Vicarious liability and non delegable duty of Hospitals

     Vicarious liability and non delegable duty of Hospitals

                                              Dr KS Dhillon LLM

What is vicarious liability?

Hospitals can be legally liable to patients for injury under two circumstances. The first is where the injury is due to negligence of the hospital itself and is referred to as corporate negligence. The second is based upon the doctrine of respondeat superior. Corporate negligence can be due to using defective equipment, negligence in the selection or retention of incompetent personnel, or the failure to properly maintain the buildings and grounds.

The second type of liability is called vicarious liability. Vicarious liability is where A is held responsible for the wrongful or negligent act of B committed against C when A himself had no part in B's conduct.

The doctrine of respondeat superior simply means, "let the master answer" and it makes the master liable for the wrongs committed by his servant while furthering the master's business. The applicability of the respondeat superior will depend on the type of employment relationship which exists between the hospital and the person responsible for causing injury to the patient. The employment relationship can be that of either master-servant, principal-agent, or employer- independent contractor.
Hospitals in Malaysia are government owned or are privately owned for profit institutions or are privately owned by non-profit organizations.

Employment relationship

As a matter of law an employment relationship may be that of ‘principal-agent, master-servant, or employer-independent contractor’[1]. The respondeat superior doctrine holds that the principal/master is liable for third party injuries caused by his agent or servant. Employers are hence vicariously liable for the torts of their employees which were committed during the course of the employment.

Two conditions must be fulfilled for such liability to arise, first there has to be a particular relationship between the employer and his/her employee. Secondly the tort committed must be committed in the course of the employment [2].

The finding of liability is not based on any improper action by the employer. The employer liability exists irrespective of the employer having acted reasonably in hiring, training, supervising, and retaining the employee [3]. The underlying premise of the doctrine of respondeat superior is that in the conduct of any business, any tort committed should be borne by that enterprise as a cost of doing business (4).

There appears to be no precise unanimity between judges (or between academics) about the rationale of the doctrine of vicarious liability.

The main justifications usually advanced by the judges in case law appears to be that of loss distribution and enterprise liability [5].
The basis of loss distribution is that the loss is passed on to the 2nd defendant (D2) who is more able to bear the loss as compared to the 1st defendant (D1). D2 is usually insured against such loss and is often able to pass on the cost to buyers or users of the services provided by D2.

Enterprise liability justifications on the other hand are based on the idea that when there are benefits in an enterprise there has to be some losses and the enterprise should be able to absorb those losses.

Vicarious Liability in Medical Care

Tortious act of an employee of a hospital or a doctor can make the hospital or the doctor vicariously liable for a claim. The employees could include physicians, nurses, laboratory staff, imaging and other technicians, clinic nurse assistants, administrative and other staff members. Since the employer can be held vicariously liable, it is crucial for the employer to make sure that the employees are well qualified and have the right credentials to perform their job.

An employer-employee relationship exists when the employer has the
 “right of control” over the employee [3]. Right of control means the employer has the ability to control the way in which the employee performs his/her job.

Contract for services (independent contractor).

An independent contractor is defined as "one who exercises some independent calling, occupation, or employment, in the course of which he undertakes, supplying his own materials, servants, and equipment, to accomplish a certain result, not being subject while doing so to the direction and control of his employer, but being responsible to his employer for the end to be achieved, and not for the means by which he accomplished it.''[6].

The basic principle of vicarious liability has been that whilst one may be vicariously liable for wrong committed by an employee, one is not vicariously liable for the wrongs committed by an independent contractor [7]. The agreement between the two parties determines  whether a person is an employee or an independent contractor. When the agreement is a contract of service than the relationship is that of an employer and employee and when the contract is for services, than the person providing the services is an independent contractor.

Unlike in employer-employee relationship where the employer has the right of control, in an employer-independent contractor relationship no right of control exists. Hence the doctrine of respondeat superior does not apply when the person employed is an independent contractor. Independent contractors usually have independent businesses, and are hired solely to perform specific tasks for which they are paid “by the job” (8). Independent contractors usually have “sole control over the means and methods of the work to be accomplished” (3).

“Sole control” is only one of the factors which determine the type of relationship and it is not determinative of whether a person is an employee or independent contractor. This is especially true in the medical setting where employed doctors, residents and medical faculty, exercise independent medical judgment in treating their patients (9).

In some situations the employment contract specifically states that the hired party is an independent contractor and in such situations the doctrine of respondeat superior does not apply. In some situations the contract may show an employer and “independent contractor” relationship but in reality
the contract's characterization of the relationship maybe a mere sham to avoid  the employer’s liability under the doctrine of respondeat superior (10).

Under certain circumstances even when an employer hires an independent contractor, the employer can be held responsible for the tortious conduct of the independent contractor. This has been variously referred to as ostensible agency, agency by estoppel, apparent agency, and also apparent authority (11).

The basis for imposing such liability on the employer of an independent contractor is that the employer has done something to give the impression or led the 3rd party to believe that the independent contractor is an employee [11].

Vicarious Liability in Malaysia

In Malaysia all doctors and paramedical staff working in public health institutions are employees of the government. Hence there is an employer and employee relationship which would make the government vicariously liable for any tort committed by the doctors and other paramedical staff.
Section 34B of the Medical Act 1971 also gives protection to non government practitioners while attending to patients at the request of or by arrangement with the Government. The Act makes the government vicariously liable for any tort committed by these practitioners in line of their duty.
The owners and operators of private hospitals are also vicariously liable for the negligence of doctors and paramedical staff employed by them and are practicing at their facilities. These employees are paid a salary and the hospital has control over the type of work they do and the hours they work at the facility. This element of control establishes their employer-employee relationship where the doctrine of respondeat superior applies. Despite the vicarious liability of the employer, the doctor nevertheless remains primarily liable for his/her actions. The existence of an impaired practitioner at the private health care facility will also make the party in charge of the facility vicariously liable for any tort committed by the impaired practitioner.

