The liability of hospitals for independent contractor surgeons/doctors

The events earlier in the year - the conviction of Mr Ian Paterson of assault charges, his increase in sentencing by the appeal court and the recent settlement fund set up by Spire Hospitals and its insurers, have drawn attention to the potential liability of hospitals for medical staff who had (on the face of it) independent contractor status, as opposed to being employees.

The common law

There are two common law doctrines by which a ‘master’ or employer organisation may be liable for the torts (wrongful acts) of their employees or any independent contractors they engage. One is the doctrine of vicarious liability, which applies to employees, the other is the doctrine of non-delegable duties which applies to independent contractors.

Vicarious Liability - Liability of Employers for Criminal Acts of Employees

It is established law that an employer can be liable for the negligent act carried out by an employee in the course of their employment. The test traditionally adopted by the courts for assessing whether an act was "in the course of employment", is known as the Salmond test and under that test, the act will be in the course of employment if it is either (a) a wrongful act authorised by the master, or (b) a wrongful act which is an unauthorised mode of doing some act authorised by the master.

Where the act is a criminal act, an employer can still be vicariously liable, as long as the act has a sufficiently close connection with the role for which the employee was employed (see Lister v Hesley Hall, (Lister) – a case we covered in our June article). The Supreme Court took a similar approach when addressing the question of a petrol station attendant who physically assaulted a customer who had requested assistance (Mohamud v WM Morrison Supermarkets PLC - also covered in our June article). The Supreme Court explained that the employee’s attack in that case had been an ‘unbroken sequence of events’ which had taken place ‘within the field of activities assigned’ to the attendant.

Liability for Criminal Acts of Non-Employees

Where a non-employee commits a criminal act, liability is less straightforward.

The Supreme Court considered this issue in the case of Various Claimants v Institute of Brothers of Christian Schools (Christian Brothers). In that case, boys who were pupils of schools run by the Institute had been sexually abused. The Brothers were members of a religious organisation, but were not employed and were also scattered across the world. They were responsible for the teaching of the boys in the school, along with some lay-staff. The abuse had been carried out by some of the Brothers.

• The issue was whether the Institute could be responsible for the sexual abuse committed by the Brothers. The Supreme Court applied a two stage test to establish vicarious liability
• Consider if the relationship between the defendant and the tortfeasor (wrongdoer) is one capable of giving rise to vicarious liability 
• Consider whether the acts committed by the tortfeasor were sufficiently connected to that relationship to give rise to vicarious liability

The Supreme Court made the following observations:

“Where the defendant and the tortfeasor are not bound by a contract of employment but their relationship has the same ingredients, that relationship can properly give rise to vicarious liability on the ground that it is akin to that between an employer and an employee.” 

“What weighed with the courts has been the fact that the relationship has facilitated the commission of the abuse by placing abusers in a position where they enjoyed physical proximity to victims and influence and authority over them.”

Accordingly the Christian Brothers case established that:

"a relationship other than one of employment is in principle capable of giving rise to vicarious liability where harm is wrongfully done by an individual who carries on activities as an integral part of the business activities carried on by a defendant and for its benefit (rather than his activities being entirely attributable to the conduct of a recognisably independent business of his own or of a third party), and where the commission of the wrongful act is a risk created by the defendant by assigning those activities to the individual in question." (Per Lord Reed in Cox v Ministry of Justice (Cox)).

The case of Cox considered the case of a prisoner who was paid to carry out work in a prison kitchen. He dropped a bag of rice onto the back of an employee of the prison, and injured her. The employee sued the Ministry of Justice (MoJ) on the basis that the prisoner was an employee and the MoJ was vicariously liable.

Cox made a number of references to the Christian Brothers case, and built on its finding that there could be vicarious liability outside of an employment relationship. The Supreme Court held that the prisoner was not an employee of the prison or the MoJ, however the MoJ was liable for his negligence even in the absence of a contract of employment. The essential factors were that:

• The tort was committed as a result of an activity carried out by the tortfeasor on behalf of the defendant
• The activity was integral to the defendant’s business activities
• The defendant, in employing the tortfeasor to carry out the activity had created the risk of the tort being committed by the tortfeasor
• It was fair, just and reasonable in all the circumstances to impose vicarious liability (although it was not necessary to always consider this fourth factor, and would only be valuable to do so where the circumstances

Relationships other than employment were also examined by the Court of Appeal in the case of E v English Province of Our Lady of Charity (Our Lady). In the Our Lady case a claimant sought damages from a Diocesan Bishop who appointed a priest to work in a children’s home run by an order of nuns. While at the home, the claimant alleged she had been sexually assaulted by the priest appointed by the Diocesan Bishop.

