Hospital May Be Held Liable for ‘Independent Contractor’ Surgeon’s Alleged Mistakes
By Damian D. Capozzola, Esq., and Jamie Terrence, RN
News
A Texas Appellate Court recently decided that a nonprofit hospital could be held vicariously liable for a botched brain surgery that left a minor permanently disabled. The hospital’s argument that the defendant surgeon was an independent contractor rather than an employee was dismissed by the court. This ruling opens the door for the family of the injured plaintiff, who sued on her behalf, to continue their case against the hospital and doctor and, if successful, seek to hold the hospital responsible for damages.
The surgeon had performed brain surgery on the plaintiff to treat an arteriovenous malformation. During the procedure, a surgical tool allegedly migrated into the child’s brainstem, leading to catastrophic injuries that caused permanent mental and physical disability. The hospital attempted to distance itself from liability by arguing that the surgeon was contractually independent, claiming he maintained sole control over his medical judgment. However, the employment contract consistently referred to the surgeon as an employee of the hospital, a factor that weighed heavily in the court’s ruling. The decision underscores the importance of the language of employment agreements in healthcare and the potential for hospitals to face liability even when doctors are granted substantial autonomy in their medical practices.
Background
In February 2018, the defendant neurosurgeon performed brain surgery on the plaintiff to address an arteriovenous malformation. This condition involves an abnormal tangle of blood vessels in the brain, which poses significant health risks, including potential hemorrhage and neurological damage if left untreated.
During the surgery, a surgical retractor, a tool used to hold back tissue, allegedly migrated into the girl’s brainstem. The plaintiff alleged that this error resulted from the surgeon’s failure to properly monitor and secure the retractor during the surgery. The plaintiff alleged that the migration of the tool caused her severe physical and mental injuries, leaving her with permanent disabilities. According to the complaint, the negligent movement of the surgical tool could have been caused by either the surgeon’s actions, the surgical technician’s handling of the suction device, or the direct contact of the suction device with the retractor itself.
Following the surgery, the plaintiff filed a lawsuit against the hospital, alleging that it was vicariously liable for the surgeon’s negligence. The lawsuit also named the employer of the surgical technician who assisted during the surgery as a co-defendant. However, the focus of the appeal was on the hospital’s liability.
The hospital argued that it should not be held liable for the surgeon’s alleged negligence, arguing that he was an independent contractor who retained full control over his medical decisions. The hospital pointed to a clause in the surgeon’s employment contract stating that he had the right to exercise his independent medical judgment when treating patients. The hospital argued that Texas law restricts the degree of control a healthcare institution can exert over the medical judgment of its practitioners. The hospital claimed that since the surgeon was not under its direct control while performing surgery, it should not be vicariously liable for his actions.
The trial court denied the hospital’s motion for summary judgment, and the hospital sought an interlocutory appeal. The appellate court focused on the contractual relationship between the hospital and the surgeon, and ultimately upheld the trial court’s decision. Central to this ruling was the language in the surgeon’s employment agreement, which repeatedly referred to him as an “employee” of the hospital, not as an independent contractor. While the contract did acknowledge the surgeon’s right to exercise independent medical judgment, the court found this insufficient to absolve the hospital of potential liability.
The court’s ruling emphasized that the hospital’s right to control aspects of the surgeon’s work — such as where he practiced, his hours, and his adherence to the hospital’s policies — was enough to trigger vicarious liability. The decision also addressed the hospital’s claim that, as a nonprofit healthcare organization, it was legally prohibited from controlling the surgeon’s medical decisions. The court dismissed this argument, pointing out that the employment agreement still granted the hospital enough control over the surgeon’s actions to hold the hospital liable for his alleged negligence.
What This Means for You
Hospitals and medical institutions can be held liable for the actions of their employed physicians under the legal doctrine of vicarious liability, also known as respondeat superior. This legal theory allows an employer to be held responsible for the negligent acts of its employees, provided those acts occur within the scope of employment.
For a hospital to be liable for a surgeon’s negligence, two key factors must be established: first, that the surgeon was considered an employee (as opposed to an independent contractor), and second, that the negligence occurred while the surgeon was performing duties related to their employment.
The rationale behind vicarious liability is that employers have a certain level of control over their employees’ work and, therefore, are accountable for actions taken during the course of that work, even if the employer did not directly participate in or condone the negligent conduct. However, determining whether a physician is an employee or an independent contractor depends on the specifics of their contractual relationship with the hospital, including the level of control the hospital exercises over the physician’s work, such as compliance with institutional policies and administrative duties.
