CURRENT CALIFORNIA LAW ON OSTENSIBLE AGENCY IN THE HOSPITAL SETTING

Ostensible agency is a general tort principle allowing a plaintiff to hold a defendant liable for the actions of a third party when the defendant caused the plaintiff to reasonably believe that the third party was acting as an agent of the defendant. By statute, ostensible agency is defined: "An agency is ostensible when the principal intentionally, or by want of ordinary care, causes a third person to believe another to be his agent who is not really employed by him." (Civ. Code, § 2300.)

How ostensible agency applies in the medical malpractice setting is complicated by the ban on the corporate practice of medicine. Pursuant to that doctrine, only natural persons can practice medicine. (Bus. & Prof. Code, §§ 2032, 2400; see Lathrop v. Healthcare Partners Medical Group (2004) 114 Cal.App.4th 1412, 1420 (Lathrop).) Thus, a hospital, subject to some exceptions, generally may not control, direct, or supervise its staff physicians in the practice of medicine. (Wicks v. Antelope Valley Healthcare District (2020) 49 Cal.App.5th 866, 884 (Wicks).) Therefore, physicians with treating privileges at a hospital are typically not employees, but independent contractors. And everyone is conclusively presumed to know the law, regardless of how well known the law actually is or whether it involves simple or complex legal principles. (Macfarlane v. Department of Alcoholic Beverage Control (1958) 51 Cal.2d 84, 90 ["Knowledge of the law is presumed"]; Allen v. Allen (1892) 95 Cal. 184, 199 (Allen) ["Every one is conclusively presumed to know the law, although the ablest courts in the land often find great difficulty and labor in finally determining what the law is"].)

Yet, the standard jury instruction on ostensible agency essentially creates a rebuttable presumption that hospitals are liable for a physician's negligence under an ostensible agency theory if the patient did not select the physician providing treatment. (CACI No. 3714.)

CACI No. 3714 states: "[Name of hospital] is responsible if [name of plaintiff] proves both of the following: [¶] 1. That [name of hospital] held itself out to the public as a provider of care; and [¶] 2. That [name of plaintiff] looked to [name of hospital] for services, rather than selecting [name of physician] for services. [¶] A hospital holds itself out to the public as a provider of care unless the hospital gives notice to a patient that a physician is not an [agent/employee] of the hospital. However, the notice may not be adequate if a patient in need of medical care cannot be expected to understand or act on the information provided. You must take into consideration [name of plaintiff]'s condition at the time and decide whether any notice provided was adequate to give a reasonable person in [name of plaintiff]'s condition notice of the disclaimer."

The tension between these two principles - ostensible agency and the ban on the corporate practice of medicine - is frequently litigated in the emergency room context where a plaintiff may, understandably, rely on the hospital to select the physician who will provide the needed care and mistakenly assume that the staff physician providing that treatment is the hospital's employee or agent. That misunderstanding may arise notwithstanding the fact that hospital admission forms typically - and usually very clearly - disclose that the physicians are not employees or agents of the hospital.

Three recent cases develop the law of ostensible agency in the hospital setting and illustrate the limits of this theory by holding that there was no ostensible agency as a matter of law where patients knew or should have known their physicians were not hospital employees or agents. Each of these cases addressed ostensible agency in the context of motions for summary judgment, and they each affirmed summary judgment in favor of the hospitals.

Ostensible agency in the hospital setting

Ostensible agency of a physician has two elements: (1) conduct by the hospital that would cause a reasonable person to believe that the physician was an agent of the hospital, and (2) reliance on that apparent agency relationship by the plaintiff. Appellate courts have held that this agency can be inferred "from the mere fact that the plaintiff sought treatment at the hospital without being informed that the doctors were independent contractors." (Mejia v. Community Hospital of San Bernardino (2002) 99 Cal.App.4th 1448, 1457 (Mejia).) In Mejia, for instance, nonsuit for the hospital was reversed because the patient had "no idea" the negligent radiologist who examined her X-rays was not employed by the hospital. (Id. at pp. 1459-1460.)

Conversely, if a patient has reason to know their physician is not an agent of the hospital, there is no ostensible agency. While this may in some circumstances present a question of fact, it is a question of law when the undisputed facts can only lead to one conclusion. (Markow v. Rosner (2016) 3 Cal.App.5th 1027, 1038-1039, 1041 (Markow).) While earlier cases suggested that taking the issue from the trier of fact would be rare (Mejia, supra, 99 Cal.App.4th at p. 1458), that prediction seems inaccurate. Wicks explains when there can be no ostensible agency, and it is the first of three recent cases to conclude there was no such agency as a matter of law.

Wicks v. Antelope Valley Healthcare District (2020) 49 Cal.App.5th 866

Wicks summarizes the two circumstances when ostensible agency does not exist between a physician and a hospital: (1) when the hospital clearly notifies the patient that treating physicians are not hospital employees, and there is no reason to believe the patient is unable to understand or act on the information; or (2) when the patient is treated by a personal physician - i.e., a physician was selected by the patient rather than the hospital. (Wicks, at p. 884.)

