State Supreme Court Holds That Hospital May Be Vicariously Liable on Theory of Apparent Authority for the Negligence of Independent Contractor

This appeal to the Minnesota Supreme Court involves a medical malpractice lawsuit brought against the hospital system, Allina Health System. The suit is based on the alleged negligence of independent contractors involved in providing care for a patient in the emergency rooms of two different hospitals owned by the hospital system. At issue is whether a hospital can be held vicariously liable for the negligence of an independent contractor based on the doctrine of apparent authority.

The state court of appeals affirmed the dismissal of the medical malpractice case on the ground that a hospital can be vicariously liable for a physician’s negligence only if the physician is an employee of the hospital. The Minnesota Supreme Court reversed and remanded the case for further disposition.

The plaintiff, Alla Popovich, brought this medical malpractice case as wife and guardian ad litem for her husband, Aleksandr Popovich, alleging that her husband suffered a stroke after receiving negligent medical care in the emergency room of two separate hospitals owned and operated by Allina Health System.

In the early morning hours of Feb. 9, 2016, Aleksandr Popovich, 38, went to the emergency room at Unity Hospital complaining of dizziness, loss of balance, blurry vision and trouble breathing. One of the doctors on duty ordered a computed tomography (CT) scan of his head, and a radiologist reviewed that scan. After spending approximately two hours in Unity Hospital’s emergency department, he returned home shortly before 7 a.m.

Later that morning, Popovich had trouble breathing and became unresponsive. An ambulance took him to the emergency room at Mercy Hospital, where he arrived at 11:16 a.m.

The doctor working in the emergency room ordered a second CT scan of Popovich’s head. The radiologist reviewed both the scan from Popovich’s first emergency visit at Unity Hospital and the second scan taken at Mercy Hospital. The radiologist identified abnormalities in the scans and noted swelling in Popovich’s brain; the swelling had increased since the first scan.

After more tests showed abnormality in Popovich’s brain, he was transferred to Abbott Northwestern Hospital for further care. He arrived there at 5:37 p.m. where a doctor diagnosed him with “dissection of the left proximal vertebral artery with thrombus.” Popovich suffered a stroke.

The stroke left him with irreversible brain damage. He spent several weeks in the hospital, followed by a month of in-patient rehabilitation. He cannot walk without assistance. He has very little use of his right arm and leg, and he has severe speech and cognitive impairments. He will need therapy and nursing care for the rest of his life due to his permanent disability.

Allina owns and operates both the hospitals where Popovich received treatment.

Alla Popovich sued Allina, Emergency Physician Professional Association (EPPA), and emergency room doctors for medical malpractice in the district court. Then she added a claim against Suburban Radiologic Consultants based on the alleged negligence of its employee, the unnamed radiologist who reviewed Popovich’s first CT scan at Unity Hospital.

Allina moved for dismissal of the amended complaint stating that it did not state a cause of action under the state law against the hospital based on negligence of independent contractors. The district court granted the motion to dismiss, ruling that a hospital is not vicariously liable for the acts of non-employees.

Popovich appealed but the divided appeals panel affirmed the dismissal against Allina. The majority held that the court of appeals’ prior decision in another state case foreclosed the vicarious liability claim against Allina. The case was then appealed to the Minnesota State Supreme Court.

The issue was whether hospitals should be exempt from vicarious liability where a plaintiff seeks to hold a hospital responsible for the medical negligence of an independent contractor based on the theory of apparent authority, which the Supreme Court found to be a case of first impression to be decided.

In reversing the lower court and the appellate court, the state supreme court ruled that there is a strong public policy argument in favor of applying apparent authority to hold hospitals vicariously liable for the negligence of independent contractors, as Popovich correctly observed in its briefs. “We have long recognized that the doctrine of apparent authority prevents businesses and individuals alike from placing ‘secret limitations’ on their ‘liability of the third persons’ for the acts or omissions of their agents.” Lindstrom v. Minnesota Liquid Fertilizer Co., 119 N.W. 2d 855, 862 (Minn. 1963).

A definition of apparent authority “is not actual authority; rather it is authority which the principal holds the agent out as possessing or knowingly permits the agent to assume.” Tullis v. Federated Mutual Insurance Co., 570 N.W. 2d 309, 313 (Minn. 1997). In its reversal, the state supreme court referred to Allina’s advertisements to “[o]ur board-certified emergency medicine physicians and skilled, caring nurses.”

Popovich alleged that Allina made representations “online, through physical advertising, through signage, and in other ways” that both its Unity Hospital and its Mercy Hospital “had a fully staffed emergency department, capable of providing emergency services twenty-four hours a day, 365 days a year.” Allina also represented to the public that “a full-time radiologist is on staff” in the emergency department of Unity Hospital. Such statements to the public are similar to the “general and implied” representations that other courts have found to satisfy the element of holding out in claims against hospitals based on apparent authority.

The second element, “reliance,” focuses on the beliefs of patients and considers whether the patient looked to the hospital, rather than to a particular doctor, to provide care. Specifically, the fact-finder should determine if the plaintiff relied on the hospital to select the physician and other medical professionals to provide the necessary services. This reliance standard reflects the reality that most people who go to the emergency room do not know which medical professionals will treat them once they arrive. Instead, they rely on the hospital to select the professionals for them. That is precisely what happened here — Allina assigned the doctors who provided care to Popovich. The amended complaint specifically alleged that Popovich went to Unity Hospital seeking emergency medical care and relied on the hospital to provide “an appropriate health care provider.”

Accordingly, the state supreme court held that plaintiff stated a vicarious liability claim against the hospital for professional negligence of independent contractors in the hospital’s emergency room based on a theory of apparent authority if (1) the hospital held itself out as a provider of emergency medical care; and (2) the patient looked to the hospital, rather than a specific doctor, for care and relied on the hospital to select the personnel to provide services.

The Supreme Court thus reversed the decision of the Court of Appeals and remanded the case to the district court for further proceedings consistent with the opinion. Reversed and remanded.

Alla K. Popovich, et al. v. Allina Health System and Emergency Physicians Professional Association, et al.
, Supreme Court of Minnesota, A18-1987 (July 29, 2020).

Kreisman Law Offices has been handling emergency negligence lawsuits, hospital negligence lawsuits, physician negligence cases and wrongful death lawsuits for individuals, families and loved ones who have been harmed, injured or died as a result of the carelessness or negligence of a medical provider for more than 40 years in and around Chicago, Cook County and its surrounding areas, including Addison, Elk Grove Village, Hoffman Estates, Morton Grove, Prospect Heights, Arlington Heights, Barrington, Buffalo Grove, Lincolnshire, Deerfield, Mettawa, Vernon Hills, Mundelein, Hawthorne Woods, Lake Zurich, Mount Prospect, Des Plaines, Rosemont, Norridge, Oak Lawn, Cicero, Joliet, Romeoville, Bolingbrook, Bedford Park, Alsip, South Holland, Markham, Oak Forest, Country Club Hills, Tinley Park, Orland Hills, Chicago (Washington Heights, Calumet Heights, Greater Grand Crossing, Chicago Lawn, Marquette Park, Garfield Ridge, Archer Heights, Brighton Park, Little Village, East Garfield Park, River North, Old Town, Bucktown, Roscoe Village, Beverly, Bronzeville, Rogers Park, Sauganash, Wildwood, Jefferson Park, Mont Clare, Austin, Pullman, Morgan Park, Roseland, Mount Greenwood, Palos Heights, Chicago Ridge, Hickory Hills, LaGrange, Justice and Countryside, Ill.

Robert D. Kreisman has been an active member of the Illinois and Missouri bars since 1976.

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