What is Vicarious Liability?

Physicians might be surprised to learn that in a medical malpractice lawsuit, their practice can be legally responsible for an employee's negligent actions, even if the practice did nothing wrong.  Equally surprising, there are even limited situations where a practice can be liable for the negligent actions of independent contractors who are not employees of the practice.  This is a legal concept known as vicarious liability.   

Understanding how vicarious liability can impact a medical malpractice lawsuit will help physicians identify ways to reduce their risk of unexpectedly being held responsible for someone else’s negligent acts.  However, understanding vicarious liability first requires an understanding of the most common form of liability in a medical malpractice suit: direct liability.   

What is Direct Liability in a Medical Malpractice Lawsuit? 

In a typical medical malpractice lawsuit, the patient filing the lawsuit argues that the physician’s care was negligent, and the physician should pay the patient for harm caused by the physician’s negligent care.  In other words, the patient argues that the physician should be held accountable for the physician's own negligent actions.  This is known as direct liability.  In short, direct liability is liability that arises from a person’s own negligence. 

How Does Vicarious Liability Differ from Direct Liability? 

Vicarious liability, on the other hand, involves holding a third party responsible for someone else’s negligence.  In a medical malpractice lawsuit, vicarious liability usually involves holding an employer responsible for the actions of its employees.  The basis for vicarious liability is that employers have the right and ability to control their employees’ work.   

An employer is usually only responsible for its employees’ actions if the employee’s negligence occurred while the employee acted within the scope of his employment.  For example, if an employee negligently caused a car accident over the weekend while he was not working, the employer would probably not be held vicariously liable for the employee's negligence.   

However, courts can also find vicarious liability even when a formal employer-employee relationship does not exist.  Under a legal concept known as “apparent agency,” courts can hold a third party responsible for someone else’s negligence if the third party created the appearance that the negligent person was his agent.¹  For example, if a medical practice leads patients to believe that its independently-contracted physicians are employees of the practice through misleading advertisements, name tags, or through other actions, a court might hold the practice responsible for the physicians’ negligent actions.  This liability can extend even though the physicians are not employees of the practice.  

Courts usually focus on two questions when determining whether an apparent agency exists: (1) whether the third party represented that the negligent person was his agent, and (2) whether the injured person justifiably relied on that representation.²  With these questions in mind, the last section of this article provides suggestions for how practices can reduce the risk of vicarious liability for an independent contractor’s actions. 

What Are Some Examples of Vicarious Liability in a Medical Malpractice Lawsuit? 

There are two scenarios in which vicarious liability most commonly arises in a medical malpractice lawsuit.   

A Medical Practice Employs Physicians and Other Providers 

In a medical malpractice lawsuit, vicarious liability most often arises when a patient files a lawsuit against a physician and the practice that employs the physician.  The patient argues that the physician was negligent, and that the practice should be responsible for the physician’s negligence as the physician’s employer. 

For example, in a MICA closed claim involving vicarious liability, the family of a deceased patient filed a lawsuit against the nurse practitioner who treated the patient, plus the practice where the patient was seen.  The family argued that the nurse practitioner negligently failed to diagnose and treat pneumonia and to direct the patient to the emergency room.  The family also argued that the practice was vicariously liable for the nurse practitioner’s alleged negligence. 

The case settled before going to trial.  Even though the lawsuit included no direct liability claims against the practice, the practice faced possible vicarious liability for the nurse practitioner’s actions. 

A Medical Practice Works with Independent Contractors 

In addition to vicarious liability for employees’ negligence, vicarious liability can also arise in medical malpractice cases involving independent contractors.  For example, in 2022, the Arizona Court of Appeals heard a case involving a rehabilitation facility’s vicarious liability for its independent contractor physicians.³  The case was filed by a patient who underwent a spinal fusion and was later transferred to an in-patient rehabilitation facility.⁴   

Upon admission, the patient signed a form advising her that the physicians were independent contractors not controlled by the facility.⁵  While at the facility, the patient experienced complications, and an emergency surgery was performed to correct a spinal cord compression.⁶  The surgery was too late, and the patient never walked again.⁷  The patient sued the facility alleging abuse and neglect, but she did not sue the physicians individually.⁸   

The lower court found that an apparent agency existed, and the facility was liable for the actions of the independent contractor physicians.⁹  However, the Court of Appeals reversed the lower court's decision.¹⁰  The Court of Appeals concluded that no apparent agency existed, because the facility did not mislead the patient into thinking that the independent contractor physicians were the facility’s agents.¹¹  The Court of Appeals’ decision was heavily influenced by the facility’s requirement that patients must sign a form explaining that the physicians were independent contractors who were not controlled by the facility.¹²   

For practices who work with independent contractors, this case highlights the importance of clearly notifying patients when they are seen by an independent contractor.  Notifying patients ahead of time can help reduce the risk of liability for an independent contractor’s actions, because courts are less likely to find that patients were led to believe that an independent contractor was an employee of the practice.  

What can practices do to reduce their vicarious liability risk? 

Physicians and practices hoping to reduce their risk of vicarious liability should consider the following strategies. 

• • Ask an attorney to draft or review independent contractor agreements.  The agreement should clearly define the relationship between the independent contractor and the practice.
    
    
  • Notify patients of the existence of independent contractors.  Patients should know if they are seen by an independent contractor and that the independent contractor is not controlled by the practice.  As illustrated in the court case discussed above, a signed consent form is a good way of notifying patients of independent contractors’ status. 
    
    
  • Confirm whether independent contractors have their own malpractice insurance.  This helps protect the practice if something goes wrong, and it supports an argument that independent contractors are indeed independent of the practice.
    
    
  • Ensure job titles and job descriptions accurately reflect employees’ roles and responsibilities.  Employees’ name tags should accurately reflect their role in the practice.  Independent contractors should not wear a name tag with the practice name or logo.
    
    
  • Maintain policies and procedures for hiring new employees.  This should include conducting thorough background checks and documenting new employees’ education, training, and experience.
    
    
  • Maintain a competency and credentialing file for employees.  This file should include documentation of any routine training needed to maintain employees’ licensing or certification status. 

Overall, even though vicarious liability might be inevitable in certain situations, practices and physicians can take steps to reduce their risk of unexpected vicarious liability.   

Physicians and practices interested in discussing if and how vicarious liability is covered under their policy should contact their broker or MICA underwriter for more information.   

<sup>[1] See Fadely v. Encompass Health Valley of the Sun Rehab. Hosp., 253 Ariz. 515, 521 (App. 2022).

[2] See id. at 520.

[3] See id.

[4] See id. at 518.

[5] See id. at 520.

[6] See id. at 519.

[7] See id.

[8] See id.

[9] See id.

[10] See id.

[11] See id. 519-521.

[12] See id.</sup>