There was no contract of employment between the bishop and the priest. The Court therefore considered the preliminary point of whether the relationship between the priest and the bishop was one capable of giving rise to vicarious liability. The Court of Appeal found that it could, because the relationship was sufficiently "akin to employment" to give rise to liability. This decision was affirmed by the Supreme Court in Cox.

In Our Lady, Ward LJ made clear that vicarious liability could not attach to the torts of independent contractors.

However, the very recent preliminary issues decision in Various v Barclays Bank (Barclays) seems to blur the lines between independent contractors and employees. The Barclays preliminary issues hearing concerned a group action brought by a number of claimants who alleged they had been sexually assaulted by a doctor who was performing pre-employment medical examinations on them on behalf of the bank.

The bank paid the doctor for carrying out medical examinations on the claimants. The claimants did not have any say in who was appointed to carry out the medical examination, and the only purpose of the examination was for the bank to ascertain if they were acceptable employees. The reports produced by the doctor bore the bank’s logo and the content of the examination was as requested by the bank.

The High Court applied the factors set out in Cox and found that the bank was capable of being vicariously liable for the sexual assaults committed by the doctor notwithstanding the fact the doctor was not an employee of the bank. While this decision is not ground-breaking in its own right (other organisation have also been held liable for the acts of non-employees), the fact that the relationship between the doctor and the bank was more akin to a sub-contracted relationship muddies the water somewhat.

Vicarious Liability for Sub-Contractors – Non-Delegable Duties

Traditionally vicarious liability has been limited to an employment relationship, and the courts have therefore developed a separate doctrine to deal with liability of organisations who sub-contract or otherwise engage contractors to carry out services for them. This doctrine is that of non-delegable duties. The doctrine was examined by the Supreme Court in depth in the decision of Woodland v Essex County Council (Woodland).

In Woodland the claimant was a young child who had nearly drowned during an incident at a school swimming lesson. The swimming lesson had been a compulsory part of her education and her school had subcontracted the teaching of these lessons to a separate organisation of swimming teachers. The lesson took place at a local swimming pool.

A non-delegable duty is a duty owed by an organisation which cannot be discharged by subcontracting. Although a subcontractor may be engaged to carry out the activities associated with the duty (eg, to teach the swimming lesson), the core duty itself (eg, the duty of care of the children’s health, safety and wellbeing while being educated) would remain with the organisation responsible for it.

The Supreme Court in Woodland recapped the key principles of non-delegable duties, stating that they had been identified in two key categories. The first of these is where an independent contractor is engaged to perform a function which is inherently hazardous or liable to become so in the course of his work. The second category was explained by Lord Sumption in Woodland:

“It comprises cases where the common law imposes a duty on the defendant which has three critical characteristics. First, it arises not from the negligent character of the act itself but because of an antecedent relationship between the defendant and the claimant. Second, the duty is a positive or affirmative duty to protect a particular class of persons against a particular class of risks, and not simply a duty to refrain from acting in a way that foreseeably causes injury. Third, the duty is by virtue of that relationship, personal to the defendant.”

The Supreme Court undertook an interesting analysis of the case law concerning the non-delegable duties of hospitals (see Lord Sumption’s judgement from paragraph 14). In several of those cases (see p. 301 Gold v Essex County Council, p. 326 and p. 364 Cassidy v Ministry of Health and Roe v Minister of Health) Lord Denning expressed views that hospitals were liable for the negligence of employees both because of vicarious liability arising from the employment contract, but also because the hospitals were themselves under a duty to use care in treating the patient, and such a duty had arisen by virtue of the fact the hospital had accepted the patient for treatment.

Lord Sumption in Woodland stated that the time had come to recognise Lord Denning’s assessment of the underlying principles of non-delegable duties, and went on to set out a five point test for non-delegable duties:

“The claimant must be a patient or a child, or for some other reason be especially vulnerable or dependent on the protection of the defendant against the risk of injury.

• There must be an antecedent relationship between the claimant and the defendant, independent of the negligent act or omission itself (i) which places the claimant in the actual custody, charge or care of the defendant and (ii) from which it is possible to impute to the defendant the assumption of a positive duty to protect the claimant from harm, not just a duty to refrain from conduct which will foreseeably damage the claimant. It is characteristic of such relationships that they involve an element of control over the claimant, which may vary in intensity.
• The claimant has no control over how the defendant chooses to perform those obligations, i.e. whether personally or through employees or third parties.
• The defendant has delegated to a third party some function which is an integral part of the positive duty which he has assumed towards the claimant; and the third party is exercising, for the purpose of the function thus delegated to him, the defendant’s custody or care of the claimant and the element of control that goes with it.
• The third party has been negligent not in some collateral respect but in the performance of the very function assumed by the defendant and delegated by the defendant to him.”

