Indiana Supreme Court Decision Increases Protections for Patients Seeking Treatment at Non-Hospital Facilities

In a recent Indiana Supreme Court case, the Court held that non-hospital medical entities that serve as a health care providers may be vicariously liable for physicians whom they independently contract with unless they give meaningful notice to the patient, the patient has independent special knowledge of the arrangement between the non-hospital medical entity and its physicians, or the patient otherwise knows about these relationships. This decision helps prevent non-hospital medical facilities from evading liability in negligence cases involving the facility and independent contractor physicians.

The Facts of the Case

The plaintiff went to Marion Open MRI (the defendant) to get MRIs of his spine. Marion Open MRI is not a hospital, but an outpatient diagnostic imaging center that is not a qualified healthcare provider under the Indiana Medical Malpractice Act. Marion Open MRI independently contracted with a radiologist to read MRIs and sent the plaintiff’s MRI images to the radiologist for interpretation. The radiologist was never physically present at the Marion Open MRI facility and instead interpreted the images from his home office. The radiologist’s reports appeared on Marion Open MRI letterhead and had zero indication of his independent contractor status.

The plaintiff filed his complaint alleging medical malpractice, claiming that Marion Open MRI and the radiologist failed to diagnose and treat his spinal condition which has now resulted in permanent injuries. Marion Open MRI argued that it was not liable for the radiologist’s actions because the relevant law does not apply to non-hospital entities. In response, the plaintiff argued there was a dispute of material fact whether the radiologist was acting as an apparent agent for Marion Open MRI, even considering the fact that Marion Open MRI is not a hospital. When there is a genuine dispute of material fact, the case must go to trial. The trial court ultimately decided not to go to trial and ruled in favor of Marion Open MRI. The Court of Appeals reversed the trial court decision, holding that “it is reasonable for a patient in a diagnostic imaging center to believe that the radiologists interpreting images for the center are employees or agents of the center, unless the center informs them of the contrary.” The case was appealed to the Indiana Supreme Court.

Indiana Supreme Court’s Decision

Marion Open MRI argued that because it is not a hospital, it cannot be held liable for the radiologist’s alleged negligence under the apparent agency legal doctrine. In making its decision, the Court considered vicarious liability, which involves a court holding a party legally responsible for negligence of another, not because the party did anything wrong but rather because of the party’s relationship with the wrongdoer. When there is no employer-employee or principal-agent relationship, a principal may still be viarious liability for the negligence of another under the apparent agency legal doctrine. Apparent agency may be established when a third party reasonably believes there is a principal-agent relationship based on the principal’s communications to the third party. Apparent agency concerns only whether a principal’s communications induce a third party to reasonably believe there is a principal–agent relationship. Under certain circumstances, if there’s a finding of apparent agency, then a party can be said to be vicarious liable.

Indiana courts look at two factors when considering apparent agency: (1) the principal’s manifestations, or communications, that an agency relationship exists and (2) the patient’s resulting reliance. Here, the Court decided that despite the fact that Marion Open MRI is not a hospital, patients increasingly rely on non-hospital medical entites, and hospitals and non-hospital medical entites can make representations that reasonably lead a patient to believe that the physicians providing them healthcare are the facility’s employees or agents. Ultimately, the Court decided that apparent agency principles apply outside of the hospital context, preventing non-hospital medical entities from evading liability in negligence cases and allowing these entities to be held vicariously liable for the actions of physicians they independently contract with.

Have You Suffered Injuries after Seeking Health Treatment in Indiana?

If you or a loved one suffered injuries after seeking health treatment at an Indiana medical provider, you may be able to obtain monterey compensation through an Indiana medical malpractice suit. The attorneys at Padove Law are experienced in helping victims receover the compensation they deserve. Contact Padove Law today at 219-836-2200 to schedule a free consultation.