• Kim Stanger, Holland & Hart LLP

Liability for Non-Employees: Beware Apparent Authority

As a general rule, hospitals and other healthcare providers are not liable for the acts of non-employed medical staff members, independent contractors or vendors; instead, each party is responsible for its own actions or those of its employees or agents who are acting within the scope of their employment or agency. However, courts are sometimes willing to hold a hospital or provider vicariously liable for the acts of non-employees under the doctrine of “apparent authority”.

Apparent Authority.

The following factors support the theory of apparent authority:

  • The hospital contracted with the contractor to provide relevant services to hospital patients.

  • The hospital represented that the contractor was the “manager” of the hospital service line.

  • Hospital advertisements did not disclose that services were performed by independent contractors.

  • The hospital’s consent forms did not identify the contractor as an independent contractor or expressly disclaim liability for the contractor’s services.

  • The consent forms used by the contractor were on the hospital’s letterhead.

  • The hospital allowed the contractors to use hospital scrubs and name tags bearing the hospital’s name.

  • The hospital billed the patient for the services performed by the contractor.

Courts in other jurisdictions which recognize the apparent authority theory have also cited factors such as the following:

  • Whether the hospital supplied or assigned the contractor.

  • Whether the contractor’s services are typically provided in and as part of the hospital’s services, e.g., emergency room, anesthesiology, or radiology services.

  • Whether there was notice to the patient that the contractor was independent of the hospital through, e.g., advertising, consent forms, badges, oral communications, etc.

  • Whether patient selected the provider or had prior contact with practitioner.

  • Whether patient had special knowledge of contractual relationship.

Protecting Against Apparent Authority. The following actions may help hospitals and other providers defend against vicarious liability for contractors and other non-employees:

  • Review your ads, websites, and other marketing information to ensure they do not suggest that contractors, vendors and others are acting as your agents. Representations such as “our staff…”, “our specialists…”, or “our team of experts” may suggest that the providers are agents of the hospital. You may want to expressly disclaim any agency or employment relationship by explaining that providers in identified specialties are not employed by the hospital, and that the hospital is not liable for their actions.

  • Include appropriate disclaimers in consent forms, registration materials, and similar documents that are reviewed by the patients. Such disclaimers should be written in plain language that the patient will understand. It should be conspicuous and not hidden in small print in a multi-page document. The disclaimer should identify and differentiate between employed and non-employed providers, and confirm that the hospital is not responsible for acts of non-employees. The more specific the disclaimer is, the better the chance that it will be effective. 

  • Ensure that the hospital’s logo is removed from consent forms and other documents used by the contractor, and confirm that the contractor’s consent form and other materials explain the relationship and the limits on the hospital’s liability.

  • Orally explain the contractor’s relationship to the patient during the registration or consent process. Offer to answer any questions, then document the discussion in the medical record or elsewhere. Be consistent; the patient likely will not remember the discussion, so it will be important to document the discussion and/or make the discussion part of your standard business practice so that you can prove that the relationship was explained to the patient.

  • Place prominent signs in services areas where patients may receive care from non-employees, e.g., the emergency department, radiology department, etc. Again, signage such as the following might help:

NOTICE. Some of the health care professionals performing services in Hospital are independent contractors and are not Hospital employees or agents, including those providing services in [specify service line]. Independent contractors and practitioners are responsible for their own actions. Hospital is not liable for the acts or omissions of any such independent contractors or practitioners.

  • Distinguish the appearance of contractors from employees, e.g., require that they use different scrubs and/or different name badges which confirm that the contractor is not a hospital employee.

  • Require your medical staff and contractors to carry appropriate insurance.

Conclusion. Although the apparent authority theory increases a hospital’s or other provider’s liability, it only applies when the provider has done something to create the impression of an agency relationship. The provider may minimize the risks by implementing the foregoing suggestions or otherwise ensuring that the patient knows that the provider is not liable for the acts of specified contractors or third parties. The provider’s administration and risk managers may want to review their practices to ensure they are implementing appropriate steps.

Kim Stanger

Holland & Heart

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