Mitchell Warner, P.A. - Medical Law Alert

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PHYSICIAN LIABILITY FOR THE ACTS OF OTHERS

By Edward E. Hollowell and Kenneth A. De Ville, Mitchell Warner, P.A.

Overview:

It is well known that physicians may be held liable for damages caused by their own negligence through medical malpractice or other claims. But physicians may also be held legally responsible for damages resulting from the negligence or wrongdoing of their employees and, in some instances, of the non-employee health providers with whom they work. This Medical Law Alert summarizes the most important sources of potential physician liability for acts of various third parties involved in patient care.

Physicians And Their Employees:

It is well settled that physicians may be held liable for the negligence and other wrongful acts of their employees under the theory of respondeat superior ("let the master answer"). Respondeat superior makes no requirement that the physician-employer be negligent in any way. The doctrine frankly imposes liability without fault. A physician is "vicariously liable" for the acts of his or her employees performed within the scope and course of their employment. "Vicarious liability" is based not upon the physician's own negligence, but on the physician's relationship to the wrongdoer. Thus, in vicarious liability, an employer is held liable for the negligent acts of a third party, even though the employer may not be negligent himself or herself, nor even aware of the third party's actions.

Of course, physician-employers, like other employers, may also be held liable if their own actions contributed in some way to their employees' negligence or other wrongdoing, which resulted in plaintiffs' damages. For example, physicians may be held liable for negligent hiring, training, supervision or monitoring of an employee; or for failing to establish required or appropriate policies to ensure that their employees understand their responsibilities and job requirements. In contrast to vicarious liability, however, these actions are based on the physician-employer's own negligence or misconduct, as well as that of the employee. Physicians should have protocols for hiring, training, evaluation, supervision, monitoring and dismissal of employees, as well as procedures in place to limit the liability risk posed by employees.

Physicians' Potential Liability For The Acts Of Non-Employees:

A physician must often work with third parties who are not his or her employees. Some are trained health care professionals or other physicians who are professionally independent. Although the physician is not the employer, under some conditions he or she may be held liable for the negligent acts and omissions of those third parties.

Physicians were once legally considered "captain-of-the-ship." Under this doctrine the attending physician or surgeon could be held liable for the negligent acts of all parties, including non-employees, hospital employees and other independent medical professionals. The "captain-of-the-ship" doctrine has, thankfully, been abandoned in virtually all jurisdictions, including North Carolina.

In place of this outdated doctrine, North Carolina law now holds that a physician's liability for the actions of affiliated health professionals (even when the physician does not employ them) should be evaluated according to traditional agency doctrine known as the "borrowed servant" rule. The borrowed servant rule holds that an individual may be held vicariously liable for the negligence of a second individual if the former person has the "right" to control the latter's work and the "manner of performing it . . . irrespective of whether he actually exercises that control or not." ^{1, 2} Applied to the medical context, this doctrine means that a health professional may be deemed a "borrowed servant" of a physician, when the attending physician has the right to control the other professional's work and manner of doing it, even if the physician does not exercise that right. Stated another way, the "borrowed servant rule," applied in the medical context, allows plaintiffs to claim physician liability for the acts of other health professionals, even where the physicians are not themselves negligent and where there is no allegation that the physicians were aware that negligent conduct was occurring. Physicians, of course, may also be held liable if they negligently train, supervise, or select the "borrowed servant."

