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Posted On August 06, 2019

Complex Corporate Arrangements Are No Match for Indiana Malpractice Laws

Corporate contracting of independent health care providers does not clear medical facilities of liability in Indiana malpractice claims. In some cases, the physicians and health care staff at hospitals, imaging facilities, and other medical offices and clinics are employees of the facilities where they provide services. Alternatively, doctors and medical staff may also operate as independent contractors, carrying their own liability insurance and acting only on their own authority.

Generally, health care facilities are responsible for the actions of their employees or agents when they are acting within their scope of employment. They may not be liable for the actions of independent contractors or non-employee providers and staff unless it could be construed that such independent health care professionals are rendering services on behalf of the facility.

U.S. Court of Appeals Affirms Malpractice Verdict

The U.S. Court of Appeals recently affirmed a district court’s ruling holding an Indiana imaging facility liable for a non-employee physician’s failure to diagnose cancer. A patient filed a lawsuit against a diagnostic imaging facility claiming an independent radiologist neglected to identify and diagnose cancer in a CT scan. As a result of the missed diagnosis, the patient claimed her condition went undiagnosed and untreated for more than a year.

A representative for the diagnostic imaging facility suggested that it is merely a management company for a medical group that provides administrative services, including arranging facilities, equipment, and billing. The representative argued that the facility should not be held financially responsible for the physician’s actions because the doctor was not employed by the facility. Rather, theirs was simply a contractual relationship with the radiologist rendering services out of the facility and not on its behalf. The courts ruled in favor of the patient, however, awarding a $15 million verdict on the basis that the facility is liable under the theory of apparent agency.

What Is an Apparent Agent?

Apparent agency occurs when someone reasonably believes that another has the authority to act on behalf of an entity or another person. This type of presumed authority can be found even when the apparent agent has been granted no such power. Contracted medical providers, such as in the recent imaging facility malpractice case, may be considered apparent agents of the facilities in which they are providing services if patients could reasonably presume they are acting on behalf of the facility. Apparent agency may also arise when a medical provider’s conduct could lead third parties to logically believe they are rendering services on behalf of the facility.

The Indiana Medical Malpractice Act

The Indiana Medical Malpractice Act governs negligence claims against qualified providers in the state and offers protections to medical professionals and patients. The act establishes that a review panel will review all claims of malpractice over $15,000 before they can proceed to court to help ensure only those cases with solid merit move forward. Medical review panels consist of an independent attorney who serves as chairman and three physicians with the same or similar specialties to the professionals involved in the cases. The panel reviews the details of the complaint to help moderate quick payouts and frivolous claims.

Further, the act created the Indiana patient’s compensation fund, which helps pay patient injury claims, and it capped the amount of damages that patients can recover in malpractice cases. As of 2019, the total amount of compensation available to patients for acts of malpractice is limited to $1.25 million. Health care providers are responsible for the first $250,000 in damages to patients suffered as a result of acts of malpractice. The state’s patient’s compensation’s fund picks up the excess, up to $1 million.

Qualifying Providers and Limitations on Damages

Under the Indiana Medical Malpractice Act, those health care professionals and facilities that take the necessary steps are considered qualified providers. For the purposes of the act, health care providers include individuals, partnerships, limited liability companies, corporations, facilities, and institutions that are legally authorized or licensed to render health care or professional medical services as a physician, specialist, registered or licensed nurse, hospital, or health facility, or as an officer, agent, or employee of the individual, partnership, corporation, facility, or institution. To become qualified, medical providers must submit proof of financial responsibility, as well as pay a surcharge to the Indiana Department of Insurance. The funds from the surcharge go into the patient’s compensation fund.

Although enrollment is voluntary, only those providers who take steps to get qualified receive the protections of the act. Medical facilities and health care professionals who are not qualified are subject to the general laws relating to negligence and personal injury claims. Therefore, the caps are not applicable, and defendants may not receive supplemental assistance paying such claims from the state’s patient compensation fund.

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