Legal News

RECENT DECISION ON WHETHER INDEPENDENT CONTRACTOR PHYSICIAN IS OSTENSIBLE AGENT OF HOSPITAL

Recently, Division One of the Second Appellate District of the California Court of Appeal held that a physician who is selected by the patient and is identified as an independent contractor in a variety of hospital forms the plaintiff acknowledged reading and signing, is not the ostensible agent of the hospital where treatment was rendered. In Markow v. Rosner (2016) 16 C.D.O.S. 10703, plaintiff Michael Markow sought care from pain management specialist, defendant Howard Rosner, M.D. for chronic pain following a car accident. After a nerve root block in his cervical spine, the plaintiff sustained injuries that eventually resulted in quadriplegia. Plaintiff and his wife sued Rosner and co-defendant Cedars-Sinai Medical Center for negligence and loss of consortium. At trial, the jury found both the hospital and the physician were negligent, but only Dr. Rosner’s negligence was a substantial factor in causing plaintiff’s quadriplegia. The special verdict form showed the jury apportioned 40% of liability to Cedars on the theory that Rosner was an ostensible agent of the hospital. Thereafter, the hospital made a motion for judgment notwithstanding the verdict, which the trial court denied; Cedars appealed. Rosner also appealed on several grounds, one of which was that the jury verdict was “hopelessly inconsistent.” On appeal, the court held Cedars’s JNOV motion should have been granted, and reversed. The appellate court affirmed the judgment against Dr. Rosner.

In 2003, Markow began suffering chronic pain following a car accident; one of his physicians referred him to Dr. Rosner, who was identified as the medical director of the pain center at co-defendant Cedars-Sinai Medical Center. Plaintiff testified he researched Rosner and went to see him at Cedars (even though it was at some distance from his home) because Rosner “worked for the best hospital, one of the best hospitals in the country.”

The pain center where patient received care from Rosner was located down the street from the hospital, although the hospital owned the building and the “equipment and consumables, and the nurses and other nonphysician staff” were employees of Cedars. Because California law bans the corporate practice of medicine (B & P Code section 2400) Dr. Rosner worked as an independent contractor and could not be employed by Cedars.

Rosner treated plaintiff over a period of 4.5 years, during which time plaintiff signed and initialed 25 “Conditions of Admissions” forms with Cedars’s name and logo on them, among other consent forms. Though the Conditions of Admissions form changed slightly over the period of years plaintiff sought treatment from Rosner, all forms signed by Markow clearly stated that the physicians who furnish treatment at the hospital are independent contractors who are not employees or agents of the hospital. The patient was told the physicians would bill patients for their services independently of the hospital. Evidence showed that Rosner’s group billed Markow directly for professional services, and Markow paid the group directly for Rosner’s services. In addition, the section in the forms that identified all physicians as independent contractors required the patient to separately initial the paragraph in order to acknowledge the disclaimer; patient signed and initialed these forms. Plaintiff testified he read many of the Conditions of Admissions forms before signing and initialing them, but eventually stopped reading them because “they all appeared the same.” Despite having read, signed and initialed these forms, Markow testified he assumed Rosner “must be a full-time employee” of the hospital.

The court of appeal conducted a very thorough analysis of the ostensible agency issue. It found first that plaintiff had actual notice the doctor was an independent contractor. There was no conduct by the hospital or the physician that could reasonably have caused patient to think Rosner was an agent of the hospital—actual or ostensible. The plaintiff had chosen Rosner himself for treatment, as opposed to someone who comes into the ER unconscious and has no choice in the matter of who his physician is. In addition, the multiple forms plaintiff signed made it clear that Rosner was not an employee of Cedars. The court found Markow “knew or should have known, based upon the Conditions of Admissions forms that he initialed and signed on multiple occasions, the “Authorization for & Consent to Surgery or Special Diagnostic or Therapeutic Procedures of Blood Transfusions” form that he also signed on at least eight occasions, and Rosner’s status as Markow’s personal physician, that Rosner was not Cedars’s agent or employee, but was instead an independent contractor.” (Emphasis added.) The court went on to hold that such uncontroverted evidence turned the question of ostensible agency into a question of law, not fact. In so holding, it reviewed the matter de novo and reversed the trial court’s denial of Cedars’s JNOV motion as a matter of law. The court ruled that while the “existence of an agency relationship is usually a question of fact, it ‘becomes a question of law when the facts can be viewed in only one way.’”

Rosner’s appeal was less successful. The court found there was substantial evidence showing the paralysis was caused by his negligence based on two main theories: one was that the doctor used a type of contrast to which he knew plaintiff was allergic, and the other was the fact there was physical evidence of “negligent mechanical trauma.” In addition, the verdict form was not “hopelessly ambiguous.” Plaintiffs’ joint CCP Section 998 offer to compromise was held on review to be valid. The court noted that joint 998 offers are not necessarily invalid, especially in a situation like the instant case in which offer was just under $1M, the award was five times that, and the plaintiff’s wife’s award would be limited to $250,000 under MICRA. “The joint offer in this case did not preclude a determination of whether plaintiffs received a more favorable judgment. Plaintiffs offered to settle the case for just under $1M, yet the jury awarded them $5.2M. Thus, it is clear that plaintiffs were awarded far more than they would have received from their joint settlement offer,” particularly when the limitation on Mrs. Markow’s award was $250,000 by statute.

Finally, in an interesting side note, the court found plaintiff’s CCP Section 998 to be valid even though it was conditioned on the “accuracy of Rosner’s disclosures regarding his insurance coverage for plaintiff’s claims.” Because the court found the offer was “sufficiently specific to allow the recipient to evaluate the worth of the offer and make a reasoned decision whether to accept” it, or not, it held the conditions within the 998 offer did not invalidate it, and affirmed the trial court’s award to plaintiff of their costs pursuant to their 998 offer to compromise.

The discussion about the 998 offers is interesting, particularly in light of two other recent decisions I summarized several weeks ago in which the courts said the placement of conditions (such as the requirement that a settlement agreement be signed as part of accepting the 998 offer) may invalidate a 998 offer. In those cases, though, the courts noted that an unspecified settlement agreement might have value that is impossible to ascertain unless it is produced concurrently with the 998 offer. In Markow, by contrast, the defendant’s policy was a known, fixed amount, according to discovery responses.

This decision can be used to argue that there can be no finding of ostensible agency when the physician is retained and seen by the patient independently—for example, the patient does not encounter the doctor for the first time when the patient comes to the ER or is unconscious—and forms signed by the patient clearly indicate the physician is not an employee of the hospital. If that is the case, one can argue the patient knew or should have known from forms signed (and perhaps initialed) in the course of giving consent or being admitted that the doctors who render care are independent contractors and not employees. If one can produce enough evidence that the patient knew or should have known the doctor was an independent contractor, per this decision, a court can consider the undisputed evidence to rule on the ostensible agency issue as a matter of law.

Note that the dissent in this case is lengthy; the dissenting justice argued that the majority misstated the applicable standard of review, and that because determination of the issues of agency and “notice” are questions of fact, de novo is not the appropriate standard of review.



For more information on this and other recent decisions, please reach out to Reneé A. Richards.