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Was 'apparent agency' doctrine applicable to hospital?

CASE ON POINT: Stone v. Palms West Hospital, No. 4DO5-402 (Fla. App. 11/08/2006) So.2d -FL

ISSUE: Ordinarily, hospitals are not liable for the negligence or malpractice of anyone other than their employees. There are exceptions. The apparent agency exception applied in this case.

CASE FACTS: James Stone's physicians determined that the symptoms about which Stone complained, required hospitalization. Although they did not have admitting privileges at Palms West Hospital, they referred him to the hospital so that he could receive immediate hospital treatment for his symptoms. Stone subsequently brought suit against Palms West Hospital alleging that he sustained injuries resulting from the treatment of the physicians assigned to care for him at the hospital. Stone alleged that the hospital was liable for the negligence or medical malpractice of the physicians assigned to care for him under the doctrine of "apparent agency." In fact, the hospital did not employ the physicians. The physicians involved in Stone's care and treatment were just "on-call" physicians who had privileges at the hospital but were not employed by the hospital. Accordingly, the hospital filed a motion for summary judgment asserting that it was not liable for the acts of its on-call physicians since a hospital is not liable for the acts of physicians merely because they have staff privileges. Additionally, the hospital asserted that there was no evidence demonstrating that it represented to Stone that Drs. Turgeon, Sharma, and Patel were its agents. The hospital attached several documents in support of its motion for summary judgment. Among them was an affidavit from Glenda Williams, the hospital's Director of Physician Relations, setting forth the relationship between the hospital and the physician. The hospital maintained that the physicians were not agents or employees of the hospital. The hospital argued that the physicians were engaged in their private practice of their medical specialties and were based in their private offices, but they did have medical staff privileges at the hospital. Also, from time to time, they would have an obligation to respond to emergency department calls on a rotational basis. The hospital argued that none of the physicians had offices at the hospital and were not hospital-based physicians. The hospital steadfastly maintained that none of the physicians, nor anyone associated with the hospital, had the authority to represent to patient that the physicians were agents or employees of the hospital. The hospital argued that it did not compensate the physicians for their professional services and did not bill patients for their services. The trial court granted the hospital's motion for summary judgment. Stone appealed.

COURT'S OPINION: Finding that there was sufficient evidence to present a jury question as to whether there was an apparent agency between the hospital and the physicians who treated the patient, the District Court of Appeal of Florida Reversed the judgment for the hospital. The court accepted the uncontroverted facts that Stone believed that his physicians were working for the hospital. The court observed that apparent agency does not arise from either the subjective understanding of the person dealing with the purported agent or from appearances created by the purported agent. Instead, apparent agency exists only where the principal creates the appearance of an agency relationship. The court was satisfied that the hospital had, in fact, created the appearance of such an agency to necessitate that only a jury could make a factual determination as to whether there was an apparent agency.

LEGAL COMMENTARY: Generally, a hospital may not be held liable for the negligence of independent contractor physicians to whom it grants staff privileges. However, under certain circumstances a hospital may be vicariously liable for the acts of physicians, even if they are independent contractors, if the physicians act with the apparent authority of the hospital. It is well-settled that a hospital's granting of staff privileges to a particular health care provider, without more, is insufficient as a matter of law to create a jury question of whether the hospital impliedly represented to the public that the health care provider was the hospital's apparent agent. An apparent agency exists only if all three of the following elements are present: (a) a representation by the purported principal; (b) a reliance on that representation by a third party; and (c) a change in position by the third party in reliance on the representation. Apparent authority does not arise from the subjective understanding of the person dealing with the purported agent or from appearances created by the purported agent himself. Rather, apparent agency exists only where the principal creates the appearance of an agency relationship. Furthermore, the reliance of a third party on the apparent authority of a principal's agent must be reasonable and rest in the actions of or appearances created by the principal. In cases in where it can be shown that a hospital by its actions has held out a particular physician as its agent and/or employee and that a patient has accepted treatment from that physician in the reasonable belief that it is being rendered on behalf of the hospital, the hospital may be liable for the physician's negligence. The court concluded that the representations allegedly made by hospital personnel could support a jury finding of an apparent agency in the case.
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Title Annotation:Legal Focus on Hospital Law Issues
Author:Tammelleo, A. David
Publication:Hospital Law's Regan Report
Date:Nov 1, 2006
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