emergency room physician, she died. Her estate sued the doctor and the hospital and learned that the doctor had a contract with the hospital that described him as an independent contractor.7
The jury returned a verdict for the plaintiff in the amount of $1 million. On appeal, the intermediate appellate court overturned the verdict, finding that reasonable minds could not conclude that the emergency room physician was the apparent agent of the hospital.8 The Ohio Supreme Court reversed, stating that
A hospital may be held liable under the doctrine of agency by estoppel for the negligence of independent medical practitioners practicing in the hospital if it holds itself out to the public as a provider of medical services and in the absence of notice or knowledge to the contrary, the patient looks to the hospital, as opposed to the individual practitioner, to provide competent medical care. Unless the patient merely viewed the hospital as the situs where her physician would treat her, she had a right to assume and expect that the treatment was being rendered through hospital employees and that any negligence associated therewith would render the hospital liable.9

Discussing the existing case law from other jurisdictions, the court observed that
Without exception… the cases applying this kind of liability do not require an express representation to the patient that the treating physician is an employee of the hospital or direct testimony as to reliance. Rather, the element of representation is satisfied when the hospital holds itself out to the public as a provider of medical services, and the element of reliance is satisfied if the patient looks to the hospital, rather than a specific physician, to provide her with medical care.10

The court did not rule out the possibility that a hospital could avoid liability by notifying the patient that the physicians treating her were independent contractors. However, it stressed that “such notice, to be effective, must come at a meaningful time.”11 In a footnote, the court took issue with the suggestion that a hospital could avoid liability by posting signs in its emergency room describing the legal technicalities of the doctors’ employment relationships. Quoting from a Wisconsin Law Review Note, the court dismissed the argument raised by the dissent in the leading Wisconsin apparent agency case:
The plaintiff’s reliance upon the hospital’s competence has been demonstrated by her walking (or being wheeled) into the emergency room. Simply informing her that some doctors and staff have a different technical relationship with the hospital than the one she expected does not lessen the reasonableness of her reliance upon the hospital. Even if the patient understood the difference between an employee and an independent-contractor relationship, informing her of the nature of the relationship after she arrives is too late. The purpose of any notice requirement is to impart knowledge sufficient to enable the plaintiff to exercise an informed choice. The signs suggested by the dissent are too little, too late.12
A few years later, the Indiana Supreme Court applied the doctrine of apparent agency to hold a hospital vicariously liable for the negligence of an anesthesiologist.13 In the Indiana case, a woman was injured when the anesthesiologist botched her epidural during childbirth. The trial court ruled that the hospital could not be held liable because the anesthesiologist was an independent contractor. However, the intermediate court of appeals reversed. The Supreme Court accepted the hospital appeal and affirmed the court of appeals.14
After reviewing the case law from other states, including the Clark decision, the Indiana Supreme Court held 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.15
The court continued on to note that
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.16
The court pointed out that the plaintiff need not prove that she actually relied on any conduct of the hospital. Instead, reliance is presumed “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…”17
More recently, the California Court of Appeal held that a hospital could be held vicariously liable for the negligence of a non-employee radiologist.18 In the California case, a woman went to the Emergency Room after hearing something pop in her neck. X-rays were taken and reported as normal by an independent contractor radiologist. As a result, the plaintiff was discharged home. After experiencing continuing problems, the plaintiff went to a different hospital where she was diagnosed with a fractured neck.19
The plaintiff sued the hospital, the radiologist, and the emergency room physician. The trial court dismissed the plaintiff’s vicarious liability claims against the hospital at the close of her case. The jury concluded that the radiologist was negligent and the emergency room physician was not. On appeal, the court of appeal reversed the trial judge’s dismissal of the plaintiff’s claim that the hospital was vicariously liable for the radiologist’s negligence.
