Sword is Mightier than the Pen—New Indiana Court of Appeals Decision Broadens Apparent-Agency Doctrine

By Trenton Gill and Autumn Seib

Today it is common for hospitals to retain medical providers who are independent contractors. Indiana courts have long followed the general rule that hospitals cannot be held liable for the negligent acts of medical care providers acting as independent contractors.[1] However, in Sword v. NKC Hospitals, Inc., the Indiana Supreme Court recognized apparent agency as an exception to this general rule.[2]

Recently, the Indiana Court of Appeals expanded the breadth of the Sword doctrine in Richard Jernagan v. Indiana University Health.[3] When Mr. Jernagan presented to IU Health for spinal surgery, he was handed a business card for Dr. Michael Miller, the anesthesiologist who would be assisting during the procedure, but he was not formally informed that Dr. Miller was an independent contractor.[4] However, the business card included the name and logo of Dr. Miller’s employer, Anesthesia Consultants of Indianapolis.[5] During surgery, Mr. Jernagan experienced cardiac arrest and subsequently filed a malpractice claim.[6] Initially, Mr. Jernagan filed his Proposed Complaint with the Indiana Department of Insurance (IDOI) against IU Health, the surgeon, and the incorrect anesthesiologist.[7] The Medical Review Panel found in favor of IU Health and the surgeon without addressing the care of Dr. Miller or the incorrect anesthesiologist.[8] Regardless, Mr. Jernagan filed a complaint against IU Health and argued that IU Health was vicariously liable for the acts of Dr. Miller under Sword.[9]

Overturning the trial court’s grant of summary judgment to IU Health and thereby broadening the scope of Sword, the Indiana Court of Appeals held that Dr. Miller’s business card “merely indicates an affinity relationship” and “a sole business card, handed without more to an undoubtedly already anxious patient at check-in, [does not]conclusively affirm[] that Dr. Miller was not an employee of IU Health or that the practice group was is employer.”[10]

Equally problematic is the Court’s holding that apparent agency arguments fall outside the purview of the Medical Review Panel. The Court held that it was inconsequential that Dr. Miller was not named and his care was not assessed before the Panel because an assessment of Dr. Miller’s care by the Panel would not affect the determination of whether IU Health would be vicariously liable if Dr. Miller was found to have acted negligently.[11] Thus, under the Court’s holding, if an issue of fact is created, a plaintiff can escape the Medical Review Panel process for apparent agency arguments.

Ultimately, the Court’s holding makes it more difficult for hospitals to obtain summary judgment on apparent agency claims. Thus, in order to avoid issues of fact, it is imperative that medical providers acting as independent contractors routinely speak directly with patients to tell them that he or she is not an employee of the hospital and provide written confirmation of the same. This can happen at the same time informed consent is obtained but should be on a separate form. Moreover, the Court’s holding stresses the importance of hospitals entering and enforcing indemnity agreements with independent contractors.

If you would like a full copy of the opinion or if you have any other questions related to health care liability, please contact a member of our firm’s Medical Malpractice or Long-Term Care Liability Practice Groups.

^{This has been prepared for informational purposes only. It does not contain legal advice or legal opinion and should not be relied upon for individual situations. Nothing herein creates an attorney-client relationship between the Reader and Reminger. The information in this document is subject to change and the Reader should not rely on the statements in this document without first consulting legal counsel.}

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^{[1] Iterman v. Baker, 15 N.E.2d 365, 369-70 (Ind. 1938); Huber v. Protestant Deaconess Hosp. Ass'n, 133 N.E.2d 864, 869 (Ind. Ct. App 1956).}

^{[2] Sword v. NKC Hosps., Inc., 714 N.E.2d 142 (Ind. 1999).}

^{[3] Jernagan v. Indiana University Health a/k/a Indiana University Health ACO, Inc., 2020 Ind. App. LEXIS 419, No. 20A-PL-41 (Ind. Ct. App. 2020).}

^{[4] Id. at  *2-3.}

^{[5] Id.}

^{[6] Id.}

^{[7] Id. at *3-4.}

^{[8] Id.}

^{[9] Id.  at *4-5.}

^{[10] Id. at *19-20.}

^{[11] See id.}