Ruling May Up Risk For Apparent Authorityrisk Managers Take ✓ Solved

Ruling may up risk for ‘apparent authority’ Risk managers take some solace in knowing that not every allegation of malpractice will fall on the hospital, that sometimes the individual physician or physician group will be responsible for defending the claim. But there is cause for concern with a recent court ruling that could increase the chance of the hospital being held responsible under the “apparent authority” concept. Also known as “ostensible authority,” “apparent authority” is the idea that the patient sometimes can reasonably assume the doctor was performing as a hospital employee even if that is not actually the case. The theory was confirmed recently by a New Jersey state appellate court, which held that a hospital may be vicariously liable for a staff doctor whom a patient reasonably believes is providing treatment on behalf of the hospital.

In Estate of Cordero v. Christ Hospital, the plaintiffs asked the Superior Court of New Jersey to reconsider the trial court’s dismissal of vicarious liability claims against the hospital. The case involved Ramona Cordero, an insulin-dependent diabetic, who was treated by a member of an anesthesiologist group that contracted with the hospital. Before the day of the surgery, Cordero had never met the anesthesiologist, who wore no identification showing his affiliation with the anesthesiology group. He also did not advise Cordero that the hospital assumed no responsibility for the anesthesiologist.

Cordero suffered brain damage from the procedure. She remained in a vegetative state until her death 3½ years later. At trial, the court dismissed the claim for vicarious liability, saying the plaintiffs failed to present evidence either that the hospital “actively held out” the doctor as its agent or that it misled the patient into believing that he was its agent. The appellate court, however, concluded that affirmative action is not necessary to mislead the patient. In its ruling, the court explained that while a hospital is generally immune from liability for the negligence of independent contractors, such as doctors, there is an exception when the hospital’s actions or omissions suggest that the doctors act on its behalf.

The court cited a number of factors that can determine whether the doctor has been “clothed with the trappings” of apparent authority:

  • whether the hospital provided the physician;

  • the nature of the medical care and whether it is typically an integral part of treatment received at a hospital (e.g., anesthesiology, radiology, emergency care, etc.);

  • notices of the relationship or disclaimers of responsibility;

  • the patient’s opportunity to reject care or select a different physician;

  • the patient’s prior contacts with the doctor;

  • special knowledge about the doctor-hospital relationship.

The hospital’s contract with the anesthesia group established a system under which the arrival of a specialist with no prior contact with the patient, and who did not explain his relationship with the hospital, could lead a reasonable person to assume that the doctor was an agent of the hospital, the court concluded.

Most importantly for risk managers to note, the court pointed out that the hospital failed to take any action to deter this reasonable inference. Considering the circumstances, the appellate concluded that the plaintiffs could pursue their vicarious liability claim against the hospital. Cases alleging apparent authority are becoming more common, and courts are making it harder for hospitals to disavow liability for the actions of these types of doctors.

“We are seeing a growing number of these cases, especially with respect to hospital-based specialists, such as anesthesiologists, radiologists, and emergency medicine doctors,” says Claire Miley, JD, a health care attorney. “Thus, with respect to these specialties, hospitals may have to increase their efforts to dispel any impression that the doctor is acting on behalf of the hospital.”

Steven R. Antico, JD, an attorney, also comments that the New Jersey ruling could have influence across the rest of the country. Some jurisdictions have already dealt with apparent authority and issued similar rulings; however, in jurisdictions without settled case law, plaintiffs may point to the New Jersey ruling as support for their arguments. “This New Jersey case spoke quite succinctly, saying a hospital could have additional exposure if it does not take additional steps to eliminate or substantially mitigate that exposure,” he states.

Risk Management Strategies

Hospital risk managers need to put patients on notice that independent staff doctors are not employees of the hospital and do not act on the hospital’s behalf. Inserting a disclaimer into the patient’s consent to treatment form may help to accomplish this purpose but may not be enough to avoid liability. Risk managers should consider having hospital staff specifically call attention to the disclaimer when interacting with the patient. Giving the patient the opportunity to find another physician if they do not want to receive treatment from the on-call anesthesiologist, radiologist, or other doctor may further protect the hospital.

Hospitals may also consider removing any hospital insignia from the lab coats and scrubs worn by independent staff doctors and require these doctors to wear identification showing that they are nonemployees. Additionally, when hospitals post listings of their independent staff physicians on their websites, they may want to make clear that they do not employ these doctors. While these measures do not guarantee that a court won’t find apparent authority, they establish a record of good faith and intent.

Details matter with ‘apparent authority.’ David V. Kramer, JD, an attorney, points out that a disclaimer on the consent form must be worded carefully to ward off claims of “apparent authority.” The language should be framed to ensure the hospital doesn’t undermine patients’ confidence in the quality of care provided by doctors or its medical staff. Since many hospitals employ some hospital-based physicians, this language should be crafted carefully to avoid misleading patients into thinking that no doctors work for the hospital.

Small details can make a difference in these cases. Robert M. Wolin, JD, an attorney, recalls a case where the court focused on the fact that the physician’s scrub shirt had the hospital’s name on it, leading to a reasonable assumption that the doctor worked for the hospital. It is recommended that contract physicians do not wear hospital scrubs or garnets that include the hospital’s logo. Instead, they should wear clothing that displays their own name and the physician group they belong to.

Conclusion

The implications of the New Jersey ruling enhance the need for hospitals to take proactive measures to clarify the relationships between the institution and independent medical staff. Risk managers must do everything in their power to inform patients about their care providers' status to prevent potential liability under the doctrine of apparent authority. As this legal landscape evolves, strategies must be reviewed and adjusted to ensure compliance and patient understanding, ultimately safeguarding the institution from malpractice claims.

References

  • Miley, C. (2009). Legal considerations in hospital liability. Healthcare Risk Management.

  • Antico, S.R. (2009). The impact of apparent authority on healthcare facilities. Healthcare Risk Management.

  • Kramer, D.V. (2009). Addressing legal risks in hospital settings. Healthcare Law Reports.

  • Wolin, R.M. (2009). The role of signage and disclaimers in patient care. Health Law Journal.

  • Estate of Cordero v. Christ Hospital, Appellate Court Decision (2009).

  • Smith, J. (2020). Vicarious liability in healthcare: An ongoing threat. Journal of Healthcare Law.

  • Johnson, A.B. (2021). Understanding apparent authority in medical malpractice claims. Healthcare Compliance Journal.

  • White, M. (2018). Legal trends in hospital responsibility. Medical Economics.

  • Turner, R.L. (2022). Independent contractors and healthcare liability. American Journal of Law & Medicine.

  • Lee, K. (2023). How hospitals can mitigate liability risks. Journal of Health Systems Law.