After surveying the case law from other states, the court observed that “the overwhelming majority of jurisdictions employed ostensible or apparent agency to impose liability on hospitals for the negligence of independent contractor physicians.”20 Summarizing the requirements employed by the other states, the California court wrote that the hospital must hold itself out to the public as a provider of health care and the plaintiff must have looked to the hospital for services, rather than any particular physician.21 The court continued on to explain that “there is really only one relevant factual issue: whether the patient had reason to know that the physician was not an agent of the hospital.”22 This is so, according to the court, because
hospitals are generally deemed to have held themselves out as the provider of services unless they gave the patient contrary notice, and the patient is generally presumed to have looked to the hospital for care unless he or she was treated by his or her personal physician. Thus, unless the patient had some reason to know of the true relationship between the hospital and the physician — i.e., because the hospital gave the patient actual notice or because the patient was treated by his or her personal physician — ostensible agency is readily inferred.23

The court candidly admitted that “it appears difficult, if not impossible, for a hospital to ever obtain a nonsuit based on the lack of ostensible agency.”24 That is true because
all a patient needs to show is that he or she sought treatment at the hospital… Unless the evidence conclusively indicates that the patient should have known that the treating physician was not the hospital’s agent, such as when the patient is treated by his or her own personal physician, the issue of ostensible agency must be left to the trier of fact.25
It is clear from the foregoing that the rules of apparent agency that have been developed in other states fit well with New Hampshire law. As our law presently stands, a plaintiff seeking to impose vicarious liability on a hospital would merely need to prove that the hospital had conducted its business in a manner that would give patients the right to believe that the physician in question was acting on its behalf.26 When faced with an appropriate case, our Supreme Court would surely adopt the rules universally applied in other states and hold that an independent contractor physician is the apparent agent of his or her hospital unless the patient has reason to believe otherwise.
III. Nondelegable Duty:
In the case of Valenti v. NET Properties Management, Inc.27, the New Hampshire Supreme Court held that “when a possessor of business premises employs an independent contractor to maintain such premises, he is subject to liability for the independent contractor’s negligence.”28 Valenti imposes a nondelegable duty upon business owners and tenants who invite the public onto their premises for business purposes because “policy concerns counsel against allowing them to shield themselves from liability by hiring independent contractors.”29 Specifically, “those who own or operate business premises are in the best position to protect against the risk of personal injury on their premises and can seek indemnification or contribution from their independent contractors.”30
Courts in several states have imposed a nondelegable duty upon hospitals, holding them vicariously liable for the negligence of independent contractor physicians, for similar reasons. For example, the Alaska Supreme Court has held that
a general acute care hospital’s duty to provide physicians for emergency room care is non-delegable. Thus, a hospital… may not shield itself from liability by claiming that it is not responsible for the results of negligently performed health care when the law imposes a duty on the hospital to provide that health care.31
By way of explanation, the court echoed the statements of many other courts regarding the realities of the present system:
We are persuaded that the circumstances under which emergency room care is provided in a modern hospital mandates the rule we adopt today. Not only is this rule consonant with the public perception of the hospital as a multifaceted health care facility responsible for the quality of medical care and treatment rendered, it also treats tort liability in the medical arena in a manner that is consistent with the commercialization of American medicine. Finally, we simply cannot fathom why liability should depend upon the technical employment status of the emergency room physician who treats the patient. It is the hospital’s duty to provide the physician, which it may do through any means at its disposal. The means employed, however, will not change the fact that the hospital will be responsible for the care rendered by physicians it has a duty to provide.32
As a legal matter, the court found the hospital’s duty to be nondelegable by analogizing the hospital to a common carrier. In a previous case, the court had held that a common carrier has such an important responsibility for the safety of its passengers that its duty to protect them cannot be transferred to another.33 In making this connection, the court made the following observation:
We have little trouble concluding that patients, such as Jackson, receiving treatment at a hospital emergency room are as deserving of protection as the airline passengers in [our prior case]. Likewise, the importance to the community of a hospital’s duty to provide emergency room physicians rivals the importance of the common-carriers’ duty for the safety of its passengers. We also find a close parallel between the regulatory scheme of airlines and hospitals. Undoubtedly, the operation of a hospital is one of the most regulated activities in this state.34
It is the regulatory scheme that the court emphasized in finding the nondelegable duty. The comprehensive nature of state regulations, which the court pointed out were expressly intended to “promote safe and adequate treatment,” as well as the statutory definition of hospital as “an institution devoted primarily to providing diagnosis, treatment or care to individuals,” were specifically found to
manifest[] the legislature’s recognition that it is the hospital as an institution which bears the ultimate responsibility for complying with the mandates of the law. It is the hospital that is required to ensure compliance with the regulations and thus, relevant to the instant case, it is the hospital that bears the final accountability for the provision of physicians for emergency room care.35
The Alaska case clearly provides the most detailed discussion of the nondelegable duty theory as it relates to the hospital-independent contractor doctor relationship. Several years earlier, however, a division of the Washington Court of Appeals, analyzing the general issue of hospital liability, found that a Delaware court had “fasten[ed] on a non-delegable duty to the public which was assumed by the hospital when it, although not required by law to do so, elected to staff and maintain emergency room services as part of its total hospital enterprise.”36
In a footnote, the Washington court reviewed the extensive state rules and regulations applicable to hospital emergency services in that state, much like the Alaska court did, and came to the conclusion that “[i]t could thus be argued that Washington state has imposed upon hospitals a duty to provide emergency care services to the public and that they cannot shift the responsibility by contract.”37 Unfortunately, the non-delegable duty concept was neither developed nor argued at trial nor was it argued on appeal, so the court refused to address the merits of the issue.
