Petrovich v. Share Health Plan of Illinois, Inc.

Supreme Court of Illinois · 1999 · Torts

TortsMedical MalpracticeVicarious LiabilityAgencyHMO liabilityapparent agencyostensible authorityimplied agency

Facts

Plaintiff's employer enrolled her in Share, an IPA-model HMO that required members to obtain covered care through Share's network and to choose a primary care physician from Share's list. Plaintiff chose Dr. Kowalski, who referred her to Dr. Friedman; plaintiff alleged that both physicians negligently failed to diagnose her oral cancer in a timely manner. Share's member handbook described Share as providing "all your healthcare needs" and referred to doctors as "your Share physician," "Share physicians," and "our staff," but did not disclose that participating physicians were independent contractors. Although Share had private agreements and a subscriber certificate stating physicians were independent contractors, plaintiff testified she did not know the physicians' relationship with Share and believed they were Share employees.

Issue

May an HMO be held vicariously liable for the negligence of its independent-contractor physicians under agency principles? More specifically, did plaintiff present sufficient evidence to avoid summary judgment on theories of apparent authority and implied authority?

Rule

An HMO may be held vicariously liable for the negligence of its independent-contractor physicians under both apparent authority and implied authority. Apparent authority requires proof that the HMO held itself out as the provider of health care without informing the patient that care was rendered by independent contractors, and that the patient justifiably relied on the HMO rather than on a specific physician; implied authority exists where the facts and circumstances show that the HMO exerted sufficient control over the physician so as to negate the physician's status as an independent contractor, with the cardinal consideration being the right to control the manner of doing the work.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A managed-care plan in Cleveland gives members a handbook stating that the plan provides "all your medical care" and repeatedly refers to network doctors as "our doctors" and "your plan physician." Lena Ortiz selected a primary doctor from the plan's list and later sued after an allegedly negligent specialist referral, claiming she believed both doctors worked for the plan.

Which is the strongest argument that the plan can be held vicariously liable under apparent authority?

Explanation. Apparent authority against an HMO requires evidence that the HMO held itself out as the provider of health care without informing the patient that care was rendered by independent contractors, and that the patient justifiably relied on the HMO rather than a specific physician. Express representations of employment are unnecessary; conduct and materials such as a handbook may suffice. (Derived from Petrovich v. Share Health Plan of Illinois, Inc. (n.d.).)