Suing the hospital when superdoc falls: short of claiming that their doctors leap tall buildings in a single bound, hospitals aren't above touting their physicians' medical heroics. Hospitals' advertising may be the hook for holding them liable for their doctors' negligence.

The concept is simple: A hospital that spends thousands of dollars a year advertising the quality of its physicians to attract patients should not escape liability for the negligence of those physicians, even when they are not hospital employees.

More and more courts are agreeing with this premise and holding hospitals vicariously liable for physician negligence. Hospitals are undertaking aggressive advertising campaigns in today's competitive health care environment. For example, the average hospital spent $206,000 on advertising in 1997. (1)

Most physicians provide their services to hospitals as "staff physicians," working as independent contractors. But hospital advertisements generally promote the quality of the doctors who practice at the hospital, often referring to them as "our doctors" or something similar. Hospitals also indirectly tout the quality of the physicians they provide--advertising their state-of-the-art facilities or sometimes specific departments, such as a "Chest Pain Center," Stroke Center," or "Trauma Center." Some even include the "national ranking" of a hospital's departments.

Because these advertisements permit or even encourage patients to believe that independent-contractor physicians are agents of the hospital, courts around the country are holding hospitals vicariously liable for physicians' negligence under the theory of apparent agency. (2) Many states' courts specifically hold that the independent-contractor status of a treating physician does not bar the hospital's vicarious liability for physician malpractice. (3)

In addition to apparent agency, plaintiffs injured by the negligence of independent-contractor physicians may be able to hold hospitals vicariously liable under theories of nondelegable duty or joint venture. The hospital's advertisements play an important role in establishing each.

Hospitals defend these claims by trotting out patient consent forms and copies of posted signs indicating that physicians providing services at the hospital are independent contractors. Countering this defense is difficult because plaintiff attorneys can easily become lost in the maze of hospital paperwork. The keys to success in these cases are understanding theories of recovery and conducting careful discovery.

Apparent agency

The primary factor in determining whether one is an agent of another is the degree of control that the principal has over the agent. Because hospitals generally do not control how doctors practice medicine, most physicians not directly employed by hospitals are not actual agents of the hospital.

But many courts around the country have relied on [section] 429 of the Restatement (Second) of Torts to hold hospitals vicariously liable for a purportedly independent physician's negligence under the apparent agency doctrine. (4) The section provides:

   One who employs an independent contractor to perform services for another
   which are accepted in the reasonable belief that the services are being
   rendered by the employer or by his servants, is subject to liability for
   physical harm caused by the negligence of the contractor in supplying such
   services, to the same extent as though the employer were supplying them
   himself or by his servants.

Thus, when a hospital offers its services to the public and leads patients to believe, or creates an environment that encourages them to believe, that a physician is employed by the hospital, the physician will be treated as an employee of the hospital, and the hospital will be vicariously liable for the physician's negligence. The restatement requires the plaintiff to show that he or she looked to the hospital, rather than to the individual physician, for care, and that a person in similar circumstances would reasonably have believed that the physician who provided the treatment was a hospital employee.

A comment to the restatement provides that the section also applies when a third person accepts services on the injured person's behalf and reasonably believes that they are being rendered by the independent contractor's employer. (5)

Advertisements help create this reasonable belief. During discovery, the attorney should also investigate other factors that may help establish apparent agency. Some questions to consider:

* Were the physician's name badges and attire--such as gowns, robes, or scrubs--supplied by the hospital, and do they have the hospital's name on them?

* Does the physician's resume indicate employment at the hospital?

* Does the hospital have ultimate authority to decide which physicians are granted staff privileges?

* Have physicians or hospital employees made representations regarding the doctors' employment status to patients?

* Has the hospital accepted credit for positive or heroic acts of a physician?

* Does the hospital bill for the services of physicians?

* In litigating other cases, has the hospital claimed to have an agency relationship with its staff physicians?

* Have nonemployee physicians taught hospital-sponsored seminars or medical education classes that have appeared to be "hospital seminars"?

