Do you have an “independent contractor” physician or practitioner seeing patients in your medical practice? Do you allow an outside service to perform ultrasounds, bone density scans, lab work, aesthetic treatments, or other services in your medical practice? If the answer is yes, you may be liable for that person’s actions.
CAP understands the various reasons why you would enter professional relationships with other physicians and practitioners through your medical practice. Usually, it is to increase the range of medical services offered to patients, which increases the potential patient population and resulting revenue. Understandably, it can be to offset the expenses of doing business and to share resources.
You likely understand that when entering a formal written partnership, you can be held liable for the negligence or misconduct of a partner. But did you know that even if no formal legal partnership exists, you can expose yourself to liability when, by your actions and declarations, you give the impression of a joint medical practice? This is called Ostensible Agency.
Black’s Law Dictionary defines Ostensible Agency as,
“An Implied or presumptive agency, which exists where one, either intentionally or from want of ordinary care, induces another to believe that a third person is his agent, though he never in fact employed him. Bibb v. Bancroft (Cal.) 22 Pac. 484; First Nat. Bank v. Elevator Co., 11 N. D. 280, 91 N. W. 437.”
Consider this scenario: You are a physician owner of an ophthalmology practice named VisionCare. As an expanded service to your patients, an “independent contractor” optometrist (Dr. I) comes to your office to provide refractive services. Mrs. Goingblind presents to VisionCare because she has trouble seeing. Dr. I examines her and misses the early signs of toxoplasmosis. As a result, Mrs. Goingblind loses all left eye vision. She sues VisionCare for the optometrist’s negligence, even though Dr. I is not a VisionCare employee and Dr. I has his own malpractice coverage.
How would Mrs. Goingblind know that Dr. I is not an employee/partner of VisionCare? She wouldn’t —unless after walking through the office door, there was evidence that Dr. I was not part of VisionCare. Under the rules of Ostensible Agency, she need only perceive that he is an employee or partner in VisionCare to entangle the group in a lawsuit for the diagnostic error.
Simply put, you may be targeted for the malpractice of physicians and practitioners you do not employ or formally partner with. Absent diligence on your part, all it takes is a patient or his or her family to misinterpret and believe that there is a professional employee/employer or partnership between you and them. Furthermore, there are even instructions for juries to find you liable.
To reduce your Ostensible Agency liability, CAP recommends that when sharing office space with other physicians and practitioners who are not part of your medical practice, you should follow these risk reduction strategies:
Be alert to those situations when your words or actions can create the impression you “rely” on someone else’s reputation for service or expertise.
Educate patients that your medical practice is separate from those other physicians and practitioners. Inform your patients that you are not responsible for each other’s patients or medical practices. Make it part of the intake discussion. Post a notice at the reception desk, on your website, and in your practice materials.
Compile a list of those physicians and practitioners and have patients sign that list attesting that they understand that the physicians/practitioners in the office are not partners or otherwise affiliated. Make it part of the patient’s medical record.
Avoid regularly seeing each other’s patients (except on an emergency basis). But if you decide to, keep separate medical records and charge patients of other physicians or practitioners separately.
Use the words “a separate medical practice” under each doctor’s name on the front door for those sharing office space and resources with other physicians and practitioners.
Use separate employees, when practical.
Arrange your business needs separately — i.e., rent, accountant, insurance, etc.
Use separate prescription pads and business cards.
Use separate business letterheads.
The outside practitioner should invoice his or her medical care separately from your invoices.
Lab coats and ID badges should be identified separately for such outside practitioners.
This information is provided as a service to CAP members from a risk management perspective and is not intended as legal advice. If you have questions or a specific patient situation and need guidance please contact the Hotline at (800) 252-0555.
Amy McLain is Vice President, Risk Management and Patient Safety for CAP. Questions or comments related to this article should be directed to amclain@CAPphysicians.com.
Black’s Law Dictionary 2nd Ed. Accessed 2/22/2021