Eads v. Borman
Eads v. Borman
Opinion of the Court
Plaintiff underwent surgery performed by a physician whose office was in a building that defendant, a limited liability company (LLC), leased to medical providers.
We granted plaintiffs petition for review to resolve when a nonnegligent person or entity may be held vicariously liable on an apparent agency theory for physical injuries negligently inflicted by a medical professional. We conclude that, for such liability to arise, the injured party must have dealt with the negligent medical professional based on a reasonable belief, traceable to the putative principal’s conduct or representations, that the medical professional was the principal’s employee or was otherwise subject to the principal’s right of control in providing the medical services that caused the injured party’s injury. As we will explain, the record in this case was insufficient to permit a jury to find the LLC vicariously liable for the surgeon’s negligence on that basis. We therefore affirm the judgment of the trial court and the decision of the Court of Appeals.
BACKGROUND
We review the record in the light most favorable to plaintiff, as the party opposing the motion for summary
The names of the various medical provider tenants were listed near the door into the office building. Some of the providers were themselves limited liability companies, held themselves out as such, and incorporated the words “Willamette Spine Center” into their professional names (i.e., “Willamette Spine Center Ambulatory Surgery, LLC” and “Willamette Spine Center Physical Therapy and Rehabilitation, LLC”). Other medical providers used their individual names only, without any reference to Willamette Spine Center. Although the LLC landlord did not require it, all or many of the tenants used business cards that included “Willamette Spine Center” and the WSC logo on them, either at the top of the card or as part of their office address. Their business cards then listed their names, professional credentials and specialty areas, and contact information. The contact information, such as phone numbers and e-mail addresses, differed among the various providers in the building.
One of the professionals who leased office space in the building was Dr. Freeman, a chiropractor who was also one of three members (i.e., owners) of the LLC landlord. Plaintiff had become acquainted with Freeman through plaintiffs work as a manager at a Starbucks coffee shop. From their conversations at the coffee shop, plaintiff knew that Freeman was a chiropractor and knew that he was “affiliated” with the Willamette Spine Center. Freeman, in turn,
Borman was a tenant in the Willamette Spine Center building pursuant to an “association agreement” with Dr. Tiley, a physician who leased office space directly from the LLC. Through that association agreement, and with the LLC’s knowledge and approval, Borman subleased space from Tiley. The two shared common areas (e.g., exam rooms, patient waiting rooms), while maintaining separate staff and separate professional offices. Borman’s business cards had “Willamette Spine Center” and the WSC logo printed at the top. Printed below those words and logo was Borman’s name, his credentials and specialty, and his individual e-mail and phone contact information. Borman’s letterhead did not have ‘Willamette Spine Center” or the WSC logo printed on it. All charges to Borman’s patients were billed to Borman’s individual professional accounts and processed through Borman’s own office staff.
Plaintiff saw Borman at his office in the Willamette Spine Center building in August 2003. As part of his consultation with Borman, plaintiff filled out an “Initial Patient Health History” on a form that had only Borman’s name printed on it, without any reference to Willamette Spine Center. Plaintiff, however, thought that all the tenants in the building where Freeman and Borman had their offices were “affiliated” with “the Willamette Spine Center.” In particular, based on the fact that Borman’s office was in the Willamette Spine Center building, plaintiff thought that
Borman determined that surgery was appropriate for plaintiff, and plaintiff decided to have that surgery. In September 2003, Borman performed two surgeries on plaintiff that caused him permanent and disabling injuries. Both surgeries were performed in a local hospital, not in the Willamette Spine Center building.
Plaintiff brought this malpractice action against the LLC,
The LLC moved for summary judgment, arguing that its activities and representations provided no basis for it to be held vicariously liable for Borman’s negligence. In particular, the LLC urged that the evidence did not permit a jury to find that the LLC had promoted itself as some form of group medical entity or held out Willamette Spine Center to be such an entity, as opposed to a professional office building for which the LLC was the landlord. The LLC also urged that no evidence established that the LLC had held Borman out as its agent. According to the LLC, to whatever extent plaintiff had relied on representations made by anyone other than the LLC that Borman was an agent of the LLC, those representations could not serve as a basis on which the LLC could be vicariously liable for Borman’s negligence.
On review, although their arguments have become more refined, the parties largely renew the positions that they advanced to the trial court and to the Court of Appeals. They focus their arguments less on the applicable legal principles and more on how those legal principles apply in this specific context — viz., a malpractice action seeking to hold another person or entity (here, the LLC) vicariously liable for injuries caused by a physician’s negligence. We begin by outlining the principles that control the legal analysis. We then turn to the record in this case and whether the evidence created a jury question on the LLC’s liability.
APPLICABLE LEGAL PRINCIPLES
The LLC’s potential vicarious liability for Borman’s negligent surgery requires consideration of two lines of settled agency law. The first identifies when a putative principal can be held responsible for the acts of another on an apparent agency theory. The second identifies when a principal can be held liable for the physical torts of an agent, actual or apparent.
