After 100 Years, Hospital Liability Takes a Sharp Turn

'Ostensible Agency' Doctrine

As the Court of Appeal in Mejia acknowledged, “[F]or the last century, courts throughout the country have struggled with the issue of whether hospitals are liable for the negligence of physicians.” That is because doctors generally are not employees of the hospital. “A physician is not an agent of a hospital merely because he or she is on the medical staff of the hospital.” Mayers v. Litow (1957) 154 Cal.App.2d 413.

Thus, in California, hospital liability for injuries caused by a physician's negligence has usually depended on proof that the negligence of a hospital employee (such as a nurse) contributed to a patient's injury (see, e.g., Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995), 12 Cal.4th 291, 296-299 (discussing respondeat superior liability in context of action against hospital for acts of hospital employee)), or proof that the hospital itself was directly negligent, usually in improperly reviewing the doctor's qualifications before granting or renewing privileges at the hospital (see Elam v. College Park Hospital (1982), 132 Cal.App.3d 332, 346).

Vicarious liability based solely on the doctor's negligence, however, has not been a major consideration for hospitals in California. See, e.g., Ware v. Culp (1937), 24 Cal.App.2d 22, 28. Not, that is, until the court in Mejia created a presumption that all doctors are “ostensible agents” of the hospitals in which they practice.

Civil Code section 2300 and the Mejia opinion

Civil Code section 2300 states the requirements for ostensible agency in California: Vicarious liability will be imposed on a principal who “intentionally, or by want of ordinary care, causes a third person to believe another to be his agent.” (See also Civ. Code, ' 2317 (“Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess”); Civ. Code, ' 2334 (“A principal is bound by the acts of his agent, under a merely ostensible authority, to those persons only who have in good faith, and without want of ordinary care, incurred a liability or parted with value, upon the faith thereof”).)

Thus, by statute, a plaintiff may not recover for the negligent acts of a defendant's ostensible agent without proving three elements: 1) intentional or negligent misleading statements or conduct by the principal amounting to representations that the third party is his agent, 2) actual and justifiable reliance by the plaintiff on the principal's representations, without any negligence on the part of the plaintiff, and 3) harm to the plaintiff as a result of such reliance. (Hartong v. Partake Inc. (1968) 266 Cal.App.2d 942, 960; see also Quintal v. Laurel Grove Hospital (1964) 62 Cal.2d 154, 168 (identifying elements of ostensible agency as misleading conduct, reasonable reliance and lack of negligence by plaintiff in relying on the apparent agency).

Of particular importance is the requirement that the plaintiff's reasonable belief “that the agent had authority … must be generated by some act or neglect of the person to be held [vicariously liable].” Allen v. S.F. W.D. Produce Exch. (1922) 59 Cal.App. 93, 97. These general rules of agency apply equally in the medical context. See 40 Am.Jur.2d, Hospitals And Asylums, ' 6, p. 855 (“Insofar as a hospital occupies the status of and functions as a private corporation, matters pertaining to the management and operation thereof are governed by the rules that are applied in the case of private corporations generally, except as modified by statute.”).

In Mejia, a patient sought to use the ostensible agency doctrine to impose liability on the hospital where the plaintiff had been treated, despite the lack of evidence that any hospital employee had been negligent. The plaintiff sought treatment for a neck injury at the hospital's emergency room. The emergency-room physician ordered x-rays, which he sent to the on-call radiologist for evaluation. The radiologist's report identified only a congenital fusion. Based on this report, the emergency-room physician treated plaintiff for a twisted neck, and subsequently discharged her. The next morning, she was paralyzed. She was taken to another hospital, where it was determined that her neck was actually broken.

The patient (Ms. Mejia) sued the hospital, the emergency-room physician, the medical group that ran the emergency room and employed the emergency-room physician, the radiologist, and the medical group that ran the radiology department and employed the radiologist. The defendant physicians were not hospital employees, and there was no evidence that the hospital had been negligent, either in treating the plaintiff or in allowing the defendant physicians to practice at the hospital. The trial court thus excused the hospital from the case at the close of plaintiff's presentation of evidence at trial. The trial continued against the doctors and their respective groups, and the jury found the radiologist and radiology group were negligent. Having obtained a judgment against those defendants, Mejia nonetheless appealed, contesting the order granting non-suit in favor of the hospital.

The Court of Appeal reversed, holding that even though the hospital was not itself negligent and even though the radiologist was not actually the agent of the hospital, the hospital could be vicariously liable for the radiologist's negligence under an ostensible agency theory. The court of Appeal acknowledged that ostensible agency requires proof that: 1) the hospital engaged in conduct that would cause a reasonable person to believe that the physician was an agent of the hospital; and 2) the plaintiff relied on that apparent agency to his or her detriment. But it held that these elements are generally satisfied whenever a patient seeks care at a hospital. The court said, “Because it is commonly believed that hospitals are the actual providers of care, ostensible agency can be readily inferred whenever someone seeks treatment at a hospital.” Mejia v. Community Hospital of San Bernardino (2002), 99 Cal.App.4th 1448, 1456.

