Cordero v. Christ Hospital Opens A Can Of Worms
A decision by the Appellate Division of the Superior Court of New Jersey last week will raise more questions than it answered in malpractice cases involving hospital based physicians. In Cordero v. Christ Hospital, covered by the New Jersey Lawyer here, the Court considered whether a Hospital could be held vicariously liable for the malpractice of a member of the anesthesiology group having an independent contractor relationship with that Hospital. The Court held that:
"...when a hospital provides a doctor for a patient and the totality of the circumstances created by the hospital's action and inaction would lead a patient to reasonably believe the doctor's care is rendered in behalf of the hospital, the hospital has held out that doctor as its agent. We also hold that when a hospital patient accepts a doctor's care under such circumstances, the patient's acceptance in the reasonable belief the doctor is rendering treatment in behalf of the hospital may be presumed unless rebutted."
In delineating "the relevant circumstances that should be considered in their totality in determining whether the hospital's conduct would lead a patient in the same situation to reasonably believe that the doctor acts on the hospital's behalf," the Court pointed to the following:
- whether the hospital supplied the doctor
- whether the medical care provided is integral to the medical treatment received in the hospital
- any notice of the doctor's independence from the hospital
- the patient's opportunity to reject the care or select a different doctor
- the patient's contacts with the doctor before the incident in question, and
- any special knowledge of the doctor's contractual arrangement with the hospital
Applying these criteria to most hospital based physicians who provide services as independent contractors under an exclusive group contract (e.g., anesthesiologists, radiologists, pathologists, emergency medicine), the predominant model nationwide, few would escape characterization as acting "in behalf of the hospital."
The Court's opinion disregards the reality of current hospital operations. For reasons of efficiency and patient safety, hospitals have established exclusive independent contractor relationships with groups of specialists in key areas that are integral to the effective operation of the hospital. Such arrangements have been approved consistently by state and federal courts in the context of unfair competition and antitrust lawsuits. Without such exclusive arrangements, key services would be provided by a disjointed and unreliable collection of separate physicians - a result that would no doubt lead to another decision holding a hospital liable for failure to implement a safer system!
The Court's opinion also falsely assumes that hospitalized patients might make a different decision (i.e., that they might decline treatment) if they understood that hospital based physicians were "independent" from the hospital. Clearly, they would not, and there would be no reason for them to do so. The idea that patients accept the services of contracted hospital based physicians only because they believe the physicians are "provided in behalf of the hospital" is a fiction.
Assuming hospitals will not abandon the current model of exclusive contracts with hospital based groups, compliance with the Court's opinion will be difficult. However, unless and until this opinion is reversed, hospitals in New Jersey would be well advised to implement measures which at least nominally address some of the factors identified by the Court. Admission forms should be reviewed to emphasize the independence of all non-employee physicians, including the hospital based specialists (and disclaiming hospital liability for their acts); patients also could receive a standard notice whenever they are likely to utilize a hospital based physician advising the patient of the independent contractor relationship. All of this will add expense and paperwork, and will likely have no effect on the patients' decisions or their care, but may save the hospital from significant liability exposure.
The settlement of malpractice cases in New Jersey involving hospital based physicians will now be more difficult. Greater risk has been created that hospitals will be held responsible for the acts of heretofore "independent" physicians. All of the elements identified by the Court in Cordero v. Christ Hospital will take on new significance. Hospital statutory immunities and insurance coverage issues undoubtedly will require clarification in this regard as well. The mediator's job just got more interesting.
From a societal perspective, the movement of physicians from the very autonomous model of 40 years ago, to the more prevalent role of employee or “exclusive independent contractor” model today is not unlike what happened to engineers at the end of the 1800’s. At the end of the US Civil War, engineers were generally independent individuals developing solutions to problems for individual clients on an individual basis. As the Industrial Revolution blossomed into the Robber Barron era, engineers were caught up in the social change by losing the autonomy of their professionalism. They became employees of large enterprises.
These enterprises were frequently not directed by professional engineers, and they hired employees of many diverse skill sets. Many of these diversely skilled employees were quite removed from the engineering profession, even though their business relied critically on the engineers’ ability to design new products and design the systems to fabricate them. These organizations were frequently involved in activities that were far removed from the engineers, e.g., marketing, yet intimately tied to the products the engineers designed. Prior to the Robber Barron era, this separation did not occur – the engineer marketed himself, and inherently self-limited the scope of representations. Over time these large organizations, either expressly or impliedly, spoke for the engineer, but without the engineers’ professional understanding. This structure, while efficient for the organization, circumvented an important feedback mechanism between the engineer and the client, who became a customer, and eventually just a consumer as the engineer became an exclusive independent contractor producing work for hire, and then eventually just an employee. Naturally, as the organization model expanded, the enterprises became skilled at maximizing revenues by expanding markets for products, including new uses for existing products, and reducing costs, including costs for engineer negligence in product design and fabrication. In this latter case, initial efforts by enterprises at utilizing older legal tenets to deflect suits against their deeper pockets toward the individual engineers were quite effective. Over time however, as more separation of benefit and accountability occurred, and less economic feedback to the enterprise from unsafe designs occurred, the natural application of old legal rules became suspect.
As the legal jurisprudence began to address the needs of the social change, new theories of liability developed to re-assert an appropriate feedback mechanism so that the free-market capitalistic strengths of the enterprise would be unleashed for the benefit of society by inducing the enterprise to become as efficient as possible at producing profitable safe products, not just profitable products. This was an evolution in the law from the negligence standard applied to individual engineers to a strict product liability standard applied to the organizations that prospered from their employment of engineers’ labors. This caused the enterprises to actually prosper to an even greater extent as they developed systems to assure safety that enhanced consumer confidence and purchases making introduction of new products less risky and more successful. Today, we accept strict product liability as the norm – even in medical cases. Today, for example, there would be no questioning whether the fabrication process for a particular bandage that permitted non-sterile contamination to occur was negligent or not. The resultant contaminated bandage is the liability for the manufacturer.
I believe we are seeing the initial steps in changing the jurisprudence for medical malpractice (medical negligence) from one focused on individual negligence to a system of enterprise accountability, which I expect, like product liability, will eventually be more strict than negligence based. This case is just a small result of that broader change in medical jurisprudence that is an inevitable result of the medical industry restructuring.