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Expand the List of Hospital Apparent Agents? The Illinois Supreme Court Says Not So Fast

May 2, 2018

Illinois hospitals and the lawyers that represent them breathed a collective sigh of relief recently after the Illinois Supreme Court reversed the First District’s decision in Yarbrough v. Northwestern Memorial Hospital. 2017 IL 121367. Under traditional laws of agency, a principal can be held liable for the negligent acts of its agent under the doctrine of respondeat superior. This is most commonly seen in the employer/employee context, in which the employer controls and supervises the work of its employees and can therefore be held liable for such work. However, in certain situations the conduct of non-employees can trigger liability of the principal. It is well-established in Illinois that hospitals can be held liable for the negligent acts of non-employee physicians under the doctrine of apparent agency. In the ever-evolving world of health care, which includes the various relationships and affiliations that hospitals have with outside health care providers, it was only a matter of time that a case such as Yarbrough would come along. It raises the question of whether an independent health care clinic was an apparent agent of a hospital.

The test for determining whether a non-employee physician was an apparent agent of a hospital was set out in Gilbert v. Sycamore Mun. Hospital, 156 Ill.2d 511 (1993). In that case, the Illinois Supreme Court held that a hospital could be liable for the conduct of independent contractor physicians if:

(1) The hospital, or its agent, acted in a manner that would lead a reasonable person to conclude that the individual who was alleged to be negligent was an employee or agent of the hospital; (2) where the acts of the agent create the appearance of authority, the plaintiff must also prove that the hospital had knowledge of and acquiesced in them; and (3) the plaintiff acted in reliance upon the conduct of the hospital or its agent, consistent with ordinary care and prudence.

Gilbert, 156 Ill.2d at 525 (quoting Pamperin v. Trinity Memorial Hosp., 144 Wis. 2d 188, 208 (1988). In Gilbert, the patient involved had received care in the hospital’s emergency room from a non-employed physician. The plaintiff argued that her deceased husband assumed the ER physician was a hospital employee and relied upon that assumption in seeking care. Id. The situation in Gilbert is typical in cases alleging apparent agency of a hospital, specifically, a patient receives care there from a physician whom he has no previously established relationship, such as with an ER physician, radiologist, or pathologist, and therefore assumes that he/she is an employee of the hospital. The facts in Yarbrough were quite different, however, as the plaintiff asserted that an apparent agency existed based upon a set of factors never considered before in an apparent agency analysis.

In Yarbrough, the plaintiff sought and received prenatal care from Erie Family Health Center in Chicago. She was told by a staff member that by receiving care there, she likely would undergo any necessary ultrasounds and would deliver at Northwestern Memorial Hospital. Other connections between Erie Family Health and Northwestern Memorial included “financial support, technological assistance, and strategic support. A representative of NMH may serve on Erie’s board if requested by Erie’s board chairperson. Erie-employed physicians seeking privileges to practice at Northwestern Memorial are required to apply for them, as would any physician.” Yarbrough at ¶ 5. Plaintiff brought suit against Northwestern Memorial Hospital and Northwestern Medical Faculty Foundation alleging injuries from the prenatal care that she received exclusively at Erie Family Health. She argued that Erie was Northwestern Memorial’s apparent agent and therefore Northwestern was liable for Erie’s acts. Yarbrough at ¶ 1. The trial court agreed with the plaintiff, as did the First District Appellate Court, finding that a hospital can be found liable for the acts of an independent clinic as long as the plaintiff successfully establishes the Gilbert factors. Yarbrough v. Northwestern Mem. Hosp., 2016 IL App (1st) 141585. The Appellate Court also found that apparent agents may be established “outside of the four walls of the hospital”, and the plaintiff need not name the agent clinic as a defendant. Id.

However, the Illinois Supreme Court disagreed. The Appellate Court primarily focused on the application of the Gilbert factors while the Supreme Court reversed after analyzing Gilbert’s fundamental policy. The Supreme Court in Yarbrough found that a hospital promotes the quality of the treatment provided by its physicians and staff, and they do so to attract patients. Id. at 522. It would be unjust for a hospital to escape liability for negligent health care provided in the hospital if the patient did not know, or had no reason to know, that his/her physician was not employed by the hospital. Id. at 521, citing Arthur v. St. Peters Hosp., 169 N.J. Super.573, 583 (1979). The Court reasoned that this rationale does not apply to cases like Yarbrough. Yarbrough, 2017 IL 121367, ¶44. The Yarbrough plaintiff testified that she thought Erie and Northwestern Memorial were one in the same because she was told that the Erie physician would deliver her baby at Northwestern Memorial. Id at ¶18. The Illinois Supreme Court noted that nothing in Gilbert suggests that apparent agency is established merely because a physician has privileges at the hospital. Id at ¶46.

The Illinois Supreme Court’s decision in Yarbrough keeps the apparent agency analysis for hospitals focused, and did not expand the list of apparent agents to any and all physcians or other health care providers with limited connection to the principal. The Gilbert test is still alive and well, but the high court clarified its proper application. As health care continues to evolve, it is likely that the issue of apparent agency for hospitals will continue to be examined as rules are rewritten and relationships are redefined.