Cordero v. Christ Hospital Opens A Can Of Worms

February 16, 2008

     A decision by the Appellate Division of the Superior Court of New Jersey last week will raise more questions than it answered in malpractice cases involving hospital based physicians.  In Cordero v. Christ Hospital, covered by the New Jersey Lawyer here, the Court considered whether a Hospital could be held vicariously liable for the malpractice of a member of the anesthesiology group having an independent contractor relationship with that Hospital. The Court held that:

          “…when a hospital provides a doctor for a patient and the totality of the circumstances created by the hospital’s action and inaction would lead a patient to reasonably believe the doctor’s care is rendered in behalf of the hospital, the hospital has held out that doctor as its agent.  We also hold that when a hospital patient accepts a doctor’s care under such circumstances, the patient’s acceptance in the reasonable belief the doctor is rendering treatment in behalf of the hospital may be presumed unless rebutted.”

     In delineating “the relevant circumstances that should be considered in their totality in determining whether the hospital’s conduct would lead a patient in the same situation to reasonably believe that the doctor acts on the hospital’s behalf,” the Court pointed to the following:

  • whether the hospital supplied the doctor
  • whether the medical care provided is integral to the medical treatment received in the hospital
  • any notice of the doctor’s independence from the hospital
  • the patient’s opportunity to reject the care or select a different doctor
  • the patient’s contacts with the doctor before the incident in question, and
  • any special knowledge of the doctor’s contractual arrangement with the hospital

     Applying these criteria to most hospital based physicians who provide services as independent contractors under an exclusive group contract (e.g., anesthesiologists, radiologists, pathologists, emergency medicine), the predominant model nationwide, few would escape characterization as acting “in behalf of the hospital.”

     The Court’s opinion disregards the reality of current hospital operations.  For reasons of efficiency and patient safety, hospitals have established exclusive independent contractor relationships with groups of specialists in key areas that are integral to the effective operation of the hospital.  Such arrangements have been approved consistently by state and federal courts in the context of unfair competition and antitrust lawsuits.  Without such exclusive arrangements, key services would be provided by a disjointed and unreliable collection of separate physicians – a result that would no doubt lead to another decision holding a hospital liable for failure to implement a safer system! 

     The Court’s opinion also falsely assumes that hospitalized patients might make a different decision (i.e., that they might decline treatment) if they understood that hospital based physicians were “independent” from the hospital.  Clearly, they would not, and there would be no reason for them to do so.  The idea that patients accept the services of contracted hospital based physicians only because they believe the physicians are “provided in behalf of the hospital” is a fiction. 

     Assuming hospitals will not abandon the current model of exclusive contracts with hospital based groups, compliance with the Court’s opinion will be difficult.  However, unless and until this opinion is reversed, hospitals in New Jersey would be well advised to implement measures which at least nominally address some of the factors identified by the Court.  Admission forms should be reviewed to emphasize the independence of all non-employee physicians, including the hospital based specialists (and disclaiming hospital liability for their acts); patients also could receive a standard notice whenever they are likely to utilize a hospital based physician advising the patient of the independent contractor relationship.  All of this will add expense and paperwork, and will likely have no effect on the patients’ decisions or their care, but may save the hospital from significant liability exposure.

     The settlement of malpractice cases in New Jersey involving hospital based physicians will now be more difficult.  Greater risk has been created that hospitals will be held responsible for the acts of heretofore “independent” physicians.  All of the elements identified by the Court in Cordero v. Christ Hospital will take on new significance.  Hospital statutory immunities and insurance coverage issues undoubtedly will require clarification in this regard as well.  The mediator’s job just got more interesting.