Focus on advertising

Courts around the country are recognizing that hospitals receive substantial benefit from granting physicians staff privileges, and that consumers of medical services often view physicians who treat them in the hospital as integral parts of the hospital itself. For example, in Hardy v. Brantley, the Mississippi Supreme Court held that a hospital may be liable under apparent agency for the negligence of an emergency room doctor who failed to properly diagnose and treat a patient suffering from severe abdominal pain. The court reasoned that hospitals no longer merely provide the facilities where physicians practice their profession. (6)

Courts adopting this view recognize the importance of a hospital's advertising. For example, in 1992, the Wisconsin Supreme Court said:

   [H]ospitals increasingly hold themselves out to the public in expensive
   advertising campaigns as offering and rendering quality health services.
   One need only pick up a daily newspaper to see full- and half-page
   advertisements extolling the medical virtues of an individual hospital and
   the quality health care that the hospital is prepared to deliver in any
   number of medical areas. 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. (7)

In 2000, the South Carolina Supreme Court focused on a hospital's advertising to hold that genuine issues of material fact existed as to whether patients sought care at the hospital based on its offering of services to the public: "[H]ospitals compete aggressively ... in attracting patients and physicians who will funnel patients to them.... 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...." (8)

Using the hospital's ads to establish its vicarious liability requires time-consuming and painstaking discovery. Some can be accomplished informally. Plaintiff attorneys should visit the hospital's Web site; photograph the hospital's billboards, noting the geographical location of each; and make copies of hospital advertisements in the Yellow Pages and in local newspapers, including the dates published. They should also investigate whether the physician advertises independently or relies on hospital advertising to bring in patients.

Information that the lawyer will probably have to obtain through formal discovery includes:

* a complete list of advertisements that the hospital purchased in all media (television, radio, billboards, newspapers, and Yellow Pages) for the two-year period before the plaintiff's injury

* audiotapes of all radio advertisements and videotapes of all television advertisements from this period, and transcripts of them, including when they were broadcast and on what channels

* copies of all newspaper advertisements from this period, including the names of the newspapers and the dates of publication

* copies of all Yellow Pages and billboard advertisements the hospital purchased during this period, including locations of billboards

* names and addresses of advertising agencies that created the advertisements, along with complete copies of advertising plans with stated goals and budgets

* the amount of income generated by an advertised hospital department and the physicians who staff it, and any data on the number of patient admissions that result from advertisements.

Dealing with defenses

Many, if not most, hospitals post signs in patient areas stating that physicians are independent contractors and not employees of the hospital, and they require patients to sign consent forms including this language. In certain jurisdictions, such as Texas and Georgia, these measures allow hospitals to avoid vicarious liability. (9)

Hospitals argue that they are only bricks and mortar--the temples where the gods perform their miracles. But more jurisdictions are recognizing that common sense and fairness are on the plaintiff's side. What would our courts say about a nonmedical industry that tried to avoid vicarious liability the way hospitals do?

For example, could a commercial airline avoid liability for a crash by claiming that the pilot was an independent contractor and that it merely provided the plane, fuel, schedule, and nonpilot staff? Of course not. So why should the law treat the hospital industry, to whom patients entrust their lives, any differently? This argument is particularly compelling when the plaintiff can show that at the same time a hospital was requiring a sick patient to sign a consent form distancing it from staff physicians, it was also running ads promoting those physicians.

The posted-sign/consent-form defense is especially weak when the negligence occurred in the emergency room or a specialized care setting. Consider a case involving a heart patient who seeks treatment at a "Chest Pain Center" or a stroke patient who goes to a "Stroke Center." Even if such patients, who are ill and under stress, understand the distinction between an independent contractor and an employee--and its legal ramifications--their urgent medical needs leave them with no choice but to sign any forms given to them. An Ohio court has said that an injured or ill patient in need of emergency medical treatment

   has no meaningful choice.... He needs treatment and will turn to his local
   hospital to provide it regardless of prior notice that the physicians are
   independent contractors. The patient thinks of `Lakewood Hospital' in his
   time of need, not [the independent contractor].... [P]ublic policy requires
   that the hospital not be able to artificially screen itself from liability
   for malpractice in the emergency room. (10)

In Pamperin v. Trinity Memorial Hospital, the Wisconsin Supreme Court ruled that if hospitals hold themselves out to the public as competent health care providers, they will be held liable for the malpractice of a treating emergency-room physician, even if the physician was an independent contractor." (11)