Classically, an agency relationship “ 'results from the manifestation of consent by one person to another that the other shall act on behalf and subject to his control, and consent by the other so to act.’ ” Vaughn v. First Transit, Inc., 346 Or 128, 135, 206 P3d 181 (2009) (emphasis in Vaughn
In this case, plaintiff proceeds on a theory that Borman appeared to have authority to act as the LLC’s agent, not that Borman had actual authority to do so.
As to the second key element — reliance—the third party, in deciding to deal with the apparent agent, must in fact rely on the principal’s representation, and that reliance must be objectively reasonable. Jones, 274 Or at 595-96; see also Badger, 311 Or at 26 (describing reasonable reliance by plaintiff). In assessing the reasonableness of the reliance, the analysis is influenced by what is customary and usual for certain positions or within certain professions. See id. at 24 n 9 (generally recognized duties of a position can influence appearance of authority to act as agent (quoting with approval Restatement (Second) of Agency § 27, comment a at 104 (1958))).
“Distinguishing between employees and agents who are not employees is important for vicarious liability purposes, because a principal’s liability for the torts of its agents varies based upon the type of agent. In general, a principal is liable for all torts committed by its employees while acting within the scope of their employment. Minnis [v. Oregon Mutual Ins. Co., 334 Or 191, 201, 48 P3d 137 (2002)]. But a principal ordinarily is not liable in tort for physical injuries caused by the actions of its agents who are not employees. Jensen v. Medley, 336 Or 222, 230, 82 P3d 149 (2003). Rather, a principal is vicariously liable for an act of its nonemployee agent only if the principal ‘intended’ or ‘authorized the result [ ]or the manner of performance of that act.’ Restatement (Second) § 250; see also Jensen, 336 Or at 231 (principal liable for acts of nonservant agents only if those acts ‘within the actual or apparent authorization of the principal’). In other words, for a principal to be vicariously liable for the negligence of its nonemployee agents, there ordinarily must be a connection between the principal’s ‘right to control’ the agent’s actions and the specific conduct giving rise to the tort claim.”
Consequently, although a principal can be vicariously liable for the negligence of an agent who is not an employee, such liability arises only if the principal actually or apparently had a right of control over the agent’s injury-causing actions “similar to the control that an employer exercises over an employee[.]” Vaughn, 346 Or at 139.
VICARIOUS LIABILITY — MEDICAL MALPRACTICE
This court has not previously addressed whether and under what circumstances vicarious liability for a physician’s malpractice can be imputed to a putative principal on an apparent agency theory. Where the agency principles that we have outlined are satisfied, however, there is no reason why vicarious liability should not attach. The more significant question is how those tests should apply in the context of professional malpractice and, in particular, what must be shown to satisfy the requirement that a putative principal have a right — or an apparent right — of control over the tor-tious conduct of a medical professional. Because other courts have grappled extensively with vicarious liability in this context, we turn to the developed body of case law in other jurisdictions, which we consider helpful to our analysis.
Until recent decades, the requirement that the principal have a right (or apparent right) of control over an agent’s injury-causing conduct has precluded vicarious liability for the malpractice of physicians and similar professionals. Traditionally, courts reasoned that medical professionals, because of the skill and judgment they exercised, were not subject either legally or practically to sufficient control by other persons or entities to expose those persons or entities to
That thinking has given way, almost universally, to the recognition that entities that employ physicians both can, and in fact do, significantly control the overall delivery of medical services by such professionals, even if the entity does not direct a professional’s discrete actions in treating individual patients. Hospitals are prime examples. Modern-day hospitals no longer are mere situses for medical services, as they once were, but instead are direct providers of medical care. Sword v. NKC Hosp., Inc., 714 NE2d 142, 151 (Ind 1999) (so observing; citing other authorities). In that changed role, hospitals regularly employ “a large staff of physicians, nurses and interns, as well as administrative and manual workers, and they charge patients for medical care and treatment[.]” Bing, 2 NY2d at 666. To ensure the quality of the medical services that they offer and provide, hospitals supervise and direct the general manner in which their employees deliver medical services on their behalf through such means as “hiring criteria, training, formal practice guidelines, hierarchical supervision structures, peer review groups and disciplinary measures.” Harris v. Miller, 335 NC 379, 390, 438 SE2d 731 (1994) (footnote omitted; citing authorities).
