Treatment of Physicians as Hospital's Independent Contractors Upheld

Treatment of Physicians as Hospital's Independent Contractors Upheld

      In a recent decision, Kentucky Court of Appeals has given extensive consideration to the question of whether physicians rendering services at a hospital would be treated as employees (and therefore agents) or independent contractors.  In this instance, the patient in question had on repeated occasions signed a document acknowledging that the physicians are independent contractors and not employees.  An effort to challenge that characterization subsequent to his death was rejected.  Rains v. St. Joseph Healthcare, Inc., 2012 WL 4208772 (Ky. App. Sept. 21, 2012) (Not To Be Published).

      Bobby Rains was admitted to St. Joseph’s hospital in January, 2007 whereat he underwent several paracentesis procedures by Drs. Dunkle-Blatter and Estridge, which procedures (it was later alleged) were performed improperly.  Ultimately, Bobby Rains was transferred to University of Kentucky Medical Center, where he died.  Lisa Rains, as the surviving spouse and heir and as well the administratrix of Bobby’s estate, filed suit against various parties including St. Joseph Healthcare, alleging that “SJH was vicariously liable for the aforementioned doctors’ alleged negligence under a theory of ostensible agency.”  The trial court granted St. Joseph Healthcare summary judgment and this appeal followed.

      At the time of his admission and several times subsequent thereto, Bobby signed an authorization providing in part:

 I understand that physicians, surgeons, radiologists, pathologists, anestheosiologists, other doctors and physicians assistants who may render care or services in my case are not employees or agents of St. Joseph’s Healthcare, Inc. 

It was on the basis of this release that the trial court granted summary judgment.

On appeal, Lisa asserts the trial court erred by granting summary judgment in favor of SJH because a genuine issue of fact exists as to SJH’s liability under an ostensible agency theory, based upon the inadequate and improper consent form presented for Bobby’s signature.  We disagree.

      Ultimately, the Court of Appeals forged no new Kentucky law on this point, but was rather able to dispose of the argument through citation to prior authority, namely:

An apparent or ostensible agent is not an actual agent, but is “‘one whom the principal, either intentionally or by want of ordinary care, induces third persons to believe to be his agent, although he has not, either expressly or by implication, conferred authority upon him.’” Middleton v. Frances, 257 Ky. 42, 44, 77 S.W.2d 425, 426 (1934) (citation omitted). The general premise in Kentucky is that hospitals are not vicariously liable for doctors who are not its employees under an ostensible agency theory so long as the hospital makes the patient aware that the treating physician is not a hospital employee when the treatment was performed. See Paintsville Hosp. Co. v. Rose, 683 S.W.2d 255, 256 (Ky. 1985). See also Floyd v. Humana of Virginia, Inc., 787 S.W.2d 267, 270 (Ky. App. 1989) (medical malpractice plaintiff could not hold hospital liable for alleged negligence of physician on ostensible agency theory where admission forms read and signed by plaintiff indicated her knowledge that doctors were independent contractors and not agents of hospital, and no representation or action was made so as to induce plaintiff to believe that doctors were employees or agents of hospital); Roberts v. Galen of Virginia, Inc., 111 F.3d 405, 412-13 (6th Cir. 1997) (under Kentucky law, hospital is not liable under ostensible agency doctrine for alleged negligence of independent contractor physicians where hospital's patient registration and authorization form alerted the public that its physicians are not its employees or agents), rev’d on other grounds, 525 U.S. 249, 119 S. Ct. 685, 142 L.Ed.2d 648 (1999); Vandevelde v. Poppens, 552 F.Supp.2d 662, 667 (W.D. Ky. 2008) (hospital not vicariously liable under Kentucky law for alleged negligence of physicians based on an ostensible agency theory where hospital’s consent upon admission forms alerted the public that its physicians were not its employees or agents); Johnston v. Sisters of Charity of Nazareth Health Sys., Inc., 2003 WL 22681562 at *3 (Ky. App. Nov. 14, 2003) (hospital not liable under ostensible agency theory where patient signed admission forms on six different occasions which explicitly stated that pathologists and physicians at hospital were independent contractors and not employees or agents of hospital).

In this case, the record reflects that on seven separate occasions, beginning in March 2005 and ending with a final admission in January 2007, Bobby signed an SJH form entitled “Authorizations and Consents.” This one-page form, which was identical in all material respects at each admission, is not complex and is not drafted in legalistic language. Paragraph eight of the form, immediately preceding his signature, informed him that “physicians, surgeons, radiologists, pathologists, anesthesiologists, other doctors, and physicians assistants who may render care or services in [his] case are not employees or agents of Saint Joseph HealthCare, Inc.” No evidence was presented to show that SJH represented to the public that the doctors working within the confines of the hospital were its employees or agents. Thus, as a matter of law, SJH cannot be held vicariously liable for the alleged negligence of the doctors under an ostensible agency theory.

       There was a dissenting opinion by Judge Caperton wherein he reviewed cases addressing apparent agency and as well the Restatement (Third) of Agency.  In effect, he  argues that there remains a question of fact as to whether Bobby Rains, notwithstanding the signed agreement stating that all physicians are independent contractors, actually appreciated that the doctors were not employees and agents of the hospital.  Ergo, the signed consent would become only part of the evidence as to whether or not the physicians were agents of the hospital.