Failing to Identify Negligent Physicians in a Proposed Complaint Does Not Bar Vicarious Liability Claims; Anonymous Hospital v. Spencer

An employer is, of course, vicariously liable for the negligence of its employees when they act in the course and scope of their employment. But Indiana has erected procedures around the way in which plaintiffs may bring medical malpractice claims.
The question in this case is the extent to which those procedures affect claims of vicarious liability to a hospital.

Spencer was in the Hospital for twenty-five days, during which time he underwent multiple procedures and was cared for and treated by multiple personnel. He later filed a proposed medical malpractice complaint against the Hospital. After Spencer tendered his submission to the medical review panel, the Hospital asked the trial court to strike Spencer’s allegations of vicarious liability, and except the conduct of any physicians from the panel’s review because no physicians were named in the proposed complaint, nor were they identified during initial discovery, and the statute of limitations has expired.

The trial court denied the motion, and the Hospital appealed. At the outset, the Court highlighted a misunderstanding the parties had concerning the applicable standard of review. The parties argued that it was abuse of discretion (the trial court’s final order came after a motion to correct error), but the Court disagreed. It found that it had a de novo review for two reasons. First, the question presented was a “pure legal question regarding the interpretation of Indiana case law.” But the Court
also emphasized that its review was de novo because although the trial court heard arguments from the parties, the court
acknowledged that it did “not have any actual evidence before it to make a decision.” Our standard of review of a trial court’s decision depends on whether the court “resolved disputed facts, and if so, whether the trial court conducted an evidentiary hearing or ruled on a paper record.” Where, as here, the court neither conducted an evidentiary hearing nor resolved any disputed facts, our appellate review is de novo.

Turning to the substance of the appeal, the Court started by emphasizing the informal nature of proceedings before the medical review panel. It noted that plaintiffs cannot be expected to present the panel with each and every possible theory of negligence. It then looked to the “general theory of liability” in the proposed complaint and found that it put the Hospital on notice that Spencer was asking for the Hospital to be vicariously liable for its employees’ conduct.

The question, then, was whether Spencer’s failure to name the individual doctors who were at fault before the statute of limitations expired prevented him from making a vicarious liability claim. The Court held that it did not, citing a couple of prior decisions holding that vicarious liability exists, even if the agents are immune from suit.

The Court then criticized the Hospital for trying this tactic to avoid liability. We note that we are concerned … by the Hospital’s attempt to so severely, and we think unjustifiably, limit Spencer’s claims against it before the case has even been presented to the MRP. The Hospital waxes poetic about being prejudicially misled by what it characterizes as a “threadbare” proposed complaint and “bait-and-switch” initial discovery responses. We remind the Hospital that, in the words of Karen Carpenter, “We’ve only just begun.” The Hospital has yet to even craft its own submission to the MRP, and it has ample notice and opportunity to respond to all alleged instances of negligence, physician or otherwise, presented by Spencer in his submission. Thereafter, there is still much to be sorted out if and when this case finds its way to a courtroom.

Medical malpractice defendants should keep this criticism in mind when deciding the best procedural avenue to raise particular issues, as they may shoot themselves in the foot if they raise an argument too early.

Lessons:
1. When a trial court has conducted no evidentiary hearing or resolved any disputed facts, the standard of review on appeal is de novo.
2. When a matter is at the panel stage, the grant of power to the trial court to make preliminary determinations of law or fact is to be narrowly construed.
3. A plaintiff may pursue a vicarious theory of liability against a hospital for the conduct of physicians who are not named in a proposed complaint and for which the statute of limitations has now run to add them as parties.

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