Handing Business Card to Patient Found Insufficient Notice in Hospital Malpractice Lawsuit for Hospital to Avoid Liability for Anesthesiologist’s Actions Under Apparent Agency In Spite of Independent Contractor Relationship

Delivery of a business card to a patient during registration for a surgical procedure does not itself, as a matter of law, constitute meaningful written notice, acknowledged at the time of admission, to a patient that a physician is an independent contractor for which a hospital has no liability arising out of the doctor’s alleged malpractice. This is what the Indiana Court of Appeals recently held in the case of Jernagan v. Indiana Univ. Health.

Richard Jernagan (“Jernagan”) underwent spine surgery at IU Health North Hospital. The anesthesiologist was Dr. Michael Miller, a partner with Anesthesia Consultants of Indianapolis. Prior to the procedure, an IU Health guest relations representative, Mary Mosby (“Mosby”), registered Jernagan and gave Jernagan Dr. Miller’s business card, which stated Dr. Miller’s name, employer, and contact information. Mosby did not tell Jernagan Dr. Miller was an independent contractor and not an employee of the hospital. During the surgery, Jernagan suffered a cardiac arrest requiring resuscitation and admission to the ICU due to a sudden drop in blood pressure and significant blood loss. Jernagan filed a lawsuit against the surgeon and the hospital. A medical review panel found no malpractice on behalf of the named defendants and did not address the conduct of Dr. Miller, who had not been named in the lawsuit. After the hospital filed a second motion for summary judgment, Jernagan filed an expert affidavit as to Dr. Miller and argued the hospital was vicariously liable for his conduct based upon apparent agency pursuant to Sword v. NKC Hospitals, Inc. The trial court granted the hospital’s motion and Jernagan appealed.

The Court of Appeals first resolved a procedural issue concerning the timeliness of Jernagan’s response to the hospital’s motion for summary judgment. There had been an agreement for an extension of time reached between Jernagan and the hospital as noted on an entry to the Chronological Case Summary (CCS) with defense counsel directed to circulate an order regarding the summary judgment deadline. Indiana law has a bright-line rule that, unless a party responds to a motion for summary judgment within the applicable timeframe or requests an extension, a trial court has no discretion to alter the time limits for a response. The Court of Appeals agreed with the trial court’s analysis that the CCS entry’s direction that defense counsel circulate an order was meant to separately express the order stated in the CCS entry, and with Jernagan having requested an extension, which was granted by the trial court, Jernagan’s response was timely.

As to the merits of the appeal, the hospital argued that it could not be held responsible for any negligence of Dr. Miller because he was not an employee but an independent contractor of the hospital. To determine apparent agency in the hospital setting, the Indiana Supreme Court in Sword adopted Restatement (Second) of Torts § 429, which provides that “one who employs an independent contractor to perform services for another which are accepted in the reasonable belief that the services are being rendered by the employer or by his servants, is subject to liability for physical harm caused by the negligence of the contractor in supplying such services, to the same extent as though the employer were supplying them himself or by his servants.” Restatement (Second) of Torts § 429. As discussed by the Indiana Supreme Court in Sword, the question for the trier of fact is on the reasonableness of the patient’s belief that a hospital or its employees were rendering healthcare, taking into account the totality of the circumstances, including the actions of the hospital and any special knowledge of the patient as to the hospital’s arrangements with its physicians. The Indiana Supreme Court in Sword concluded that a hospital will generally be able to avoid liability in a medical malpractice lawsuit under apparent agency by providing meaningful written notice to the patient, acknowledged at the time of admission, that it is not the provider of care and that the care is being provided by an independent contractor not subject to the control and supervision of the hospital.

The Indiana Court of Appeals in Helms v. Rudicel relied upon Sword in finding there was a genuine issue of material fact as to whether a health clinic’s consent form stating “many” of the clinic’s physicians were independent contractors constituted meaningful written notice. Similarly, in Ford v. Jawaid, the Indiana Court of Appeals found a genuine issue of material fact as to whether meaningful written notice was provided when a hospital’s consent form stated the healthcare professionals providing care “may be independent contractors.” Here, the Indiana Court of Appeals found merely giving Jernagan a business card at check-in, without more, did not establish, as a matter of law, meaningful written notice to him, acknowledged at the time of admission, that Dr. Miller was an independent contractor of the hospital. The hospital’s actual consent form did not characterize Dr. Miller as an independent contractor or even indicate a possibility that he may not have been an employee of the hospital. Therefore, the Court held there was a genuine issue of material fact as to whether the business card given to Jernagan was meaningful written notice to him, acknowledged at the time of admission, that Dr. Miller was an independent contractor.

The hospital also argued Jernagan should be barred from asserting vicarious liability of the hospital as to Dr. Miller because Jernangan did not name Dr. Miller in his proposed complaint. However, the Indiana Court of Appeals concluded Jernagan did not need to file a proposed complaint against Dr. Miller prior to commencing a vicarious liability claim against the hospital. In so finding, the Court noted Helms and Columbus Regional Hosp. v. Amburgey, which allowed apparent agency claims to proceed against a principal despite the running of the statute of limitations as to immune or non-named providers where no judgment had been entered regarding their alleged negligence.

You can read the full opinion here.