In Wicks, the Court of Appeal affirmed summary judgment for a hospital in the first circumstance, holding there was no ostensible agency because the emergency room patient signed a "straightforward notice" that told him the physicians were not employees or agents. (Wicks, supra, 49 Cal.App.5th at p. 883.) And, unlike in earlier cases, such as Mejia, supra, 99 Cal.App.4th 1448 and Whitlow v. Rideout Memorial Hospital (2015) 237 Cal.App.4th 631 (Whitlow), the circumstances suggested that the patient could understand the form - he drove himself to the hospital, medical records indicated he was alert and oriented, and he reported only moderate discomfort. Thus,"[t]he undisputed evidence" was that the patient-plaintiff was given, and acknowledged, "meaningful written notice." (Wicks, at pp. 882-884.)

The circumstances in Wicks stand in contrast to those in Whitlow, supra, 237 Cal.App.4th at page 640, an earlier emergency room case where the patient contended the hospital's admission form stating that physicians were not agents of the hospital was insufficient notice because she signed the form when she was "writhing" in pain from a brain hemorrhage.

Magallanes v. Doctors Medical Center of Modesto (2022) 80 Cal.App.5th 914 (Magallanes)

Magallanes followed Wicks and was the first case to hold there was no ostensible agency based solely on the second circumstance Wicks identified - the patient was treated by a physician that she chose. Even though there was a question of fact as to whether the patient understood the admission form notifying her of the physician's employment status, the court affirmed summary judgment for the hospital because the patient underwent surgery she scheduled with a physician she had seen several times. Because the patient chose her surgeon, the court concluded that the patient did not rely on an apparent agency in seeking care and should have known that the physician was not the hospital's agent. (Magallanes, at pp. 920, 923-924.)

Franklin v. Santa Barbara Cottage Hospital (2022) 82 Cal.App.5th 395 (Franklin)

The most recent case, Franklin, also affirmed summary judgment for a hospital where the patient chose his own physician. Although the patient was given written notice of his physician's status while in the emergency room when he was alert and in moderate pain, the trial court granted summary judgment because of the patient's lack of reliance on an agency relationship.

The Court of Appeal discussed several factors the patient claimed to rely on and determined they were not reasonably indicative of an agency relationship. It reasoned that hospital communications about the physician, including hospital webpages, should have alerted the patient that the physician was not an agent of the hospital because they listed the name of the institute where he worked (not the hospital) next to his name and as his address. And the location of the physician's office near the hospital could not have been relied on because ostensible agency depends on conduct by the hospital, not the physician. The court also concluded that the patient could not have relied on an apparent agency due to these factors because, in accord with Magallenes, he did not look to the hospital to provide care, "he looked to his personal physician, ... whom he had selected to perform the surgery." (Franklin, supra, 82 Cal.App.5th at pp. 408-409.)

This discussion from Franklin reinforces the decision in Markow, supra, 3 Cal.App.5th 1027, an earlier case where a number of similar factors, including the physician's position as director of the hospital's pain clinic and his use of the hospital logo, did not negate the circumstances precluding ostensible agency - the actual notice given to the patient from forms he signed while a patient of the physician, or the fact that he chose his physician instead of the hospital assigning one to him.

Impact

Wicks, Magallanes, and Franklin are notable developments limiting hospital liability and the burden of litigation by illustrating when the issue of ostensible agency can be resolved on summary judgment. This is especially true since courts have held that ostensible agency resulting in hospital liability can in some situations be "readily inferred" when a patient seeks care from a hospital. (Mejia, supra, 99 Cal.App.4th at pp. 1454-1455, 1457). And hospitals may rely not only on Wicks, Magallanes, and Franklin, but also on CACI No. 3714 (regarding ostensible agency in the hospital setting) and its accompanying "Sources and Authority," under which the Judicial Council lists the Wicks rule. Hospitals should also rely on the long-standing principle that everyone is presumed to know that hospitals cannot employ or control the physicians treating patients as members of the medical staff. (Bus. & Prof. Code, §§ 2032, 2400; Allen, supra, 95 Cal. at p. 199; Wicks, supra, 49 Cal.App.5th at p. 884; Lathrop, supra, 114 Cal.App.4th at p. 1420.)

These cases and the Wicks rule may also prove to be valuable tools for hospitals defending a likely growing number of malpractice suits seeking damages under a recently raised noneconomic damages cap under MICRA. (See Assem. Bill No. 35 (2021-2022 Reg. Sess.) § 3.) In short, when undisputed evidence establishes that a medical malpractice plaintiff chose their own physician, rather than "looking to" the hospital to provide one, ostensible agency claims against the hospital can, and should, be resolved in favor of the hospital as a matter of law on summary judgment.

H. Thomas Watson and Steven S. Fleischman are partners at Horvitz & Levy LLP, and Alexandra M. Maher is an attorney in the firm's Appellate Fellowship Program.