The Mejia court concluded that the first ostensible agent element “is satisfied when the hospital 'holds itself out' to the public as a provider of care.” Thus, to prove the first element, “it is not necessary to show an express representation by the hospital.” Id. at p. 1454. “Instead, a hospital is generally deemed to have held itself out as the provider of care, unless it gave the patient contrary notice.” Ibid. Moreover, the court even suggested that “prior notice may not be sufficient to avoid liability in an emergency context, where an injured patient in need of immediate medial care cannot be expected to understand or act upon that information.” In effect, this ruling by the court amounts to “judicial notice” that virtually all patients believe the doctors treating them at a hospital are hospital employees.

The Mejia court further held that “[t]he second element, reliance, is established when the plaintiff 'looks to' the hospital for services, rather than to an individual physician.” Mejia, supra, 99 Cal.4th at p. 1454. “Effectively, all a patient needs to show is that he or she sought treatment at the hospital.” Id. at p. 1458. Once this is shown, “courts presume reliance, absent evidence that the plaintiff knew or should have known the physician was not an agent of the hospital.” Id. at p. 1454.

The hospital pointed to plaintiff's admissions that: 1) she never even knew about the radiologist's involvement in her case and therefore could not have understood the hospital to have held the radiologist out as its agent; 2) the radiology group, not the hospital, selected and controlled the radiologist; and 3) plaintiff went to the hospital because it was the closest to her, not because of its reputation. The Court of Appeal found none of these facts to be relevant. Focusing exclusively on the presumed appearance of agency, the court acknowledged, “It appears difficult, if not impossible, for a hospital to ever obtain a non-suit based on the lack of ostensible agency” (Id. at p. 1458), and added that “merely by claiming that she sought treatment at [a] hospital,” a plaintiff will present sufficient evidence to allow her claim to reach a jury, “absent evidence that plaintiff should have known that the [treating physician] was not an agent of [the] hospital” (Id. at p. 1460).

You are ordinarily not liable for the misdeeds of others, right? Sure, you can be vicariously liable for certain conduct of employees and agents, but not others you may associate with, such as independent contractors. Except sometimes. And now, if you're a hospital that allows independent contractor physicians to treat patients at your facility, “sometimes” is presumptively “all the time.” That is the rule laid down in the recent decision, Mejia v. Community Hospital of San Bernardino (2002), 99 Cal.App.4th 1448.

Mejia has taken a sharp right turn off the path hospital liability jurisprudence has taken over the last century. In fact, a treatise last year discussing hospitals' direct liability for acts of independent, non-salaried doctors reported, “So far there is no recorded case in California where such liability has been imposed because of the acts of a medical doctor.” (1 MacDonald, Cal. Medical Malpractice: Law and Practice (2001 supp.) Ostensible Agency, ' 4.20.) Mejia blazes a new trail in this area by imposing such liability under the doctrine of “ostensible agency,” a legal fiction that has been created to impose vicarious liability for injuries caused by someone who is not a “real” agent of the defendant, but is nonetheless treated as the defendant's agent for public policy reasons.

Whether other appellate courts follow Mejia down this road remains to be seen. Hospital administrators obviously hope not, out of concern that the Mejia rule will threaten their continued ability to offer medical services by dramatically increasing potential liability and legal costs.

'Ostensible Agency' Doctrine

As the Court of Appeal in Mejia acknowledged, “[F]or the last century, courts throughout the country have struggled with the issue of whether hospitals are liable for the negligence of physicians.” That is because doctors generally are not employees of the hospital. “A physician is not an agent of a hospital merely because he or she is on the medical staff of the hospital.” Mayers v. Litow (1957) 154 Cal.App.2d 413.

Thus, in California, hospital liability for injuries caused by a physician's negligence has usually depended on proof that the negligence of a hospital employee (such as a nurse) contributed to a patient's injury (see, e.g., Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995), 12 Cal.4th 291, 296-299 (discussing respondeat superior liability in context of action against hospital for acts of hospital employee)), or proof that the hospital itself was directly negligent, usually in improperly reviewing the doctor's qualifications before granting or renewing privileges at the hospital (see Elam v. College Park Hospital (1982), 132 Cal.App.3d 332, 346).

Vicarious liability based solely on the doctor's negligence, however, has not been a major consideration for hospitals in California. See, e.g., Ware v. Culp (1937), 24 Cal.App.2d 22, 28. Not, that is, until the court in Mejia created a presumption that all doctors are “ostensible agents” of the hospitals in which they practice.

Civil Code section 2300 and the Mejia opinion

Civil Code section 2300 states the requirements for ostensible agency in California: Vicarious liability will be imposed on a principal who “intentionally, or by want of ordinary care, causes a third person to believe another to be his agent.” (See also Civ. Code, ' 2317 (“Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess”); Civ. Code, ' 2334 (“A principal is bound by the acts of his agent, under a merely ostensible authority, to those persons only who have in good faith, and without want of ordinary care, incurred a liability or parted with value, upon the faith thereof”).)