The basic principle of vicarious liability is that whilst one may be vicariously liable for an employee’s wrong, one is not vicariously liable for the wrongs of an independent contractor.
The definition of an independent contractor has been a problem. One of the most comprehensive definition enunciated in 1923 is one which says that an independent contractor is "one who exercises some independent calling, occupation, or employment, in the course of which he undertakes, supplying his own materials, servants, and equipment, to accomplish a certain result, not being subject while doing so to the direction and control of his employer, but being responsible to his employer for the end to be achieved, and not for the means by which he accomplished
it.''[6].

Although specialists working in private hospitals in Malaysia are labelled as independent contractors in their contract with the hospital, the doctors do not have their own set up for the treatment, management and care of the patients. They are not at liberty to charge what they like. The charges are controlled by the hospital. The hospital controls the flow of patients to the doctors. The doctors do not own the clinic where they work. The staff working in the clinic are employees of the hospital. They do not own any material used and they do not hire any staff who are working with them in the hospital. Hence the specialist do not fit the definition of independent contractors. Therefore specialist working in private hospitals are neither employees nor independent contractors. The hospitals, therefore, cannot be held vicarious liable for torts committed by the specialists.

The boundaries of vicarious liability have over time been expanded by court decisions to embrace tortfeasors who are not employees of the defendant, but stand in a relationship which is sufficiently similar to employment [12].

The Courts in Malaysia have adapted the doctrine of non-delegable duty of care as expounded in Woodland v Swimming Teachers Association and others [2014] AC 537, when dealing with torts committed by specialists in private hospitals [13].

In Malaysia, the concept of a non-delegable duty was first applied in Datuk Bandar Dewan Bandaraya Kuala Lumpur v Ong Kok Peng & Anor [1993] 2 MLJ 234 in the context of extra-hazardous operations. The Supreme Court than explained that a non-delegable duty of care requires the defendant who engages a contractor to make sure  that duty of care is exercised by the contractor, otherwise he would be equally liable as the contractor. In the law of negligence there is positive duty to protect another from harm. Whenever there is a special relationship between the plaintiff and the defendant, there is a positive duty to guard against harm caused by a third party. This is true for the relationship between the patient and the private health care facility.

Many have erroneously considered non-delegable duties as a kind of vicarious liability. This, however, is a misconception. The effect of these two doctrines is similar where liability is imposed on the defendant for the an injury caused to the plaintiff as a result of the negligence of another party (the tortfeasor).

The nature and basis of non-delegable duties and vicarious liability are distinct. In the former personal liability is imposed on the defendant for the breach of his own duty towards the plaintiff, regardless of who the defendant has engaged to perform the task. The latter on the other hand imposes vicarious liability on the defendant for the employee’s breach of duty towards the plaintiff [13]. Hence personal liability is imposed on all  private hospitals on the basis of non delegable whenever a tort is committed by the doctors on a patient who walks into the hospital.

Some doctors on the other hand are “truly independent contractors” and no liability exists in the form of vicarious liability or non delegable duty for the hospital, when such doctors commit a tort.  These are doctors who have their independent premises outside a private hospital, where they attract and treat patients but they use the operating facilities of the private hospital. In such situations the doctors medical services are not integrated into or conducted on behalf of the hospital and the plaintiff selects the surgeon to provide the medical services and the Hospital has no say as to what the doctor does in its premises. In these situations the liability for the Plaintiff’s injuries rests solely with the doctor [13].

References

1. Southwick SF. Vicarious Liability of Hospitals. Marq. L. Rev. 1960; Vol 44 (2): 153-182 .
2. Cooke, J. (2009). Law of Tort. (9thed.). England: Pearson Education Ltd. 
3. St Joseph Hosp v Wolff, 94 SW3d 513, 541–42 (Tex 2002); Baptist Mem'l Hosp Sys v Sampson, 969 SW2d 945, 947 (Tex 1998).
4. Wolff, 94 SW3d at 540.
5. Morgan P. Recasting vicarious liability. The Cambridge Law Journal. 2012; 71: 615-­650.
6. Mechen, Agency, p. 13, §20 (3rd ed. 1923).
7. D & F Estates Ltd v Church Commissioners [1989] A.C. 177, 208. C.f. Winfield and Jolowicz on Tort, pp. 948–9.
8. Limestone Products Distributor Inc v McNamara, 71 SW3d 308, 312 (Tex 2002).
9. Murk v Scheele, 120 SW3d 865, 866 (Tex 2003); Miers v Texas A&M University System Health Science Center, 2009 Tex App LEXIS 9818 *10–11 (Tex App—Waco) (Dec. 30, 2009).
10. Newspapers Inc v Love, 380 SW2d 582, 588–90 (Tex 1964).
11. Sampson (Tex 1998), 969 SW2d at 948 n2.
12. Various Claimants v Catholic Child Welfare Society [2012] UKSC 56, [2013] 1 All ER 670, [2013] 2 AC 1.
13. Soo Cheng Lin v Dr kok Choong Seng and Sunway medical Centre Berhad In The Federal Court of Malaysia (Appellate Jurisdiction) Civil Appeal No: 02(f)-58-08/2016(B).