Connecticut Health Law

The Supreme Court of Connecticut recently issued an important decision that could significantly increase a hospital’s liability for the negligence of physicians who have privileges at, but are not directly employed by, the hospital. In Cefaratti v. Aranow, the court finally resolved an issue that had resulted in conflicting decisions in the lower courts, and held that the doctrine of “apparent agency” can apply in medical malpractice actions to hold a hospital vicariously liable for the negligence of a person whom the hospital holds out as its agent or employee. The court also adopted new standards for establishing such liability.

Background

After learning that a surgical sponge had been left inside her abdominal cavity during gastric bypass surgery, the plaintiff sued the physician who performed the surgery, whom she chose after conducting research on gastric bypass surgeons in Connecticut and whom she believed was an employee of the hospital where the surgery took place. She also sued the hospital, alleging that the hospital was liable for the physician’s negligence under the doctrine of apparent agency because the hospital held the physician out as its agent.  Both the trial court and the Appellate Court found in favor of the hospital on the basis that Connecticut does not recognize the doctrine of apparent agency.

Confusion in the Lower Courts

The court acknowledged the confusion regarding whether Connecticut recognizes a right to recover from a principal for the negligence of an agent and found that the state had in fact recognized the related doctrine of apparent authority as far back as 1941. (While courts often use the terms interchangeably, “apparent authority” is sometimes distinguished from “apparent agency” in that the former operates to expand the scope of an actual agent’s authority, while the latter creates an agency relationship that would not otherwise exist.)  In the earlier case, the court applied the doctrine of apparent authority but found that the plaintiff had failed to establish the factual elements of the claim. According to the court in Cefaratti, cases since then at the trial and appellate level sometimes mistakenly suggested that the state did not recognize either apparent agency or apparent authority as a basis for liability.

New Standards Adopted

The court overruled those cases and set forth two alternative standards for establishing whether a principal (the hospital in this case) can be held liable for an agent’s (the surgeon’s) wrongdoing. The plaintiff must prove either that:

• The principal held itself out as providing certain services;
• The plaintiff selected the principal on the basis of the principal’s representations; and
• The plaintiff relied on the principal to select the specific person who performed the services that resulted in the harm to the plaintiff.

OR

• The principal held the apparent agent or employee out to the public as possessing the authority to engage in the conduct at issue, or knowingly permitted the agent to act as having such authority;
• The plaintiff knew of these acts and actually and reasonably believed that the agent or employee possessed the necessary authority; and
• The plaintiff detrimentally relied on the principal’s acts—in other words, the plaintiff would not have dealt with the agent if he or she had known that the agent was not an agent of the principal.

Since the court adopted the second standard for the first time, it remanded the case to the trial court to give the plaintiff an opportunity to present evidence that she detrimentally relied on her belief that the physician was an agent or employee of the hospital. To meet this burden, the plaintiff will have to prove that she would not have allowed the physician to perform the surgery if she had known that he was not the hospital’s agent or employee.

Impact on Hospitals

For hospitals that rely on non-employee health care providers to furnish emergency room, surgical and other services to their patients, Cefaratti may be a source of increased risk, particularly where the patient does not choose the provider who will treat him or her. The court left open for another day the question of whether a hospital can rebut the presumption that medical providers are agents or employees of the hospital by posting signs to that effect or having patients sign disclaimers. In light of Cefaratti, hospitals should review their marketing plans involving non-employee medical providers as well as other aspects of their operations, including admission forms and malpractice insurance policies, to determine whether any changes can be made to reduce the potential liability that may result from this decision.