In this case, the key issue was whether the surgeon was an employee or independent contractor. While the hospital argued that the surgeon exercised independent medical judgment, the court found that the language of the contract referred to him repeatedly as an “employee.” This distinction mattered because the court held that, despite the surgeon’s professional autonomy, the hospital still had enough control over his general work duties — such as adhering to hospital protocols and performing administrative tasks — that vicarious liability could apply. This case highlights the importance of carefully drafted employment agreements in healthcare settings. Hospitals and physicians must ensure their contracts accurately reflect their legal relationship because courts will look beyond labels like “independent contractor” or “employee” to the actual terms of control and supervision in determining liability.
One of the key takeaways from this case is the significance of employment agreements in the role of establishing vicarious liability. Here, the surgeon’s employment contract played a central role in the court’s decision to hold the hospital potentially liable. The contract consistently referred to the surgeon as an employee, despite provisions that allowed him to retain independent medical judgment. Hospitals must carefully draft and review employment agreements with physicians to ensure that the language accurately reflects the nature of the relationship. If the hospital intends to classify a physician as an independent contractor, the contract should explicitly and consistently reflect that status, and the terms should align with that classification.
In addition to reviewing employment agreements, state and federal regulatory agencies often require that contracted workers, either independent or supervised, meet all the same requirements as regular staff members. This includes periodic evaluation by supervisors or peers, depending on the level or position the contracted individual is filling. In the case of a physician or surgeon, periodic review by one’s peers is mandated by these laws and regulations. In this way, the hospital or other facility for which an independent contractor performs services has oversight and a responsibility to assure a level of quality comparable to his or her peers.
While physicians may retain the right to exercise independent medical judgment in treating patients, this does not necessarily shield hospitals from liability. In this case, the court found that the hospital’s control over the surgeon’s work was enough to establish vicarious liability. Hospitals should recognize that, even if a physician is making independent medical decisions, they still may be held liable if they retain significant control over other aspects of the physician’s work.
The ruling also clarifies the scope of a hospital’s legal responsibilities under Texas law. The hospital argued that it could not be held liable because, under Texas Business Organizations Code Section 22.056, nonprofit health organizations are prohibited from exerting control over physicians’ medical decisions. But the court found that this statute did not absolve the hospital of liability because it still had the right to enforce various employment-related policies and standards on the surgeon.
Healthcare institutions must ensure that institutional policies comply with statutory limits while acknowledging the potential for liability. That said, it is important to note that these kinds of employment and independent contractor issues can vary significantly by state or may even be subject to federal law in certain circumstances. It always is important to consult knowledgeable counsel concerning these matters.
Nonprofit hospitals and healthcare organizations may face unique challenges when it comes to liability for the actions of their employed physicians. But simply being organized as a nonprofit entity does not shield a hospital from vicarious liability. Even if a nonprofit healthcare organization is prohibited from controlling physicians’ clinical decisions, it still can be held liable if it exercises control over other aspects of the physician’s employment. Healthcare administrators should be aware of the potential for liability and take proactive steps to ensure that their policies and contracts are aligned with legal requirements.
For healthcare professionals and institutions facing potential litigation, this case underscores the importance of legal preparation. The hospital’s efforts to distance itself from the surgeon’s actions ultimately failed because the contractual language and the degree of control it exercised over his work were inconsistent with its argument. In similar cases, healthcare organizations should work closely with legal counsel to ensure that contracts, policies, and procedures are carefully crafted to mitigate liability risks.
Reference
- Decided on June 15, 2024, in the Court of Appeals for the Thirteenth District of Texas, Case No. 13-22-00374-CV.
Damian D. Capozzola, Esq., The Law Offices of Damian D. Capozzola, Los Angeles
Jamie Terrence, RN, President and Founder, Healthcare Risk Services, Former Director of Risk Management Services (2004-2013), California Hospital Medical Center, Los Angeles
A Texas Appellate Court recently decided that a nonprofit hospital could be held vicariously liable for a botched brain surgery that left a minor permanently disabled. The hospital’s argument that the defendant surgeon was an independent contractor rather than an employee was dismissed by the court. This ruling opens the door for the family of the injured plaintiff, who sued on her behalf, to continue their case against the hospital and doctor and, if successful, seek to hold the hospital responsible for damages.
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