A question left unanswered by those holdings has been whether a hospital or other entity can be held vicariously liable for a physician’s malpractice on an apparent agency theory. The issue has arisen most commonly in circumstances where a hospital or other entity retains physicians as independent contractors, rather than as employees, and then offers and delivers medical services on its own behalf through those independent contractors. Most jurisdictions considering vicarious liability in that context have concluded that “liability for a doctor’s negligence should be imputed to a [putative principal] when apparent authority, as defined in that jurisdiction, is established.” Estate of Cordero v. Christ Hosp., 403 NJ Super 306, 313, 958 A2d 101 (2008) (so observing in hospital context; citing representative cases); see generally Kashishian v. Port, 167 Wis 2d 24, 42-44, 481 NW2d 277 (1992) (characterizing vicarious liability for hospitals on apparent agency theory as a “growing trend”; citing cases). Drawing from familiar agency principles, courts typically have focused on two requirements as keys to imposing vicarious tort liability for a physician’s malpractice on an apparent agency theory: first, whether the putative principal (such as a hospital) “held out” the physician as an employee or other agent to deliver medical services on the principal’s behalf and subject to the principal’s oversight or other control; second, whether the injured plaintiff reasonably
Cases involving hospitals have presented circumstances that most commonly have given rise to a basis for a finding of vicarious liability on an apparent agency theory. For the “holding out” element, the cases have “almost invariably” looked to the fact that modern-day hospitals are engaged in directly providing medical care and services, rather than merely providing a situs where medical professionals do so in furtherance of their individual medical practices. As part of their changed role as direct health care providers, hospitals are now run like businesses and promote themselves based on the superior quality of the health care they offer. See, e.g., Kashishian, 167 Wis 2d at 41-44 (so observing; citing cases and authorities). To that end, hospitals pervasively engage in sophisticated advertising and public relations campaigns designed to compete with other facilities and providers, and to attract the patronage of the public in the communities that they serve. Id. at 38 (describing hospitals as spending “billions” to nurture their images as full care health facilities). Even without commercial advertising, hospitals cultivate “high visibility” in their communities to present themselves as “vital to community health” rather than as mere facilities in which private physicians practice their professions. See Hannola v. City of Lakewood, 68 Ohio App 2d 61, 66, 426 NE2d 1187 (1980) (describing how hospitals promote themselves as direct medical providers of quality care through fund-raising campaigns, community relations programs, public service programs, press releases, and the like). In effect, hospitals invite the public to rely on their competence in the delivery of at least certain kinds of health care services. Through that “holding out,” a hospital cultivates an image that causes the public to assume, “correctly or not, that the hospital exerts some measure of control over the medical activities” integral to the hospital setting. Id. at 66
With regard to the second element — reasonable reliance — the cases have focused on whether the plaintiff looked to and relied on the hospital as the direct provider of the medical services rendered. The fact that the patient relies on the reputation of the hospital itself as a care provider, and does not make an “independent selection as to which physicians” the patient will obtain care from, provides the factual basis for the reliance needed for the apparent authority analysis. Pamperin, 144 Wis 2d at 205-12 (internal quotation marks omitted) (discussing cases and so holding); see also Estate of Cordero, 403 NJ Super at 318-19 (canvassing cases and holding that reliance could be found based on fact that patient looked to hospital for care and physician was chosen by hospital). Conversely, the mere fact that medical services are provided on a hospital’s premises is not enough to create vicarious liability. For example, if a patient seeks medical services from a physician who has staff privileges at a hospital and who uses the hospital merely as the situs for the physician’s own medical practice, the necessary reliance on the hospital as a direct provider of care is lacking. See Houghland v. Grant, 119 NM 422, 428-29, 891 P2d 563 (1995) (comparing physicians who contract to provide services on behalf of hospital to physicians with staff privileges engaged in independent medical practices; citing cases).
To be sure, vicarious liability for physician malpractice has not been limited to the hospital context; at least some courts have extended it to other entities as well, such as health maintenance organizations (HMO) and nonhospital
Boyd is illustrative. There, the HMO had contractually committed to provide health care services and benefits to subscribers. It provided those services through a limited selection of primary physicians who were screened by the HMO and who had to comply with the HMO’s rules; the HMO gave subscribers no choice of with whom to consult for specialist care. All fees for services were paid directly to the HMO, not to the physicians. The court in Boyd concluded that there was a factual question as to whether the physicians, although independent contractors, were apparent agents of the HMO because the patient in that case had submitted herself to the care of the physicians at the HMO’s invitation and subject to significant apparent control on the HMO’s part. Boyd, 377 Pa Super at 621. Other cases extending vicarious liability to entities other than hospitals have required similar representations by the entity, similar indi-cia of control by the entity, and similar reliance by the patient on the entity as the provider of medical care. See, e.g., George v. Fadiani, 772 A2d 1065 (RI 2001) (factual question on apparent agency for dental services clinic where incorporated entity held itself out as a provider of dental services; selection of an appointment with specialist was done by clinic staff; billings were made on clinic stationary and through clinic staff; and clinic controlled compensation of dental providers).
In sum, the weight of authority in other jurisdictions is that, in a proper case, a hospital or other entity can be held vicariously liable for a physician’s negligence on an apparent authority theory. We agree with those authorities.
ANALYSIS IN THIS CASE
With that legal backdrop, we turn to the record in this case to assess whether, based on it, a jury could find the LLC vicariously liable for Borman’s negligence. In arguing that a jury could do so, plaintiffs central thesis is that the
Finally, plaintiff relies on the fact that Freeman referred to Willamette Spine Center as “his clinic” and to Borman as a ‘Willamette Spine Center surgeon.” Plaintiff contends that, because Freeman was an owner/member of the LLC landlord of the building, Freeman’s representations were those of the LLC itself, not of Freeman as a chiropractor, or at least a jury could so conclude. Taken together, plaintiff argues, the circumstances reasonably led plaintiff to believe that he was seeking treatment from an entity — “the” Willamette Spine Center — rather than from independent medical providers whose practices were in that building.