Lord Sumption disagreed that control over the environment in which the negligence occurred was essential for a non-delegable duty to exist and suggested that this factor would apply more to the category of non-delegable duties which arose where the contractor was carrying out an inherently risky or dangerous task.

The essential factor of a non-delegable duty, Lord Sumption explained, was that the organisation had delegated the function of a duty which the organisation itself had originally owed. The organisation would have to have been responsible for performing the task which it had subcontracted, and not merely the organiser of a task. Lord Sumption stated: “In the absence of negligence of their own, for example, in the selection of the contractors, they will not be liable for the negligence of independent contractors where on analysis their own duty is not to perform the relevant function by only to arrange for its performance.”

Lady (as she was then) Hale’s judgement offered an interesting example of three pupils who attended school swimming lessons, one of them in a private school, one in a state school who employed a swimming teacher and one in a school like the one in Woodland, whose swimming lesson was taught by a subcontractor. Lady Hale compared the three, and noted it would make little sense to the man on the street if the first and second pupil had recourse (in contract, and via vicariously liability respectively) against the school or local authority, but the third pupil would have no right of action simply because of the independent contractor status of the swimming teacher.

Lady Hale commented:

“No one in this case has seriously questioned that if a hospital patient is injured as a result of a nurse’s carelessness it maters whether the nurse is employed by the hospital or by an agency; or if a pupil at school is injured by a teacher it matters whether the teacher is employed by the school or is self-employed. […] The reason why the hospital or school is liable is that the hospital has undertaken to care for the patient, and the school has undertaken to teach the pupil, and that responsibility is not discharged simply by choosing apparently competent people to do it. The hospital or school remains personally responsible to see that care is taken in doing it.”

The Situation of hospitals and the Practising Privileges of surgeons
Non-delegable Duties

Previously it would have seemed that as the doctors engaged by a hospital are technically "independent contractors", the only basis for the hospital being liable for negligence and/or criminal acts by independent contractors would be on the basis of a non-delegable duty (unless it could be shown the hospital were negligent in granting practising privileges to a particular surgeon in the first place).

However, the test for non-delegable duties would not be easily met. Taking the five point test set out in Woodland in turn:

• The claimant is a patient or child, or is vulnerable – this is clearly met by patients.
• There is an antecedent relationship between the claimant and the defendant which places the claimant in custody, charge or care of the defendant and which imputes a positive duty of care on the defendant – this will probably be met by most patients attending a hospital, so long as the relationship is between the hospital and the patient, as opposed to the patient expressing a wish to see a particular surgeon and the surgeon then arranging for their care to be accommodated at the hospital.
• The claimant has no control over how the defendant chooses to perform its obligations – this is more of a grey area. Presumably patients attending a hospital will usually have a degree of choice in the surgeon they choose and the care and treatment they receive.
• However, the patient will also be somewhat oblivious to the technical employment status of the surgeon – to a patient, the hospital and its constituency of surgeons and nurses are likely to be perceived as one and the same entity. At a more basic level, the patient will not be able to choose whether to have treatment by an employee or a subcontractor, which could fulfil this element of the test.

The types of situation which the courts have considered for this element include the lack of control the prospective employees had over the doctor who carried out the medical examination on them (who was selected by the bank) in Barclays, the lack of choice of where the school swimming lessons occurred as in Woodland, and even the lack of choice in whether swimming lessons occurred at all.

It may therefore depend on what basis the patient saw the surgeon at the hospital as to whether the hospital would be found to have a non-delegable duty – it appears there is a distinction between patients who locate a surgeon they particularly want to see who happens to work from a particular hospital, and a patient who is referred to a surgeon at a hospital with little input into that decision. While this would appear to be something of an arbitrary distinction that appears to be the meaning of this element of the test.

• The defendant has delegated to a third party some function which is an integral part of the positive duty which he has assumed; and the third party is exercising the defendant’s custody or care of the claimant and the element of control that goes with it – this is trickier. It could depend on the way the relationship with the surgeon is arranged, as above. Query whether the relationship is one where the patient goes to a hospital for care, and the hospital delegate care to the surgeon (which would meet this point of the test), or whether the patient is going to the surgeon directly for care, and the surgeon delegates the ancillary care to the hospital’s staff/ facilities. If it is the first scenario (which is probably more likely for most patients), this would meet the criteria above. If it is the second scenario, then this section of the test would not be met.
• The third party has been negligent in the performance of the very function assumed by the defendant and delegated by the defendant to him - this section would be easily met assuming the hospital’s duty was one to provide medical care to the patient.

