Why the <i>Mejia </i>Opinion Is Troubling

It is, of course, conceivable that a patient could present evidence that a doctor's services were chosen based on a belief that he or she had an employment or agency relationship with the hospital. See Jacoves v. United Merchandising Corp. (1992), 9 Cal.App.4th 88, 104 (triable issue of fact created concerning ostensible agency where defendant doctor was designated by hospital as the director of its adolescent psychiatric unit, obtained releases for him on its admission forms, and evidence gave rise to an inference that the plaintiffs 'admitt[ed] [their son] to the hospital at least in part [based] on [the doctor's] position with the hospital.') But the Mejia opinion creates a presumption of ostensible agency without requiring any such evidence, and instead shifts the burden to the defendant to prove the plaintiff had actual notice (such as through information on an admission form, or because of a prior relationship with the doctor) demonstrating the doctor was not an agent of the hospital.

Trial Courts' Options

To the extent that Mejia departs from the analysis in Jacoves (which the Mejia opinion did not cite, much less distinguish) and other cases requiring the patient to present affirmative evidence on the elements of ostensible agency, trial courts are free to decline to follow Mejia. Auto Equity Sales Inc. v. Superior Court (1962) 57 Cal.2d 450, 455-456. If followed by other courts, however, the Mejia court's expanded ostensible agency theory is tantamount to creating strict liability for hospitals for most physician negligence occurring on hospital premises. 'When courts focus on the subjective impressions of the patient, rather than the hospital's act in misleading patients as to the status of its medical staff, they stand traditional ostensible agency theory on its head. If just having an emergency room is enough to trigger vicarious liability, then 'ostensible agency' becomes a form of strict liability rather than a fault-based principle.' (Smith, Helyar: Limits of Ostensible Agency Theory: Vicarious Liability of Independent Contractor Physicians (Apr. 1999) 6 Med. Malpractice L. & Strategy 1.)

The Court of Appeal nonetheless determined that California law should follow a perceived 'national trend' in favor of expanded ostensible agency liability for hospitals because, in adopting this theory, other courts purported to rely on one California Court of Appeal case, Stanhope v. L.A. Coll. of Chiropractic (1942), 54 Cal.App.2d 141. In fact, Stanhope does not support jettisoning or diluting the three statutory elements of ostensible agency in California.

The Stanhope Case

The plaintiff in Stanhope was brought to a chiropractic college for emergency treatment of a back injury. A radiologist at the independent X-Ray facility at the college failed to discover that the plaintiff's back was in fact broken. The Court of Appeal upheld the jury's finding of ostensible agency between the radiologist and the college, reasoning that the college 'did nothing to put [the plaintiff] on notice that the X-Ray laboratory was not an integral part of [the] institution.' Stanhope, supra, 54 Cal.App.2d at p. 146.

However, the court's discussion of the facts of Stanhope makes clear that the college did indeed take affirmative action that might lead a patient to believe that the X-Ray department and the college were connected: The college had an arrangement with the radiologist whereby he taught at the college and performed all X-Ray services for the college free of charge, in exchange for free rent. Id. at pp. 144-145. Moreover, the plaintiff in particular was given reason to believe that the two were connected: He was told that the charges for his visit (examination and X-Rays) were going to be cut 50% because of the college's connection with the former student who brought the plaintiff in for treatment.

The other California cases relied on by the Court of Appeal in Mejia do not support imposing ostensible agency liability in the absence of some affirmative act by the hospital establishing agency. See Quintal v. Laurel Grove Hospital, supra, 62 Cal.2d at p. 167 (anesthesiologist was on hospital staff, wore hospital clothing, and hospital admission form (which was witnessed by two hospital employees) included a signed patient authorization to administer anesthetic as necessary); Seneris v. Haas (1955), 45 Cal.2d 811, 832 (anesthesiologist was one of six exclusive to the defendant hospital and was summoned by a hospital nurse to give the anesthetic in question).

In short, Stanhope is a case best limited to its peculiar facts, not a springboard to revolutionizing ostensible agency law in California, as the Court of Appeal did in Mejia.

Worsening the Funding Crisis

Even more troubling, the agency theory espoused by Mejia could have devastating effects at a time when the health care system is, in many regions, in a funding crisis. With their expanded exposure for medical malpractice liability, hospitals may begin to feel justified in intruding on doctors' professional judgment, thus straining relationships between hospitals and the doctors who practice there. Moreover, as hospitals scramble to generate and implement new admitting procedures to distance themselves from the doctors, patient care may suffer from the increased bureaucracy. Resolving the already complex malpractice action will become more time-consuming and costly when hospitals are joined as co-defendants with the doctors accused of violating the standard of care.

Weighed against these problems is the dubious advantage of authorizing suit against hospitals ' with their 'deep pockets' ' in actions that otherwise would proceed only against the doctor, with the doctor's liability insurer in the background. On balance, neither patients nor health care providers seem to come out as winners under Mejia.

Mary-Christine Sungaila and Lisa Perrochet are partners in the law firm of Horvitz & Levy LLP, in Encino, CA.

Part Two of a Two-Part Article.

Contrary to the Mejia court's analysis, patients do not generally choose an emergency room in reliance on any belief about the doctors' employment or agency relationship with the hospital. They may choose the hospital based on terms of their insurance plan, or the hospital's geographic location. But nobody can seriously suggest that if a patient were confronted with a neon sign in the hospital waiting room declaring the doctors to be independent contractors whose conduct is not attributable to the hospital, he or she would turn around and look elsewhere to find a hospital with employee doctors.