The other LLC representations on which plaintiff relies, both alone and in combination, similarly conveyed at
Plaintiff nevertheless urges that he reasonably perceived that he was dealing with a single entity (i.e., a single “group medical practice”) because Freeman once referred to “his clinic, the Willamette Spine Center” and also referred to Borman as a ‘Willamette Spine Center surgeon.” The parties disagree whether those two statements by Freeman are attributable to the LLC given, on the one hand, Freeman’s status as one of the LLC members and, on the other, the fact that plaintiff knew nothing about the existence of the LLC or Freeman’s role in it, and Freeman made the statements in the only capacity that plaintiff knew Freeman to have — as a chiropractor. We need not, however, resolve that disagreement.
Plaintiffs case also fails on the second key element for vicarious liability on an apparent agency theory— whether the plaintiff actually and reasonably relied on the LLC’s representations by looking to Willamette Spine Center as an entity (real or reasonably perceived), rather than to a
No evidence thus supports a conclusion that, subjectively, plaintiff relied on the signage or any other representation by the LLC to believe that the LLC was itself a medical provider. Even if plaintiff had done so, however, that reliance would not have been reasonable. A key distinction between this case and other cases in which courts have found a basis for vicarious liability is that here, unlike in those cases, there was no actual entity (e.g., a hospital, an outpatient clinic) with which plaintiff dealt, or could have dealt. Inside the building denominated “Willamette Spine Center,” all appearances were that the practitioners were independent medical providers. There was no common staff or even a common receptionist. Each medical provider in the building had his or her own office, own professional staff, and own exam and waiting rooms (although some, such as Borman and Tiley, shared certain limited spaces). Each medical provider used his or her own forms and billed to his or her own accounts for his or her services. Each had unique contact information, including phone numbers and e-mail addresses. The record suggests no means for plaintiff, or any other third party, to have contacted “Willamette Spine Center” as an entity or to deal with it as an entity, had plaintiff or anyone else tried. There was no phone number to call, no address or e-mail for correspondence, no receptionist to talk to, and no one in charge who oversaw the delivery of medical services and whom a patient could approach with question or complaints.
In short, plaintiff was led to Borman because of his personal relationship with Freeman, who had referred plaintiff to Borman in the same way that any medical professional customarily refers patients to a specialist. He was not seeking treatment by a nonexistent entity (“Willamette Spine Center”), which in turn assigned him to or otherwise controlled his selection of surgeons. Indeed, no reasonable person in plaintiffs position could conclude that Willamette Spine Center, as an entity, was in the business of surgery or of overseeing the performance of any surgeon housed in the building, given that plaintiffs surgery was not performed in that building, but was instead performed at a local hospital. Plaintiffs belief that Borman was a “Willamette Spine Center surgeon” was objectively reasonable only to the extent that plaintiff understood Borman to be an independent medical professional who associated with related specialists by having his practice in a common office building and by referring patients, as appropriate, to other practitioners in the building. To whatever extent plaintiff subjectively believed Borman to be an employee or other agent under the control of an entity (Willamette Spine Center) that was a direct provider of medical services — something plaintiff did not say he believed — that belief was unreasonable in these circumstances.
For those reasons, we conclude that the record is inadequate to permit a jury to hold the LLC liable for Borman’s negligent surgery on the theory that Borman was
The decision of the Court of Appeals and the judgment of the trial court are affirmed.
There are two named plaintiffs in this case — David Eads, who was injured, and his wife. For ease of reference, we refer to Eads and his wife in the singular.
Plaintiff originally brought a malpractice action against Borman and the LLC, in addition to other defendants, including the local hospital. At this juncture in the case, all other defendants have been dismissed from the action and the LLC is the only remaining defendant.
Both at trial and in the Court of Appeals, plaintiff also sought to hold the LLC liable on a theory that Borman was its actual agent. Plaintiff no longer pursues that theory.
This court has used the common-law test for “apparent authority to determine a principal’s responsibility both for actual agents and apparent agents. See, e.g., Badger v. Paulson Investment Co., Inc., 311 Or 14, 23-27, 803 P2d 1178 (1991) (using apparent authority analysis to resolve whether one was apparent agent with authority to take particular action); Aerne v. Gostlow, 60 Or 113, 121, 118 P 277 (1911) (similar). But see Eads v. Borman, 234 Or App 324, 332 n 5, 227 P3d 826 (2010) (citing Court of Appeals cases for proposition that apparent authority analysis applies only to actual agents). That approach makes sense. Under general agency principles, establishing an agency (apparent or actual) is not enough to hold a principal responsible for an agent’s conduct; rather, the action taken by the agent also must be one that was within the scope of the agent’s actual or apparent authority. See Beeson, 199 Or at 330 (one cannot hold principal liable for an act that does not fall within the scope of agent’s real or apparent authority). Thus, the apparent authority analysis often subsumes both issues. See, e.g., Jones, 274 Or at 595-96 (lack of apparent authority resolved issue of principal’s potential vicarious liability; unnecessary to resolve whether putative agent was actual or apparent agent). As we later observe, 351 Or at 737-38 n 5, the Restatement (Third) of Agency (2005) takes the same approach.