Alternate theories of recovery

Nondelegable duty. This theory provides that a party that has undertaken certain duties must perform them responsibly. If the party chooses to delegate those duties to someone else, the original party remains liable for any negligence of the third party, regardless of whether the third party is an actual agent or independent contractor. (12)

A duty imposed by statute or ordinance cannot be delegated to an independent contractor, (13) so plaintiff attorneys should carefully review the state licensing statutes and regulations applicable to the hospital. For example, a hospital with an emergency room may have a statutorily imposed--and therefore nondelegable---duty to provide physicians for emergency room care. If so, the hospital would be responsible for the care rendered by the physicians it had a duty to provide. (14)

In addition, state licensing statutes and regulations often set forth minimum standards for operating hospitals and surgical centers, and for specific departments such as anesthesia, radiology, pathology and emergency rooms. For example, a hospital that has an emergency department may be required by statute or administrative rule to maintain written policies and procedures specifying the scope and conduct of services, to provide emergency care 24 hours a day, and to designate a physician to direct the department.

In some jurisdictions, because a patient cannot choose the physician who will provide care in these specific departments, the hospital can be held vicariously liable for the actions of those physicians under the nondelegable duty doctrine. (15)

In addition, participation in Medicare may subject a hospital to nondelegable responsibility under federal law for the acts of the physicians it provides. Medicare regulations address a broad range of services provided in participating hospitals, including radiology, surgery, anesthesia, emergency, respiratory care, and many more. These regulations often specifically state that hospitals providing services under Medicare are responsible for those services. (16)

Joint venture. A joint venture is an association of people formed to carry out a single business enterprise for profit. Such a venture is created by a contract--written or implied--under which the parties combine their efforts, property, money, skill, and knowledge to implement the undertaking, without creating a partnership or corporation. (17)

The elements of a joint venture vary from state to state, but essentially they include

* a community of interest in performance of a common purpose

* a right to share in profits

* a duty to share in losses

* a joint proprietary interest

* joint control or right of control. (18)

A hospital certainly has a community of interest with its physicians in providing health care. A hospital contributes its facilities, equipment, and staff; its physicians contribute the knowledge and skill to properly utilize the facilities and direct the staff. For example, a "Trauma Center" cannot operate a surgical unit without anesthesiologists, and a hospital cannot operate a surgical "Cancer Center" without pathologists to interpret test results and analyze the tissue removed during surgery.

There is also a joint sharing of profits when the hospital receives payment for services ordered by a physician and the physician receives payment for services he or she performs at the hospital. Physicians often order tests, such as radiology and laboratory tests, that must be performed with hospital equipment; the hospital bills for these tests, and the physician is compensated for the services provided in connection with them.

And both a hospital and its physicians are at risk for financial loss if the hospital is unprofitable. For example, under Florida law, a duty to share in losses exists as a matter of law if one party supplies the labor, experience, and skill, and the other the necessary capital. This is because, in the event of loss, the party supplying the know-how would have done so in vain, and the party supplying the capital would have suffered from its loss in value. (19)

Plaintiff counsel should conduct careful discovery of the hospital's billing practices to determine how extensively profits and losses are shared.

To establish a joint proprietary interest, plaintiff counsel should conduct discovery to determine the extent of physician ownership of the hospital facility or equipment.

Finally, hospitals and staff physicians have joint right of control over delivery of health care. The hospital controls its physicians' staff privileges by deciding which physicians will have them and by establishing standards for patient care. The physician, once on staff, shares control over hospital employees and facilities.

A Florida case, Arango v. Reyka, illustrates the joint venture theory. In that case, a hospital was held responsible for the negligence of a group of anesthesiologists that contracted with the hospital. The court ruled that the type of relationship between a hospital and its doctors is a question for the jury, and upheld the jury's finding that the anesthesiologist group was a joint venturer with the hospital.

The court examined the fee-splitting arrangement between the parties, discussed the fact that the hospital automatically assigned patients to the group, and pointed out the sharing of profits and losses between the hospital and the group. (20)

Not just bricks and mortar 

Proving claims of vicarious liability against a hospital for its physicians' negligence is never easy. Hospitals often defend these claims with great success. But more and more courts are recognizing that a hospital is not just a building--a message that is clearly conveyed in the industry's advertising.

