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Minnesota Court of Appeals Rejects Argument to Overturn Case Law Holding Hospitals Cannot be Held Vicariously Liable for Non-Employed Physician’s Negligence Image

Minnesota Court of Appeals Rejects Argument to Overturn Case Law Holding Hospitals Cannot be Held Vicariously Liable for Non-Employed Physician’s Negligence

Posted by: Ryan C. Ellis

Written by the Gislason & Hunter Medical Malpractice Group 

In a July 8, 2019 opinion, the Minnesota Court of Appeals rejected an argument to upend published case law that has stood for thirty years in Minnesota and which holds that hospitals are not vicariously liable for the acts or omissions of non-employed physicians. In Popovich v. Allina Health System, et. al. (Court of Appeals File No. A18-1987), the majority affirmed the district court’s dismissal of a vicarious-liability claim against a health system stemming from the alleged negligence of a non-employed ED physician.

As set forth by the majority in Popovich, the patient went to a hospital ED complaining of dizziness, loss of balance, blurred vision, headache, and shortness of breath. He was evaluated by an ED physician employed by a private emergency physician group, treated, and discharged. Later that morning, the patient was brought to another local hospital ED. He was evaluated by a different ED physician employed by the same private emergency physician group. That physician ultimately transported the patient to another hospital for admission. The court did not elaborate on the patient’s diagnosis, but stated that he required a two-week admission followed by in-patient rehabilitation. The patient and his wife later filed suit against the health system that owned the hospitals and the private emergency physician group asserting that as a result of the physicians’ alleged negligence the patient “suffered severe and permanent damage requiring extensive ongoing therapy and medical care….”

The health system moved for dismissal of the patient’s claims against it arguing that a hospital is not vicariously liable for the acts of non-employees. The district court granted that motion and the patient appealed.

At the heart of this appeal is the patient’s claim that the health system was legally culpable for the ED physicians’ alleged negligence under the theory of apparent authority. “Apparent authority is that authority which a principal [i.e. – the health system] holds an agent [i.e. – ED physician] out as possessing, or knowingly permits an agent to assume.” If apparent authority exists, then the health system may be held liable for any negligence of the ED physicians.

Without addressing the issue of apparent authority directly, the majority relied on published and controlling case law from McElwain v. Van Beek, 447 N.W.2d 442 (Minn. Ct. App. 1989), which held that “a hospital can only be held vicariously liable for a physician’s acts if the physician is an employee of the hospital.” The majority in Popovich rejected the patient’s argument that Moeller v. Hauser, 54 N.W.2d 639 (Minn. 1952) – the Minnesota Supreme Court case which the McElwain court relied on for its holding – is not supportive of this position.

The patient argued that because the Moeller court addressed the question of whether a hospital could be held vicariously liable for the negligence of an employed resident physician – not whether the hospital could or could not be held liable for the negligence of a non-employed physician – McElwain’s reliance on that holding was misplaced. The majority in Popovich rejected that argument and held that McElwain’s reliance on Moeller was legitimate and the holding in McElwain is controlling law in Minnesota. Further, citing the doctrine of stare decisis – Latin for “to stand by things decided” and the legal principle by which subsequent courts are typically obligated to respect prior precedential case law – the majority declined to overturn McElwain despite the patient’s urging to do so. Applying the holding in McElwain to its facts, the majority in Popovich held that because the ED physicians were not employees of the health system, then the health system could not be held vicariously for the physicians’ alleged negligence and dismissal of the claims against it was appropriate.

Of note, Judge Kevin Ross dissented from the majority opinion in Popovich. In that dissent he argued that McElwain did not purport to establish a new rule of law, but instead meant to restate what it thought was the rule declared by the Minnesota Supreme Court in Moeller. Accordingly, the court of appeals was not bound by the doctrine of stare decisis and could overturn McElwain. In addition, Judge Ross argued that Moeller did not establish or declare that hospitals were not vicariously liable for the acts of non-employed physicians and that McElwain’s holding that a hospital cannot be held vicariously liable for the negligence of a non-employed physician was an “unnecessary…stray statement” and nothing more than dictum. Judge Ross indicated that he would reverse and, without otherwise commenting on the merit of the apparent-authority theory of liability, remand to the district court to consider the health system’s motion to dismiss in light of McElwain being overruled.

Despite Judge Ross’s arguments, the majority decision stands and McElwain’s holding that a hospital cannot be held vicariously liable for the negligent acts or omissions of a non- employed physician remains the law in Minnesota; however, the patient may seek review by the Minnesota Supreme Court. We will continue to monitor this case and provide an update should the supreme court rule.

This information is general in nature and should not be construed as tax or legal advice.