Chapter 4.F.1 (or 2.B) -- Hospital Liability

In an unusual but important decision, the Virginia Sup. Ct. considered whether a physicians' practice group composed of faculty at the state's premier medical school qualified for charitable immunity.  The Court held no, despite the organization's charitable tax exemption, because it operated much more as a normal for-profit business than as a charity.  University of Virginia Health Services Foundation v. Morris, Va., 275 Va. 319, 657 S.E.2d 512 (Va. 2008).

Reaching a contrary, but more conventional, conclusion for a hospital, the Arkansas Sup. Ct. concluded that making a profit and suing patients to collect unpaid bills does not rob a non-profit hospital of its charitable immunity. Anglin v. Johnson Regional Medical Center, ___S.W.3d ___ (Ark. 2008).

Based on sovereign immunity, the Oregon Sup. Ct. held that its state medical school is protected by a $200,000 statutory cap on damages that applies to any state agency, but that the same limit applied to individual physicians who work there is unconstitutional, since it “emasculates” a remedy available at common law. Clarke v. Oregon Health Sciences University, 175 P.3d 418 (Or. 2007).

Documenting a sharp increase in liability suits against nursing homes, especially in Texas and Florida, see David G. Stevenson & David M. Studdert, The Rise of Nursing Home Litigation: Findings from a National Survey of Attorneys, 22(2) Health Aff. 219 (March 2003).

For a rare decision rejecting hospital responsibility for an emergency room physician, see Sanchez v. Medicorp Health System, 618 S.E.2d 331 (VA 2005).  Taking the more traditional approach, the Tenn. and Iowa Supreme Courts, in separate cases, found that allegations of apparent agency raised issues of triable fact, regarding treatment by hospital-based physicians (radiologist and emergency room), despite the hospital’s attempts in one case (Tenn.) to disclaim responsibility in admissions forms.  Boren v. Weeks, 251 S.W.3d 426 (Tenn. 2008); Wilkins v. Marshalltown Medical and Surgical Center, 758 NW2d 232 (Iowa 2008).

The Minn. Sup. Ct. addressed the interesting argument that a state peer review confidentiality statute negates hospital liability for negligent credentialing, since it is based on the opposing policy of protecting peer review processes from the threat of liability.  The court rejected this argument, noting that "The policy considerations underlying the tort of negligent credentialing outweigh the policy considerations reflected in the peer review statute because the latter policy considerations are adequately addressed by the preclusion of access to the confidential peer review materials."  The court noted, however, that the peer review statute "may make the proof of a common law negligent-credentialing claim more complicated" by requiring the trial court to bifurcate the liability case against the physician from the case against the hospital.  Larson v. Wasemiller (738 N.W.2d 300 (Minn 2007)). 

Prof. Barry Furrow argues in “Patient Safety and the Fiduciary Hospital,” 1 Drexel L. Rev. 439 (2009), that a plethora of modern requirements and expectations for hospitals to monitor, report, and improve quality all converge to create a more general fiduciary duty that hospitals owe to patients regarding the quality of care.

Reinforcing the argument for a more general form of hospital enterprise liability is a study showing that, without liability, hospitals "internalize" only a small percentage of the costs of medical error, and therefore they have only a weak "business case" for avoiding medical errors.   Michelle M. Mello, et al., Who pays for medical errors? An analysis of adverse event costs, the medical liability system, and incentives for patient safety improvement, 4 J. Empirical Legal Stud. 835-860 (2007).  See also Michelle M. Mello and David M. Studdert, Deconstructing negligence: the role of individual and system factors in causing medical injuries, 96 Geo. L.J. 599-623 (2008) (documenting that most medical errors have a system component, so that targeting mainly individual physicians is misdirected).

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