The test that this court has followed for many years is consistent with the test that the Restatement (Third) of Agency now proposes, which uses an apparent authority analysis both for agents and apparent agents:
“Apparent authority is the power held by an agent or other actor to affect a principal’s legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations.”
Restatement (Third) of Agency § 2.03 (2005).
As the comments to that section explain, courts over the years have frequently used the terms “apparent agency” and “apparent authority” interchangeably. Id. at comment b. The Third Restatement therefore now uses the doctrine of apparent authority to determine when a principal is bound by actors who appear to be agents but are not, as well as agents who act beyond the scope of their actual authority. Id. at comment a. The test under the Third Restatement has the same key features as
Plaintiffs claim here against the LLC is based solely on a vicarious liability theory. As noted in Vaughn, a principal also can be liable for physical torts committed by an agent if the principal hada nondelegable duty of care or was negligent in hiring, instructing, or supervising the agent. In that circumstance, the principal’s liability is direct, not vicarious, however. Vaughn, 346 Or at 138 n 7. Other theories, also not involved in this case, can likewise result in another entity or individual being directly or jointly liable for a treating physician’s negligence. See, e.g., Sprinkle v. Lemley, 243 Or 521, 528-31, 414 P2d 797 (1966) (physicians who diagnose and treat patient in concert can be liable for each other’s negligence); Moulton v. Huckleberry, 150 Or 538, 549, 46 P2d 589 (1935) (physician who refers patient to another can be hable for negligence of other physician if that physician is an employee, partner, or agent of the referring physician, or if the referral was itself negligent); Wemett v. Mount, 134 Or 305, 315, 292 P 93 (1930) (physician partners in the practice of medicine are liable for each other’s negligence); see also Huffaker v. Bailey, 273 Or 273, 282, 540 P2d 1398 (hospital has potential independent tort liability for negligent acts of physicians based on hospital’s own negligence in hiring and supervising staff).
Vaughn and our other cases relying on the same principal are illustrative of the kind of control required. See Vaughn, 346 Or at 141-42 (although port authority had right to control some activities of shuttle company, port lacked control over day-to-day driving; port therefore not vicariously liable for shuttle driver’s negligence); Jensen, 336 Or at 237-39 (international union not vicariously liable for wrongful employment actions of affiliated local union based only on local union’s abstract authority to act for international union subject to its right of control; jury required to find international union had right to control specific conduct — i.e., hiring and firing employees — on which claim was based); Peeples v. Kawasaki Heavy Indust., Ltd., 288 Or 143, 149-50, 603 P2d 765 (1979) (motorcycle manufacturer not vicariously liable for negligent warranty service work performed by authorized local dealer where evidence did not establish manufacturer had right to control “the manner in which the dealer performed warranty service,” even though local dealer was manufacturer’s authorized agent for that purpose).
The concurrence disagrees that the common law agency principles embraced by this court’s settled cases apply in an action seeking to impose vicarious liability for tortious conduct on a theory of apparent rather than actual agency. 351 Or at 758-59 (De Muniz, C. J., specially concurring). Under the concurrence’s approach, an apparent principal would be liable in tort in situations in which an actual principal would have no liability. But apparent agency, as explained, derives from the appearance of authority created by the principal and reasonably relied on by a third party. If the apparent relationship between the putative principal and the apparent agent is something other than what would be required to hold an actual principal vicariously liable for the agent’s acts (i.e., other than employment or other relationship in which the putative principal would exercise similar control), there is no legal basis for vicarious liability on an agency theory. In other words, apparent agency does not broaden the basis on which vicarious liability attaches; it instead exposes one to vicarious liability on established rules of agency law in circumstances in which the relationship necessary for such liability reasonably appears to exist but in fact does not.
Harris involved the different, but related issue, of whether a hospital could be held vicariously liable for the negligence of a nurse surgical assistant as an employee of the hospital, or whether only the surgeon conducting the surgery (under the borrowed servant doctrine) could be so liable. Our court has addressed the same question and, in concluding that hospitals can be held liable in those circumstances, has similarly stressed the reality of modern-day hospitals and the control they can and do exercise over the delivery of medical services by their employees. See May v. Broun, 261 Or 28, 38, 492 P2d 776 (1972) (hospitals increasingly provide highly technical equipment operated by skilled professionals that the hospital hires and trains); see also Holger v. Irish, 316 Or 402, 410-13, 851 P2d 1122 (1993) (declining to adopt “captain of the ship” doctrine to impose vicarious liability on nonnegligent surgeon for negligence of nurse assistant; vicarious liability available only against hospital, which hired and trained nursing staff and billed for nursing services).