Thus, by statute, a plaintiff may not recover for the negligent acts of a defendant's ostensible agent without proving three elements: 1) intentional or negligent misleading statements or conduct by the principal amounting to representations that the third party is his agent, 2) actual and justifiable reliance by the plaintiff on the principal's representations, without any negligence on the part of the plaintiff, and 3) harm to the plaintiff as a result of such reliance. (Hartong v. Partake Inc. (1968) 266 Cal.App.2d 942, 960; see also Quintal v. Laurel Grove Hospital (1964) 62 Cal.2d 154, 168 (identifying elements of ostensible agency as misleading conduct, reasonable reliance and lack of negligence by plaintiff in relying on the apparent agency).

Of particular importance is the requirement that the plaintiff's reasonable belief “that the agent had authority … must be generated by some act or neglect of the person to be held [vicariously liable].” Allen v. S.F. W.D. Produce Exch. (1922) 59 Cal.App. 93, 97. These general rules of agency apply equally in the medical context. See 40 Am.Jur.2d, Hospitals And Asylums, ' 6, p. 855 (“Insofar as a hospital occupies the status of and functions as a private corporation, matters pertaining to the management and operation thereof are governed by the rules that are applied in the case of private corporations generally, except as modified by statute.”).

In Mejia, a patient sought to use the ostensible agency doctrine to impose liability on the hospital where the plaintiff had been treated, despite the lack of evidence that any hospital employee had been negligent. The plaintiff sought treatment for a neck injury at the hospital's emergency room. The emergency-room physician ordered x-rays, which he sent to the on-call radiologist for evaluation. The radiologist's report identified only a congenital fusion. Based on this report, the emergency-room physician treated plaintiff for a twisted neck, and subsequently discharged her. The next morning, she was paralyzed. She was taken to another hospital, where it was determined that her neck was actually broken.

The patient (Ms. Mejia) sued the hospital, the emergency-room physician, the medical group that ran the emergency room and employed the emergency-room physician, the radiologist, and the medical group that ran the radiology department and employed the radiologist. The defendant physicians were not hospital employees, and there was no evidence that the hospital had been negligent, either in treating the plaintiff or in allowing the defendant physicians to practice at the hospital. The trial court thus excused the hospital from the case at the close of plaintiff's presentation of evidence at trial. The trial continued against the doctors and their respective groups, and the jury found the radiologist and radiology group were negligent. Having obtained a judgment against those defendants, Mejia nonetheless appealed, contesting the order granting non-suit in favor of the hospital.

The Court of Appeal reversed, holding that even though the hospital was not itself negligent and even though the radiologist was not actually the agent of the hospital, the hospital could be vicariously liable for the radiologist's negligence under an ostensible agency theory. The court of Appeal acknowledged that ostensible agency requires proof that: 1) the hospital engaged in conduct that would cause a reasonable person to believe that the physician was an agent of the hospital; and 2) the plaintiff relied on that apparent agency to his or her detriment. But it held that these elements are generally satisfied whenever a patient seeks care at a hospital. The court said, “Because it is commonly believed that hospitals are the actual providers of care, ostensible agency can be readily inferred whenever someone seeks treatment at a hospital.” Mejia v. Community Hospital of San Bernardino (2002), 99 Cal.App.4th 1448, 1456.

The Mejia court concluded that the first ostensible agent element “is satisfied when the hospital 'holds itself out' to the public as a provider of care.” Thus, to prove the first element, “it is not necessary to show an express representation by the hospital.” Id. at p. 1454. “Instead, a hospital is generally deemed to have held itself out as the provider of care, unless it gave the patient contrary notice.” Ibid. Moreover, the court even suggested that “prior notice may not be sufficient to avoid liability in an emergency context, where an injured patient in need of immediate medial care cannot be expected to understand or act upon that information.” In effect, this ruling by the court amounts to “judicial notice” that virtually all patients believe the doctors treating them at a hospital are hospital employees.

The Mejia court further held that “[t]he second element, reliance, is established when the plaintiff 'looks to' the hospital for services, rather than to an individual physician.” Mejia, supra, 99 Cal.4th at p. 1454. “Effectively, all a patient needs to show is that he or she sought treatment at the hospital.” Id. at p. 1458. Once this is shown, “courts presume reliance, absent evidence that the plaintiff knew or should have known the physician was not an agent of the hospital.” Id. at p. 1454.

The hospital pointed to plaintiff's admissions that: 1) she never even knew about the radiologist's involvement in her case and therefore could not have understood the hospital to have held the radiologist out as its agent; 2) the radiology group, not the hospital, selected and controlled the radiologist; and 3) plaintiff went to the hospital because it was the closest to her, not because of its reputation. The Court of Appeal found none of these facts to be relevant. Focusing exclusively on the presumed appearance of agency, the court acknowledged, “It appears difficult, if not impossible, for a hospital to ever obtain a non-suit based on the lack of ostensible agency” (Id. at p. 1458), and added that “merely by claiming that she sought treatment at [a] hospital,” a plaintiff will present sufficient evidence to allow her claim to reach a jury, “absent evidence that plaintiff should have known that the [treating physician] was not an agent of [the] hospital” (Id. at p. 1460).