In other words, patients who consent to be treated by a doctor do not generally rely on 'appearances,' one way or another, when consenting to being treated by a doctor at the hospital. Rather, they rely on the doctor to provide competent diagnosis and treatment, while they rely on the hospital to provide proper facilities and related nursing and staffing care. The rationale underlying the 'ostensible agency' fiction for imposing vicarious liability is therefore absent in this context.

It is, of course, conceivable that a patient could present evidence that a doctor's services were chosen based on a belief that he or she had an employment or agency relationship with the hospital. See Jacoves v. United Merchandising Corp. (1992), 9 Cal.App.4th 88, 104 (triable issue of fact created concerning ostensible agency where defendant doctor was designated by hospital as the director of its adolescent psychiatric unit, obtained releases for him on its admission forms, and evidence gave rise to an inference that the plaintiffs 'admitt[ed] [their son] to the hospital at least in part [based] on [the doctor's] position with the hospital.') But the Mejia opinion creates a presumption of ostensible agency without requiring any such evidence, and instead shifts the burden to the defendant to prove the plaintiff had actual notice (such as through information on an admission form, or because of a prior relationship with the doctor) demonstrating the doctor was not an agent of the hospital.

Trial Courts' Options

To the extent that Mejia departs from the analysis in Jacoves (which the Mejia opinion did not cite, much less distinguish) and other cases requiring the patient to present affirmative evidence on the elements of ostensible agency, trial courts are free to decline to follow Mejia. Auto Equity Sales Inc. v. Superior Court (1962) 57 Cal.2d 450, 455-456. If followed by other courts, however, the Mejia court's expanded ostensible agency theory is tantamount to creating strict liability for hospitals for most physician negligence occurring on hospital premises. 'When courts focus on the subjective impressions of the patient, rather than the hospital's act in misleading patients as to the status of its medical staff, they stand traditional ostensible agency theory on its head. If just having an emergency room is enough to trigger vicarious liability, then 'ostensible agency' becomes a form of strict liability rather than a fault-based principle.' (Smith, Helyar: Limits of Ostensible Agency Theory: Vicarious Liability of Independent Contractor Physicians (Apr. 1999) 6 Med. Malpractice L. & Strategy 1.)

The Court of Appeal nonetheless determined that California law should follow a perceived 'national trend' in favor of expanded ostensible agency liability for hospitals because, in adopting this theory, other courts purported to rely on one California Court of Appeal case, Stanhope v. L.A. Coll. of Chiropractic (1942), 54 Cal.App.2d 141. In fact, Stanhope does not support jettisoning or diluting the three statutory elements of ostensible agency in California.

The Stanhope Case

The plaintiff in Stanhope was brought to a chiropractic college for emergency treatment of a back injury. A radiologist at the independent X-Ray facility at the college failed to discover that the plaintiff's back was in fact broken. The Court of Appeal upheld the jury's finding of ostensible agency between the radiologist and the college, reasoning that the college 'did nothing to put [the plaintiff] on notice that the X-Ray laboratory was not an integral part of [the] institution.' Stanhope, supra, 54 Cal.App.2d at p. 146.

However, the court's discussion of the facts of Stanhope makes clear that the college did indeed take affirmative action that might lead a patient to believe that the X-Ray department and the college were connected: The college had an arrangement with the radiologist whereby he taught at the college and performed all X-Ray services for the college free of charge, in exchange for free rent. Id. at pp. 144-145. Moreover, the plaintiff in particular was given reason to believe that the two were connected: He was told that the charges for his visit (examination and X-Rays) were going to be cut 50% because of the college's connection with the former student who brought the plaintiff in for treatment.

The other California cases relied on by the Court of Appeal in Mejia do not support imposing ostensible agency liability in the absence of some affirmative act by the hospital establishing agency. See Quintal v. Laurel Grove Hospital, supra, 62 Cal.2d at p. 167 (anesthesiologist was on hospital staff, wore hospital clothing, and hospital admission form (which was witnessed by two hospital employees) included a signed patient authorization to administer anesthetic as necessary); Seneris v. Haas (1955), 45 Cal.2d 811, 832 (anesthesiologist was one of six exclusive to the defendant hospital and was summoned by a hospital nurse to give the anesthetic in question).

In short, Stanhope is a case best limited to its peculiar facts, not a springboard to revolutionizing ostensible agency law in California, as the Court of Appeal did in Mejia.

Worsening the Funding Crisis

Even more troubling, the agency theory espoused by Mejia could have devastating effects at a time when the health care system is, in many regions, in a funding crisis. With their expanded exposure for medical malpractice liability, hospitals may begin to feel justified in intruding on doctors' professional judgment, thus straining relationships between hospitals and the doctors who practice there. Moreover, as hospitals scramble to generate and implement new admitting procedures to distance themselves from the doctors, patient care may suffer from the increased bureaucracy. Resolving the already complex malpractice action will become more time-consuming and costly when hospitals are joined as co-defendants with the doctors accused of violating the standard of care.

Weighed against these problems is the dubious advantage of authorizing suit against hospitals ' with their 'deep pockets' ' in actions that otherwise would proceed only against the doctor, with the doctor's liability insurer in the background. On balance, neither patients nor health care providers seem to come out as winners under Mejia.

Mary-Christine Sungaila and Lisa Perrochet are partners in the law firm of Horvitz & Levy LLP, in Encino, CA.