This court’s case law is in accord. Giusti v. Weston Co., 165 Or 525, 529-31, 108 P2d 1010 (1941) (corporation authorized to do business as hospital association, which contractually agreed to provide medical services to high school football players, vicariously liable for negligence of physicians that corporation employed to provide those services). Only a few jurisdictions appear to be to the contrary. See, e.g., Hall v. Frankel, 190 P3d 852, 861 (Colo 2008) (citing line of Colorado cases holding that hospitals and other corporations are not liable for employee-physicians because physicians are not subject to principal’s right of control); Tolman v. IHC Hosp., Inc., 637 F Supp 682, 684 (D Utah 1986) (following Colorado authority).
See also Kashishian, 167 Wis 2d at 42-45 (extending principle to cardiology services; discussing applicability of principle outside emergency room context; citing cases); Estate of Cordero, 403 NJ Super at 316-17 (sufficient manifestation of control "when a hospital has established and staffed facilities or departments through which patients receive specialized care from medical professionals with whom they do not have a prior or ongoing relationship — emergency rooms, operating rooms and anesthesiology and radiology departments”).
Our own case law in that regard is in accord. See Holland v. Eugene Hosp., 127 Or 256, 261-62, 270 P 784 (1928) (hospital not liable for physician’s negligence where patient sought services directly from physician, paid physician, and physician had no relationship with hospital other than that of physician with staff privileges).
See generally John D. Hodson, Annotation, Liability of Hospital or Sanitarium, for Negligence of Physician or Surgeon, 51 ALR4th 235 § 7 at 270-71, § 20 at 344-52 (1987) (collecting cases in which hospitals have been held vicariously liable for malpractice of physicians who were independent contractors and other nonagents on theory that hospitals contracted to provide medical services and had those services performed by physicians who had apparent authority to do so on the
The Restatement (Second) of Agency § 267 states a test for a principal’s vicarious liability for an apparent agent’s negligent conduct. It provides:
“One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.”
The reference to “other agent” leaves unclear whether, consistently with section 250 of the Restatement (Second) of Agency (cited earlier), the principal must appear to have a right to control the manner in which the harm-causing act is performed, even if the apparent relationship is not that of master-servant. As explained, under this court’s decisions, vicarious liability for physical torts may be imputed to a principal outside the master-servant relationship only when that principal has an employer-like right to control the agent’s (the nonservant agent’s) injury-causing conduct. Section 267 is not specifically directed to the physical tort context. But it is in general accord with the test that we announce in this case if, in the context of vicarious liability for tortious conduct, it extends only to apparent agents who either are apparent employees or over whom the principal, through representations traceable to the principal, appears to exercise control or oversight over the injury-causing conduct. See 3510r at 740 n 8.
Plaintiff relies on other representations as well, but they are ones that plaintiff did not show that he ever saw or relied on, or did not show to be traceable to the LLC, or both. For example, plaintiff points to an Internet advertisement by two chiropractors who had offices in the Willamette Spine Center building, which is undated, which plaintiff never claimed to have seen, and which the LLC was not shown to have had any involvement in posting. Plaintiff also relies on an Internet homepage with the heading ‘Willamette Spine Center” and the WSC” logo that was dated May 2006 (two-and-a-half years after Borman negligently performed surgery on plaintiff), which plaintiff also did not claim to have seen or relied on, and which the LLC was not shown to have known about or have created. We agree with the Court of Appeals that any representations not traceable to the LLC and not relied on by plaintiff cannot be a basis for holding the LLC liable for Borman’s negligence. See Eads, 234 Or App at 334 (disregarding that evidence because it did not relate to “conduct by defendant holding Borman out as its agent” where no evidence indicated that defendant authorized those representations or had knowledge that they were made).
When a landlord gives a building a distinctive trade name to communicate something about the businesses of the tenants, a landlord reasonably should expect the tenants to make some use of that trade name on business cards or other marketing materials. For that reason, we conclude, contrary to the LLC’s position, that a jury would be entitled to find that the use of the building name and logo on tenant business cards was traceable to the LLC.
The parties provide no developed legal analysis as to whether Freeman’s status as an LLC member means that his statements to a patient in a social setting or in his chiropractic practice are attributable to the LLC. In terms of Freeman’s
To the extent plaintiffs theory is that Freeman had apparent authority to bind the LLC, that proposition poses a host of potential issues. Plaintiff dealt with Freeman only as a chiropractor. Nothing in the record suggests that plaintiff knew that the LLC existed or that Freeman was a member of it. Given that context, a key statement on which plaintiff relies (Freeman’s one reference to Willamette Spine Center as “his” clinic) reasonably conveyed at most an individual and personal-to-Freeman interest or role in the association of practitioners in the building. The parties do not adequately explore whether such a statement by an LLC member can be attributed to the LLC, and we decline to resolve that question. See generally So. Seattle Auto Auction, Inc. v. Ladd, 230 Or 350, 361-62, 370 P2d 630 (1962) (one who deals with agent as principal can look only to agent for relief; no apparent authority can arise to bind principal); Water, Waste & Land, Inc. v. Lanham, 955 P2d 997 (Colo 1998) (agency principles pertaining to undisclosed and partially disclosed principals apply to LLC; party who deals with LLC member without knowing LLC exists or knowing LLC’s identity can look to only individual member, not LLC).
