Vinson & Elkins, L.L.P.
Houston, Texas

The San Antonio Court of Appeals recently issued an opinion that greatly expands the liability exposure of hospitals based on the alleged negligent acts of an emergency room physician. Sampson v. Baptist Mem'l Hosp. Sys., No. 04-95-00910-CV, 1996 Tex. App. LEXIS 5003 (Tex. App. San Antonio Nov. 13, 1996, n.w.h.). Although, since 1986, Texas hospitals have been subject to liability for the acts of emergency room physicians based on the legal theory of "ostensible agency," this case would expand that liability by holding the hospital vicariously liable under a theory of "apparent agency." Under theories of ostensible agency, a hospital may be held liable for the acts of a physician if the hospital "holds out" the physician as its agent or employee. Under Texas law, a hospital may defeat ostensible agency by providing "notice" to the patient that the physician is not an employee or agent. According to the court, "apparent agency" cannot be defeated by notice to the patient that the physician is an independent contractor and, thus, the court appears to impose a "strict liability" standard on a hospital for the negligent acts of an emergency room physician.

The court explained this extension of liability based on public policy: "In this Court's opinion it is public policy, and not traditional rules of the law of agency or the law of torts, which should underlie the decision to hold hospitals liable for malpractice which occurs in their emergency rooms." The court further stated: "Because we do not believe hospitals should be allowed to avoid such responsibility, we encourage the full leap imposing a nondelegable duty on hospitals for the negligence of emergency room physicians." In further dicta (a holding not necessary for the decision in the case) the court stated:

At a time when hospitals are engaged in sophisticated managed care structuring and advertising in an effort to induce patients and insurance companies to use their services, we contend that hospitals must accept the responsibility that attaches to the services it undertakes to generate revenues. While public policy and fundamental fairness indicate this result, it is dictated by the simple fact that an injured party must rely on a hospital's emergency room because there is no other place to go.

Id. at 10.

This case involved a patient who presented to Baptist Memorial Hospital System ("Baptist") and was greeted by a sign in the emergency department that clearly stated that the physicians are independent contractors and not employees of Baptist. The patient also signed a consent form that went into lengthy detail acknowledging that Baptist was not responsible for the judgment or conduct of any physician who treats or provides a professional service, "but rather each physician is an independent contractor who is self employed and is not the agent, servant, or employee of the hospital." Baptist clearly took extraordinary measures to defeat ostensible agency allegations.

The trial court granted the summary judgment in favor of Baptist and plaintiff appealed. On appeal, the court expressed its disapproval of allowing hospitals to defeat vicarious liability by providing notice to the patient. Thus, the court analyzed the summary judgment under the "apparent agency" theory of vicarious liability, distinguishing it from the "ostensible agency" theory. The court noted that the plaintiff did not recall being shown the consent form or signing the document and she stated that she did not see the signs in the emergency department. On that basis, the court held there was a fact issue that required reversal of the summary judgment.

However, not content to reverse the summary judgment and remand the case to the trial court for disposition, the court found it necessary to make a giant leap in the law. The court decided to take an "additional step in our analysis to consider whether notice provided in consent forms and posted in emergency rooms can ever be sufficient to negate a hospital's 'holding out' given the exigencies of the circumstances in which patients seek emergency medical treatment." The court concluded that signs are "too little, too late" because a patient by definition is under stress and really has no choice in the matter of choosing an emergency room physician. Similarly, the consent form is not adequate and, in fact, the court does not think there is any notice that is sufficient to defeat "apparent agency." Thus, in the court's opinion, the duty to provide physicians for emergencies is nondelegable and a hospital may not shield itself from responsibility for the negligent performance of such care.

There was a strong dissent by Justice Sarah Duncan noting that the parties did not even plead "apparent agency," but instead pleaded "ostensible agency." Also, even under "apparent agency" the hospital must hold out the physician as an employee, but Baptist had conclusively demonstrated that it did not hold out its emergency room physicians as its employees. "[T]o the contrary, short of shutting down its emergency room, it did all it could reasonably have done to notify patients that its emergency room physicians were not its employees." Justice Duncan further explained in her dissent:

The members of the majority apparently believe it is this court's role to unilaterally impose its views of good "public policy," and what it perceives to be "fundamental fairness," on Texas citizens. I, on the other hand, believe it is our role to apply the law enunciated by the higher courts and the legislatures to the best of our ability. Accordingly, I would leave this difficult policy decision with its far-reaching social and economic ramifications to the Texas Legislature.

Hopefully this case will be appealed to the Supreme Court where hospitals should find a friendlier forum. If appealed, or perhaps on motion for rehearing, hospitals should consider filing an amicus curiae brief arguing against the holding in this case.