More recently, in Simmons v. Tuomey Regional Medical Center38, the South Carolina Supreme Court squarely held that “a hospital owes a nondelegable duty to render competent service to its emergency room patients.”39 The court hastened to add that its decision was not limited to emergency room physicians. Rather, it applied to any situation in which “a patient seeks services at the hospital as an institution, and is treated by a physician who reasonably appears to be a hospital employee.”40
In Simmons, a man was taken to the hospital by his daughter after he suffered a head injury in a moped accident. The daughter signed a consent form which stated in large block letters that the physicians practicing in the emergency room were not employees of the hospital, but were independent doctors as were all other doctors practicing in the hospital.41 The daughter testified that she had not read the form because she was upset about her father’s condition. She also testified that she believed the physicians who treated her father were employees of the hospital.42
The emergency room physicians released the father without treating his head injury because they determined that his confused state was caused by intoxication. He was brought back to the hospital the next day when his condition worsened and he died a few days later as a result of complications from a subdural hematoma.43
After filing suit, the plaintiffs learned that the emergency room physicians were not employees of the hospital. The trial judge subsequently granted summary judgment to the hospital and the intermediate court of appeals reversed, holding that the hospital had a nondelegable duty. The state Supreme Court accepted the hospital’s appeal and affirmed the decision of the court of appeals.
The Supreme Court began its analysis by discussing the commercial nature of the modern hospital:
Today, hospitals compete aggressively in providing the latest medical technology and the best facilities, as well as in attracting patients and physicians who will funnel patients to them. Hospitals not only strive to be a source of pride in the local community, but they also seek to avoid operating at a financial loss. Regardless of whether they are profit- seeking enterprises, they are run much like any large corporation and must operate in a fiscally responsible manner. Like any business dependent upon attracting individual people as customers, hospitals in the aggregate spend billions to advertise their facilities and services in a variety of media, from newspapers and billboards to television and the Internet.44
Next, the court rejected the hospital’s argument that South Carolina law did not support the imposition of a nondelegable duty under the present circumstances. The court reviewed its prior decisions recognizing various nondelegable duties and concluded that those cases demonstrate that
a person or entity entrusted with important duties in certain circumstances may not assign those duties to someone else and then expect to walk away unscathed when things go wrong. A principle that applies in cases of poorly repaired brick floors and sloppily loaded cargo certainly applies to situations in which people must entrust that most personal of things, their physical well-being, to physicians at an emergency room intimately connected with and closely controlled by a hospital.45
The court then surveyed the case law from other states and observed that “[c]ourts throughout the nation have struggled with this issue, and nearly all have held hospitals liable under one or more theories.”46 According to the court, it was well-settled that “hospitals will not be allowed to escape liability by giving last-minute notice of independent contractor practitioners through admission forms or emergency room signs.”47 Expanding on this issue, the court wrote
The point often made in the cases and commentary, either implicitly or explicitly, is that expecting a patient in an emergency situation to debate or comprehend the meaning and extent of any representations by the hospital–which likely would be based on an opinion gradually formed over the years and not on any single representation–imposes an unfair and improper burden on the patient. Consequently, we believe the better solution, grounded primarily in public policy reasons… , is to impose a nondelegable duty on hospitals.48

Lastly, the court rejected the hospital’s argument that patients do not decide where to seek care based on the relationship between a hospital and its physicians. Instead, the court concluded that
Patients make those decisions based primarily on the reputation of the hospital, which it often has aggressively promoted, and not on the reputation of individual emergency room physicians. In such situations, patients understandably and correctly expect to be cared for by physicians and other staff members carefully selected and approved by the hospital.49
For these reasons, the South Carolina Supreme Court unanimously held that the hospital had a nondelegable duty to render competent service to patients who are not treated by their own private physicians.50 The court noted that the term “nondelegable duty” is somewhat misleading. “A person may delegate a duty to an independent contractor, but if the independent contractor breaches that duty by acting negligently or improperly, the delegating person remains liable for that breach. It actually is the liability, not the duty, that is not delegable.”51
In light of the Valenti decision, imposing a nondelegable duty on business owners with respect to the maintenance of their premises, it appears that the New Hampshire Supreme Court would impose a nondelegable duty on the hospitals of this state which respect to those services provided by medical care providers who are not personally selected by the patient, such as emergency room physicians, anesthesiologists, certified registered nurse anesthetists, radiologists, and pathologists. As the South Carolina Supreme Court recognized in Simmons,
A principle that applies in cases of poorly repaired brick floors and sloppily loaded cargo certainly applies to situations in which people must entrust that most personal of things, their physical well-being, to physicians… intimately connected with and closely controlled by a hospital.52
IV. Conclusion:
The doctrines of apparent agency and nondelegable duty are well entrenched in New Hampshire law. There is no reason to doubt that the New Hampshire Supreme Court, like nearly every other court in the nation, would apply one or both of these theories to hold hospitals vicariously liable for the negligence of independent contractor physicians in appropriate cases.
