Back in 1999, the Indiana Supreme Court in Sword v. NKC Hospitals, Inc. adopted the Restatement (Second) of Torts § 429, holding that a hospital could be vicariously liable for the tortious conduct of an independent contractor through an apparent or ostensible agency. Under Sword’s § 429 apparent agency analysis, courts look at two main factors: (1) the principal’s manifestations that an agency relationship exists and (2) the patient’s resulting reliance.
Recently, the Indiana Supreme Court in the case of Arrendale v. American Imaging & MRI, LLC, has extended independent contractor liability to non-hospital medical entities that provide patients with healthcare.
In the Arrendale case, Harold Arrendale’s primary care physician sent him to American Imaging & MRI, LLC (Marion MRI) to get MRIs of his spine. Marion Open MRI is not a hospital, but rather an outpatient diagnostic imaging center that is not a qualified healthcare provider under the Medical Malpractice Act (MMA). Marion Open MRI contracted with a radiologist Dr. Alexander Boutselis to read MRIs on an independent contractor basis. Pursuant to this contract, Marion Open MRI sent Arrendale’s images to Dr. Boutselis for review and interpretation. Dr. Boutselis read and interpreted these MRIs from his home office and was never physically present at Marion Open MRI. Dr. Boutselis’s reports and conclusions from reviewing Arrendale’s MRIs appeared on Marion Open MRI letterhead and gave no indication of his independent contractor status.
Arrendale filed his complaint in 2017 among which he alleged medical malpractice related to his MRI and imaging care. He specifically alleged that the defendant entities, including Marion Open MRI and Dr. Boutselis, failed to diagnose and treat his spinal arteriovenous fistula, which has now resulted in permanent injuries.
Marion Open MRI moved for summary judgement, arguing that it was not liable for Dr.Boutselis actions because Sword’s Restatement (Second) of Torts § 429 analysis did not apply to non-hospital entities. The trial court granted summary Judgement for Marion Open MRI. The court of appeals reversed.
The Indiana Supreme Court then took the case to decide if Sword applied to non-hospital entities. The Court affirmed summary judgement for Arrendale for two reasons. First, the Court acknowledged that there are ongoing changes in the way patients consume healthcare. The court explained that given these continued changes, they “cannot close [their] eyes to the legal and social needs of our society, and this Court should not hesitate to alter, amend, or abrogate the common law when society’s needs so dictate.”
Secondly, policy reasons underlying Sword apply equally to Marion Open MRI and non-hospital medical entities providing patients with healthcare. The court confirmed Arrendale’s argument that “the law should meet reasonable people’s expectations,” and that reasonable people expect that the physicians providing them with healthcare services are employed by the facility that the patient attends, unless the patient is provided with notice to the contrary.” For these reasons, the Indiana Supreme Court extended the Sword analysis to apply to hospital and non-hospital medical providers.
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