These courts agree that the principles of common sense, fairness, and patient protection all support the civil justice system's holding hospitals liable for physician negligence.

Notes

(1.) Sarah Ellerman, "Hospitals Use Advertising to Reach the Masses," www.nurseweek.com/ features/99-2/promotion.html, discussing "Marketing by the Numbers," a study of trends in health care marketing published by the American Hospital Association Society for Healthcare Strategy and Market Development.

(2.) Goldberg v. Isdaner, 780 A.2d 654 (Pa. Super. Ct. 2001); Simmons v. Tuomey Reg'l Med. Ctr., 533 S.E.2d 312 (S.C. 2000); Gilbert v. Sycamore Mun. Hosp., 622 N.E.2d 788, 795 (Ill. 1993).

(3.) Gatlin v. Methodist Med. Ctr., Inc., 772 So. 2d 1023 (Miss. 2000); Sorrells v. Egleston Children's Hosp. at Emory Univ., Inc., 474 S.E.2d 60 (Ga. Ct. App. 1996); Martell v. St. Charles Hosp., 523 N.Y.S.2d 342,350 (Sup. Ct. 1987); Paintsville Hosp. Co. v. Rose, 683 S.W.2d 255, 258 (Ky. 1985).

(4.) Walker v. Winchester Mem'l Hosp., 585 F. Supp. 1328, 1330 (W.D. Va. 1984); Sharsmith v. Hill, 764 P.2d 667, 672 (Wyo. 1988); Jackson v. Power, 743 P.2d 1376 (Alaska 1987); Arthur v. St. Peters Hosp., 405 A.2d 443, 446-47 (N.J. Super. Ct. Law Div. 1979).

(5.) RESTATEMENT (SECOND) OF TORTS [section] 429, cmt. a (1963-1964 Main Vol.); see also RESTATEMENT (SECOND) OF AGENCY [section] 267 (2002).

(6.) 471 So. 2d 358, 371 (Miss. 1985).

(7.) Kashishian v. Port, 481 N.W.2d 277, 282 (Wis. 1992).

(8.) Simmons, 533 S.E.2d 312, 316-17.

(9.) See, e.g., Baptist Mem'l Hosp. v. Sampson, 969 S.W.2d 945 (Tex. 1998); Holmes v. Univ. Health Serv., 423 S.E.2d 281 (Ga. Ct. App. 1992).

(10.) Hannola v. City of Lakewood, 426 N.E.2d 1187, 1190 (Ohio Ct. App. 1980).

(11.) 423 N.W.2d 848 (Wis. 1988); see also Steven R. Owens, Pamperin v. Trinity Memorial Hospital and the Evolution of Hospital Liability: Wisconsin Adopts Apparent Agency, 1990 WIS. L. REV. 1129. The article notes that the fundamental issue is what constitutes adequate notice.

(12.) See, e.g., 41 AM. JUR. 2d Independent Contractors [section] 37 (1995).

(13.) Id. [section] 38.

(14.) Jackson, 743 P.2d 1376.

(15.) Id.

(16.) See, e.g., 42 C.ER. [subsection] 482.23-27, 482.52-57 (2002). A Florida trial court held a hospital liable under this theory in Graber v. Goldfarb, No. 96-10230 AF (Fla., Palm Beach County Cir. Ct., Nov. 13, 1998).

(17.) Arango v. Reyka, 507 So. 2d 1211 (Fla. Dist. Ct. App. 1987).

(18.) Id.

(19.) Florida Tomato Packers, Inc. v. Wilson, 296 So. 2d 536, 539 (Fla. Dist. Ct. App. 1974), citing Russell v. Thielen, 82 So. 2d 143, 146 (Fla. 1955).

(20.) Arango, 507 So. 2d 1211.

James W. Gustafson Jr. is an associate with Searcy, Denney, Scarcola, Barnhart & Shipley in West Palm Beach, Florida. Thomas D. Masterson is a partner with the Masterson Law Group in St. Petersburg, Florida.