New Apparent Agency Case

On December 12, 2006, the First District issued a decision that will very likely have a significant and negative impact upon hospitals, where the hospital is sued for the conduct of non-employed physicians based on the apparent agency doctrine. In Schroeder v. Northwest Community Hospital, the trial court granted summary judgment in favor of Northwest Community Hospital. The First District has reversed that decision. Issue: whether there was sufficient evidence for a jury to find that the physician defendants were the apparent agents of Northwest Community Hospital (NWCH)?Relevant Facts: The patient/decedent sought care at NWCH for rheumatoid arthritis on three occasions. Each time the patient was admitted he or his wife initialed and signed a consent form. This one-page document contained six sections pertaining to (1) a general consent for treatment, (2) a disclosure statement, (3) a release of responsibility for valuables, (4) an assignment of insurance benefits, (5) a payment guarantee, (6) and an acknowledgment. Item 2 of the consent form, which was the subject of defendant's motion for summary judgment, states in pertinent part:“Item 2 disclosure Statement: Your care will be managed by your personal physician or other physicians who are not employed by Northwest Community Hospital or Northwest Community Day Surgery Center but have privileges to care for patients at this facility. Your physician's care is supported by a variety of individuals employed by Northwest Community Hospital or Northwest Community Day Surgery Center, including nurses, technicians and ancillary staff. Your physician may also decide to call in consultants who practice in other specialties and may be involved in your care. Like your physician, those consultants have privileges to care for patients at this facility, but are not employed by Northwest Community Hospital or Northwest Community Day Surgery Center.” Item 6 of the consent form entitled “Acknowledgment” reads: “Upon signing this form, I acknowledge that I have read and understood the foregoing and accept its terms.”Plaintiff argued: the evidence established a genuine issue of material fact that the defendant physicians were the apparent agents of NWCH. Plaintiff argued the universal consent form which she and decedent signed was “extremely confusing” and ambiguous because it did not state in a clear fashion that the doctors who would be caring for decedent were not hospital employees or agents, and it could reasonably be interpreted to mean that his personal physicians were employed by NWCH but the other unidentified physicians who might be involved in his care were not. Additionally, plaintiff argued the disclosure statement was “sandwiched” in between “small print” releases of medical records and consents for treatment, a release of responsibility for valuables, and an assignment of insurance benefits, all of which added to the confusion, and no meaningful effort was made by the hospital to ensure that plaintiff or decedent understood what was being disclosed to them.Holding/Reasoning: The Court stated: "there is evidence that decedent signed the consent forms during his first two hospitalizations, and plaintiff, his wife, signed a form during his third and final hospitalization. However, we believe the issue is not whether plaintiff was confused or led to believe by any actions on the part of Northwest that the physicians were its agents or employees but whether decedent was confused or misled by the disclosure forms and whether he perceived or believed the physicians were the agents or employees of Northwest. Obviously, if he knew or should have known that the defendant physicians were independent contractors, then the hospital is not liable. If, however, there is evidence that decedent reasonably believed his personal care physician and the consulting physicians were agents or employees of the hospital, a triable issue of fact exists and should be presented to a jury. We believe there is sufficient material evidence on this issue of apparent agency which should be submitted to the trier of fact, and that, therefore, summary judgment was inappropriate."Bottom Line: I believe this is a devastating decision for hospitals. I believe the Court gave lip service to the Gilbert decision and ultimately misapplied the principals set out in Gilbert and York.