We have identified no case — and plaintiff cites none — with facts analogous to these in which a court has found a basis for vicarious liability. The few disclosed by our research are, instead, uniformly to the contrary. See, e.g., Vanstelle v. Macaskill, 255 Mich App 1, 662 NW2d 41 (2003) (insufficient representation by hospital of control over physician’s practice to hold hospital landlord vicariously liable for physician who practiced in leased space in office building owned by hospital and who had staff privileges at hospital); Slavik, 661 NYS2d at 275 (no liability for leasing corporation based on use of trade name “Corona Medical & Dental Center” for office building); Hylton, 630 NYS2d at 749-50 (similar).
Concurring Opinion
specially concurring.
I concur in the majority’s evaluation that the record in this case is inadequate to permit a reasonable jury to conclude that defendant Willamette Spine Center, LLC held out Dr. Borman to plaintiff as its agent for the delivery of medical services. I do so because plaintiff has failed to present sufficient evidence that it was defendant — and not some other party — that was responsible for misleading plaintiff as to the affiliations of the providers at the ‘Willamette Spine Center.” However, the majority also concludes that, even if plaintiff had established defendant’s responsibility for the conduct alleged, no reasonable jury could find that plaintiff actually or reasonably relied on that conduct to infer that the Willamette Spine Center was a group medical clinic. In my view, that second holding is both incorrect and unnecessary to decide in this case. I write separately to express my view that the record in this case is sufficient for a reasonable jury to find that someone is holding out the individual providers in the Willamette Spine Center building as agents of a unified group medical clinic providing an array of medical services, in a manner that, upon proper proof of the identity of the
In this case, the record shows that Dr. Freeman
The record also reflects that the Willamette Spine Center name and logo were used in public advertisements in a manner that strongly suggested the existence of a single, unified entity providing a broad range of medical services. A web page, once located at www.willamettespinecenter.com, prominently featured the name and logo described above and proclaimed that:
*755 “Willamette Spine Center was developed from a desire to provide comprehensive spinal care and pain management services, equipped with state of the art equipment, dedicated physicians who are expert in the practice, and knowledgeable staff committed to serving the needs of the patients. The patients served by the Willamette Spine Center are individuals with both spinal and pain disorders. The center utilizes all of its medical providers as a multidisciplinary team to assure patients receive the services they need from the onset of the disease process to the completion of a rehabilitative program. We have contracts with most major insurance carriers and work regularly with attorneys to meet the financial needs of our patients.”
In addition, an internet telephone directory advertisement, also using the Willamette Spine Center name and stylized logo, described the center as a “Comprehensive Diagnostic Facility offering: Chiropractic[,] X-Ray, MRI & CT Scans[,] Precision Spine Injection, Diagnostic & Treatment!,] Spine Surgeryt, and] Physical Therapy,” and set out a list of medical practitioners under the heading “WSC Providers.”
I agree with the majority to the extent that it holds that no reasonable jury could find, on the basis of that evidence, that defendant Willamette Spine Center, LLC held out Borman as its agent for the delivery of medical services. The only evidence in the record with regard to the actions of the LLC itself shows that the LLC leased the Willamette Spine Center building from another entity, subleased portions of that building to the various providers who practiced there, and collected rent from those tenants. Although the LLC controlled the building’s signage under the leases, there is no evidence that the LLC designed or erected the signs on
I part ways with the majority, however, to the extent that it holds that, even if plaintiff had established that the LLC had engaged in those acts, that evidence nonetheless would have been insufficient to permit a reasonable jury to hold the LLC vicariously liable for Borman’s malpractice under the doctrine of apparent authority. Drawing all reasonable inferences in favor of plaintiff, as we must, I would hold that a reasonable jury could conclude from the above facts that someone was holding out Borman as an agent of the Willamette Spine Center in a manner that could subject the person or persons responsible for creating that impression to vicarious liability for his malpractice. In strain - ing to find otherwise, the majority improperly fails to consider the evidence in the light most favorable to plaintiff. See ORCP 47 C (permitting the court to grant summary judgment only if, “based upon the record before the court viewed in a manner most favorable to the adverse party, no objectively reasonable juror could return a verdict for the adverse part/’). For instance, the majority holds that a jury could not reasonably find that the use of the Willamette Spine Center name and logo on the providers’ business cards implied a group medical practice, reasoning that the business cards “reasonably communicated the independence of the individual providers” because “each provider had his or her own individual contact information on the card as well, such as telephone numbers and e-mail addresses.” 351 Or at 749. However, while a reasonable jury could find that the lack of a central e-mail address or telephone number implied the providers’ independence, that is by no means the only reasonable inference a jury could draw from that evidence. A competing
Similarly, the majority holds that the list of provider names next to the front door of the building could not reasonably be interpreted to suggest a group practice, because the providers were listed individually and, in some cases, designated as LLCs. Again, however, while a jury could interpret that evidence to indicate that the providers were independent, an equally plausible interpretation — and one more favorable to plaintiff — is that the names were listed together in that central location because the providers were affiliated with one another in a group medical practice. The designation of some of the providers as LLCs does not entirely discredit that inference: LLCs can affiliate with other entities in corporate forms just as natural persons can. See ORS 63.077(2)(g) (permitting an LLC to “[b]e a promoter, incorpo-rator, general partner, limited partner, member, associate or manager of any partnership, joint venture, trust or other entity”). Indeed, the fact that some of those LLCs actually incorporated the designation ‘Willamette Spine Center” into their names could imply to a reasonable person a legally significant affiliation with the clinic.