In summary then, whether or not a hospital owes a non-delegable duty would appear to depend on how the hospital operates and the degree of control patients have over the way in which the hospital operates. On balance, it is more likely that the hospital would owe a non-delegable duty. It seems more logical that patients approach a hospital for medical treatment, and while they may have a choice over the identity of the surgeon who carries out their treatment, they do not have choice over the employment status of that surgeon. Compare it to a situation where, in a school, a pupil has a choice of classes to take. He may choose to take swimming or gymnastics, but he does not have a choice over the employment status of the teacher who teaches that class. The same issues would still apply should the swimming teacher be an independent contractor, and why should the school be more able to delegate its duty of care simply because it offers a choice of classes. The only way perhaps it may be able to delegate its duty of care is if it was to clearly state that one class was taught by an independent contractor.

Vicarious Liability

Perhaps more interestingly, the recent developments in the law of vicarious liability offer an opportunity to argue that the relationship between the doctors and hospitals is actually one "akin to employment" and that therefore hospitals are vicariously liable for any negligent or criminal acts by the doctors engaged by the hospital.

Considering the factors set out in Cox:

• The tort was committed as a result of an activity carried out by the tortfeasor on behalf of the defendant.
  This is relatively straightforward. Hospital engages doctors/ surgeons to carry on medical treatments in its hospitals. Without them, it would be unable to make money from its hospitals by treating patients. As above, there may be some argument that hospitals provide a service to the doctors by providing hospital services and settings in which doctors facilitate their treatment of patients. Should such an argument be successful, it could render this criteria unmet and bar any vicarious liability.
• The activity was integral to the defendant’s business activities.
  As above, it is integral to a hospital’s business that it has doctors to undertake medical treatments in its hospitals. While there is some element of it being part of the doctors’ business activities to treat patients on a private basis, the work is not exclusively for the benefit of the doctors, and no matter the benefit to the doctors or patients, it is the absolute basis of the hospital’s business activities.
• The defendant, in employing the tortfeasor to carry out the activity had created the risk of the tort being committed by the tortfeasor.
  Again, this criteria is relatively straightforward to establish. There is an inherent risk when you have medical practitioners providing services, that there will be medical malpractice and negligence as a result. Further, similarly to how allowing the warden to work closely with the boys in Lister enabled him to carry out the abuse on the children, allowing a surgeon access to patients enables the surgeon to carry out unnecessary and negligent treatments on patients. 
• It was fair, just and reasonable in all the circumstances to impose vicarious liability (although it was not necessary to always consider this fourth factor, and would only be valuable to do so where the circumstances had not previously been the subject of an authoritative judicial decision).
  This would need to be considered in any particular cases and such a situation has not yet been the subject of a judicial decision. However, it would be fair, just and reasonable to impose vicarious liability on a hospital as they have a responsibility to maintain the health and safety of their patients, a failure to hold them vicariously liable would create a disparity in the system. 

Assuming the four Cox criteria are met and that therefore the relationship is one capable of giving rise to vicarious liability, it would then have to established that the acts committed were sufficiently connected with the relationship for the hospital to be liable.

As per the decision in Lister, the role of the "employee" should not be too narrowly defined. In the Ian Paterson case one can identify that he was engaged to undertake medical treatments and perform surgery on patients. It can be envisaged that there is no problem in establishing that his criminal acts were sufficiently closely connected with the role for which he was engaged. Even the doctor in the Barclay’s case, who sexually assaulted his patients, was found to have been acting "within the course of 'employment'" for the purposes of vicarious liability as his acts were "inextricably linked" with the role for which he was engaged. Arguably, Mr Paterson’s acts were more closely linked with his ‘employment’ than the sexual assaults perpetrated by the Barclay’s doctor.

Of course, it would mark a considerable step in the law for an organisation to be held vicariously liable for the negligence or criminality of an independent contractor (as opposed to being found liable on the basis of a non-delegable duty). However, the law seems to be taking steps in this direction and ultimately, for public policy reasons, the law will evolve to a situation where it is no longer possible to exclude independent contractors from the scope of vicarious liability. The analysis would be that doctors so retained (on practising privileges or whatever description is used) are not true "independent contractors". They are engaged in an environment run and organised by hospitals which presumably impose working conditions of sorts, times, rules and regulations, and practises. In fact, hospital doctors may have less freedom or independence than the doctor in the Barclay’s case, who at least undertook examinations in his own home and was free to take work or not. If the Barclay’s doctor was a true independent contractor, and the bank was found vicariously liable for his crimes, it suggests it would be possible to make hospitals vicariously liable for the negligent or criminal acts of the doctors they employ.

It is expected that Barclay’s will appeal the High Court decision and in doing so the law may be clarified and strengthened, but it will certainly be one to watch, as it appears to be the logical end point of the recent case law on vicarious liability.