The "borrowed servant" doctrine is problematic. It does not seem to accurately match a 21st century medical environment that typically features numerous skilled, specialized, autonomous and semi-autonomous professionals working in concert with physicians. Moreover, there is no bright-line rule designating when a health professional becomes a "borrowed servant" of an attending physician. The determination of whether the lead physician has the "right" to control the actions of fellow health professionals is fact-based, which means that it may vary from situation to situation. Courts may consider: 1) the testimony of experts; 2) prevailing standards of care; 3) contractual agreements; 4) statutorily defined supervision requirements; 5) policy and procedure manuals; 6) the selection and payment of the health professional; and 7) the power to discharge, to determine whether the attending physician had the right to control the manner or details of the health professional's work. No one factor is required. The existence of a right to control is derived from the totality of the circumstances. Given this somewhat uncertain standard, the wide range of health professionals with whom physicians interact, and the variety of financial and institutional settings in which physicians practice, physicians must be wary of hidden "liability traps" endemic to the modern medical practice environment. Physicians are placed in practice settings in which they must work with and supervise physician's assistants, nurse practitioners, nurses and technicians that they have not employed nor selected. Some of these risks can be diminished if they are identified in advance and neutralized by appropriate policies, protocols, practices, contractual arrangements or other measures.

Physicians' Responsibility For The Acts Of Their Partners:

Physicians who participate in joint enterprises and informal partnership arrangements may face similar liability risks. Partnerships and joint ventures occur when two or more persons carry on business for profit. No formalities or written agreements are required. The partnership arrangement can be implied or inferred from the conduct of the parties. Traditionally, partners in an enterprise are liable for any torts, including contractual claims, committed by a partner or employee in the course of partnership business. This rule may have devastating effects on a physician because each partner may be held "jointly and severally" liable for the wrongful act of another partner. This means that one partner could be held personally and individually liable for the entire amount of the claim against another partner or the partner's agent. Given this danger, it is essential that physicians not engage in arrangements or behavior, without proper legal counsel intervention, that may be construed as a partnership or a joint venture. Otherwise, they may find themselves unwillingly liable for the legal wrongdoings of their partners.

Fortunately, there is much that physicians can do to protect themselves from these dangers. Qualified attorneys can advise physicians regarding the types of arrangements that might be construed by the courts as joint ventures or implied partnerships. More importantly, physicians can organize their practices in such a way as to substantially limit their liability for the acts of other health care professionals. For example, in North Carolina, medical groups may be organized as professional associations, professional corporations, professional limited liability partnerships or professional limited liability companies. By organizing a medical practice as a professional association, a professional corporation, a professional limited liability partnership or a professional limited liability company, physicians can reduce their exposure to liability significantly. Under these formal arrangements, individual partnership members cannot be held individually liable for claims that "arise from errors, omissions, negligence, malpractice, incompetence, or malfeasance" committed by another member of the partnership or by agents of the partnership. These legal arrangements allow physicians to significantly control the extent of their liability for the acts of other health professionals.

It is important to note that a physician in one of the above-named partnership arrangements might still be individually liable for the harm done by allied health providers if the physician negligently hired, trained, supervised or monitored an employee or borrowed servant. But, as noted earlier, this liability is based on the attending physician's own negligence, rather than on the physician's relationship with the allied health provider.

Conclusion:

A physician may be held financially liable for the negligent or wrongful acts of another health professional when:

The physician is the employer of the health professional; or
The physician has the right to control the other health professional's work and the manner in which it is done (the 'borrowed servant' doctrine); or
The physician negligently supervises, hires, or trains the other health professional when the physician has a duty to supervise, hire or train; or
The physician is engaged in a joint enterprise or partnership with another health professional and that arrangement has not been legally formalized in such a way as to protect the physician from liability.

A wide range of practice environments exists today. Qualified legal counsel can help a physician evaluate risks posed by the physician's association with allied health professionals, and counsel can devise the most appropriate arrangement to limit those risks.

¹ CE Daye & MW Morris. North Carolina Law of Torts (1991).

² Harris v. Miller, 438 S.E.2d 731 (NC 1994).

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The Medical Law Alert is a publication of the Mitchell Warner Health Law Group. Its purpose is to provide general information about significant legal developments, and should not be construed as legal advice on specific factual scenarios. For more information on the issues discussed in this publication, please contact Edward E. Hollowell, JD, FCLM or Kenneth A. De Ville, JD, PhD, Co-Editors at (800) 662-7403.