Hospital Liability for Negligence of Independent Contractor Physicians

By Ronald L. Scott

In Baptist Memorial Hospital v. Sampson, 1998 WL 253914 (Tex. May 21, 1998), the Texas Supreme Court recently addressed the elements required to establish liability against a hospital for the acts of an independent contractor emergency room physician. Sampson suffered a bite from a brown recluse spider that was misdiagnosed by an emergency room physician as an allergic reaction. Samson sued the physician for medical malpractice in failing to diagnose the bite, together with Baptist Memorial Hospital System ("BHMS") under various theories including vicarious liability, the only issue on appeal. Both parties agreed that BMHS established as a matter of law that the physician was not an agent or employee of BMHS. Therefore, the burden of proof shifted to Sampson raise a fact issue on each element of her ostensible agency theory, which Texas courts have held to be in the nature of an affirmative defense.

The legal relationship between hospitals and physicians is an increasingly complex one. Physicians must meet certain hospital-mandated criteria to obtain hospital "privileges"ówhich usually include the right to admit and treat patients in the hospital. However, a typical patient is unlikely to know whether a given physician is an employee of the hospital, a contractor to the hospital, or simply a private practitioner with privileges to practice at the hospital. Increasingly, for example, emergency room physicians are independent contractors rather than employees of the hospital, an important distinction where an injured patient is seeking to hold the hospital liable for malpractice. Arguably, where a patient is aware that a hospitalís emergency room is staffed with independent contractor physicians, the patient is therefore looking to such physicians (rather than the hospital) for medical care, and the hospital is insulated from malpractice committed by such physicians. A feature common to many emergency rooms is therefore a prominent sign proclaiming that physicianís practicing in the ER are independent contractors and are not hospital employees. However, many patients arrive at an emergency room unconscious, rendering such signs meaningless for such patients.

Patients have argued that hospitals should remain liable for malpractice committed by independent contractor physicians under the doctrine of respondeat superior, i.e., an employer is vicariously liable for the negligence of an agent or employee acting within the scope of his or her agency or employment, even though the principal/employer has not committed a wrong. The entity employing independent contractors is generally not liable for the negligence of such independent contractors, since the employing entity does not control the means and methods of the work to be accomplished by the independent contractors. However, hospitals may remain liable for actions performed by independent contractors on a variety of grounds.

In one Alaska case, the plaintiff asserted that the hospital should be vicariously liable for the negligence of independent contractor physicians under a theory of "enterprise liability." The plaintiff contended that "vicarious legal responsibility" in Alaska is "enterprise liability," i.e., if the enterprise impacts society and the negligent act occurred during an activity performed for the benefit of the enterprise, the enterprise is liable. The Alaska court disagreed, stating that enterprise liability is simply one of two widely accepted theories used by courts to justify vicarious liability in an established employer/employee relationship.

A more common basis to hold hospitals liable for negligence by independent contractor physicians is apparent authority. Courts consider two factors: (1) whether the patient looks to the institution rather than the physician for care; and (2) whether the hospital "holds out" the physician as its employee. Apparent authority is distinguishable from another theory of vicarious liability--"agency by estoppel"--which requires actual reliance by the person injured upon representations of the principal (hospital). Apparent authority recognizes that it is the principalís (hospitalís) conduct, not the alleged agent (independent contractor physician), which controls.

Yet another theory of vicarious liability is that the hospital has a non-delegable duty as a matter of law to provide non-negligent physician care (particularly in its emergency room where the hospital is a general acute care facility). Courts may consider the hospitalís by-laws, and standards of accreditation the hospital has agreed to comply with. Accreditation standards may require hospitals to staff emergency rooms with active medical staff, integrate the ER with other departments, etc. Hospitals argue that physicians, not hospitals, have a duty to practice medicine non-negligently, so a hospital cannot delegate a duty it never had. In some jurisdictions, a non-delegable duty is an established exception to the general rule that an employer is not liable for the negligence of independent contractors, making hospitals vicariously liable as matter of law for independent contractorís negligence.

In Baptist Memorial Hospital v. Sampson, the Texas Supreme Court rejected the court of appeals decision that would have imposed a non-delegable duty on a hospital "solely because it opens its doors for business." The court noted that an injured plaintiff is not without a remedy, retaining a cause of action against the negligent physician, or even directly against the hospital if the hospital was negligent in the performance of a duty owed directly to the patient. The court also held that Sampson had failed to produce any evidence that the hospital took any affirmative act to make patients think the emergency room physicians were its agents or employees. Further, the hospital took reasonable efforts to disabuse them of such a notion. Therefore, the Supreme Court reversed the judgment of the court of appeals and rendered judgment that Sampson take nothing against the hospital.