But for the lack of nexus between those culpable actions and the actions shown to be attributable to defendant here, I would hold that the issue of whether apparent authority existed in this case should be submitted to a jury for resolution under appropriate instructions. In my view, the majority’s unnecessary commentary on that issue improperly fails to draw all reasonable inferences in favor of plaintiff and sets an ill-advised precedent for future courts faced with similar cases.
The Restatement (Third) of Agency § 2.03 (2006), provides:
“Apparent authority is the power held by an agent or other actor to affect a principal’s legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations.”
The Restatement (Second) of Agency § 267 (1958), provides:
“One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.”
The majority quotes those sources but does not apply the test that they describe. 351 Or at 737-38 n 5, 738-39, 745-46 n 13). Instead the majority declares the latter provision imposes specific right-to-control requirements that the provision does not contain. That is a mistake. The majority should not bury its statement in a footnote or claim that this court’s case law agrees with the majority’s mistaken view.
There is no unclarity in the above-quoted Restatement provisions, and no Oregon case adopts the majority’s construction. The Restatement provisions correctly address the legal standard for determining the liability of a principal for the lack of due care of an apparent agent without any reference to a proof requirement concerning the principal’s right to control the details of the tortious conduct of the apparent agent. That is so because apparent authority requires a
Later in its opinion, the majority sets out the legal standard for determining the vicarious liability of a principal in medical malpractice cases against healthcare entities.
The medical care industry has undergone vast structural changes in the last few decades. The independent physician who contracts for privileges at the local hospital or makes house calls to provide care for his roster of loyal patients is largely a relic of a bygone era. Modern medical care increasingly is being provided instead by doctors employed by or affiliated with HMOs, insurance companies, and hospitals, as a manifestation of the increasing dependence of the medical practice on institutional resources and expertise. See generally William M. Sage, Enterprise Liability and the Emerging Managed Health Care System, 60 Law & Contemp Probs 159 (1997). The dwindling number of doctors not beholden to those entities is increasingly turning to alternative arrangements like group practices, clinics, and professional corporations — in part for the purpose of managing the ever-increasing costs of malpractice liability to persons like plaintiff here. Id. In turn, it is unsurprising that patients would look to those entities to provide medically appropriate services. In my view, the changing nature and prevalence of those relationships is highly relevant to the
For the reasons I have set out, I specially concur in the decision of the court.
The record reflects that Freeman was both a member of the defendant LLC and a chiropractor who practiced in the Willamette Spine Center building. On at least one occasion (in a biographical paragraph of an academic article he authored), Freeman also identified himself as the “co-medical director of Willamette Spine Center.”
The record shows that Freeman not only recommended that plaintiff see Borman, but personally arranged the details of plaintiffs appointment and then called plaintiff and told him when to come in.
The majority disregards those advertisements on the grounds that plaintiff failed to establish that defendant authored the ads, that the ads existed at or before the time plaintiff was injured, or that plaintiff saw the ads prior to his operations. Although I agree that there is insufficient evidence for a reasonable jury to attribute the ads to defendant or find that plaintiff relied on the ads, I find the evidence relevant to show that whoever authored the ads intended for potential patients to view the Willamette Spine Center as a unified group medical practice, both at the time that plaintiffs attorneys accessed the web page for the purposes of this litigation, and, according to the web page, at the time that entity “was developed.” Even if plaintiff did not personally witness every indication of the principal’s intent, that intent is relevant to the question of whether it was objectively reasonable for plaintiff to rely on other evidence of which he did have knowledge.
351 Or at 739-42. The point of that standard is that the patient looks to the entity as the provider of healthcare, and not only to the doctor who performs the medical services.
Reference
- Full Case Name
- David EADS and Diane Eads, Individually and as Husband and Wife, Petitioners on Review, v. Timothy R. BORMAN, D.O.; Salem Hospital, a Registered Oregon Non-Profit Corporation; Michael J. George, M.D.; And Salem Radiology Consultants, P.C., an Oregon Professional Corporation, Defendants, and WILLAMETTE SPINE CENTER, LLC, an Oregon Corporation, Respondent on Review
- Cited By
- 39 cases
- Status
- Published