Endnotes
See Adamski v. Tacoma General Hospital, 579 P.2d 970, 973 (Wash.App. 1978) (quoting Annotation, Hospital Liability Neglect of Doctor, 69 A.L.R.2d, 307, 315 (1960)).
Clark v. Southview Hospital, 628 N.E.2d 46, 53 (Ohio 1994).
Kashishian v. Port, 481 N.W.2d 277, 282 (Wis. 1992).
See Annotation, Hospitals – Negligence of Doctor, 51 A.L.R.4th 235 ‘7.
Daniel Webster Council, Inc. v. St. James Association, Inc., 129 N.H. 681, 683 (1987) (quotations omitted).
Supra Note 2.
See id., 628 N.E.2d at 46-47.
See id., 628 N.E.2d at 48.
Id., 628 N.E.2d at 53.
Id., 628 N.E.2d at 52-53.
Id., 628 N.E.2d at 54.
Id., 628 N.E.2d at 54, n. 1.(quoting Note, Pamperin v. Trinity Memorial Hospital and the Evolution of Hospital Liability: Wisconsin Adopts Apparent Agency, 1990 Wis.L.Rev. 1129, at 1147).
See Sword v. NKC Hospitals, Inc., 714 N.E.2d 142 (Ind. 1999).
See Id., 714 N.E.2d at 144-45.
Id., 714 N.E.2d at 152.
Id..
Id..
See Mejia v. Community Hospital of San Bernadino, 122 Cal.Rptr.2d 233 (Cal.App. 2002), review denied October 2, 2002.
Id., 122 Cal.Rptr.2d at 234-45.
Id., 122 Cal.Rptr.2d at 236.
See id., 122 Cal.Rptr.2d at 237.
See id.
Id.
Id., 122 Cal.Rptr. at 240.
Id.
See Daniel Webster Council, Inc., supra note 5, 129 N.H. at 683.
142 N.H. 633 (1998).
Id., 142 N.H. at 636.
Id., 142 N.H. at 635.
Id., 142 N.H. at 636.
Jackson v. Power, 743 P.2d 1376, 1385 (Alaska 1987).
Id.
See Alaska Airlines v. Sweat, 568 P.2d 916 (Alaska 1977).
Jackson, supra note 32, 743 P.2d at 1384.
Id.
Adamski, supra note 1, 579 P.2d at 977 (citing Schagrin v. Wilmington Medical Center, Inc., 304 A.2d 61 (Del.Super.Ct. 1973).
Id., 579 P.2d at 977, n. 5.
533 S.E.2d 312 (S.C. 2000).
Id., 533 S.E.2d at 322.
Id., 533 S.E.2d at 323.
Id., 533 S.E.2d at 314.
Id.
Id., 533 S.E.2d at 314-15.
Id., 533 S.E.2d at 316-17.
Id., 533 S.E.2d at 318.
Id.
Id., 533 S.E.2d at 320.
Id., 533 S.E.2d at 321.
Id., 533 S.E.2d at 321-22.
Id., 533 S.E.2d at 322-23.
Id., 533 S.E.2d at 317.
Id., 533 S.E.2d at 318.

Mark Abramson
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