Article by Bradley Kessler, Law Clerk
Ostensible agency theory is a vicarious liability theory that is traditionally applied to hospitals alone. However, Pennsylvania courts have expanded its use beyond hospitals in select circumstances. Ostensible agency theory is an exception to the general rule that entities are not vicariously liable for the conduct of independent contractors. In Capan v. Divine Providence Hospital, the Pennsylvania Superior Court recognized that “the changing role of the hospital in society creates a likelihood that patients will look to the institution rather than the individual physicians for care.” Capan v. Divine Providence Hosp., 430 A.2d 647, 649 (Pa. Super. Ct. 1980). As such, the court reasoned that hospitals should not be insulated from vicarious liability where the patient reasonably believes an independent contractor to be an agent/employee of a hospital.
The theory of ostensible agency was codified in Section 516 of the Medical Care Availability and Reduction of Error (MCARE) Act. Notably, Section 516(e) specifies that only hospitals are subject to ostensible liability. However, Pennsylvania courts have accepted the use of the ostensible liability theory for select non-hospital entities.
For example, In Boyd v. Albert Einstein Medical Center, the Pennsylvania Superior Court expanded the use of ostensible liability theory to Health Maintenance Organizations (HMOs). Boyd v. Albert Einstein Medical Center, 547 A.2d 1229. The plaintiff in that case sought to hold Pennsylvania HMO vicariously liable for the negligence of participating doctors. The HMO argued that only hospitals are subject to ostensible agency liability. The court rejected that argument, holding that the rationale for applying the theory of ostensible agency to hospitals is “certainly applicable” to HMOs. Id. at 1234. Although this case predates the enactment of the MCARE Act, it has received no negative treatment and has not been overturned. This suggests that its holding was not preempted by the passage of the MCARE Act and non-hospital HMOs are still subject to ostensible agency theory.
For similar reasons, the Pennsylvania Superior Court expanded the applicability of ostensible agency theory to individual physicians in Parker v. Freilich. Parker v. Freilich, 803 A.2d 738 (Pa. Super. Ct. 2002). Applicability to nursing homes, however, is less clear. Some Pennsylvania trial courts have explicitly rejected nursing homes as subject to ostensible agency theory. See Pittas v. Healthcare & Retirement Corp. of America, No. 2009-C-5561, 2012 WL 4739133 (Pa.Com.Pl.Civil Div. Jul. 2012). These courts note that the legislature could have chosen to extend ostensible agency theory beyond just hospitals, but declined to do so.
Despite this skepticism, the Pennsylvania Supreme Court has not specifically foreclosed the application of ostensible agency theory to nursing homes. See Scampone v. Highland Park Care Center, LLC, 57 A. 3d 582 at n.12 (Pa. 2012) (explaining that Capan did not “[purport] to limit the application of its holding to hospitals and . . . appellants do not dispute that a nursing home and related entities may be found liable on vicarious liability theories similar to those presented in . . Capan”).
The text of MCARE imposes ostensible agency liability on hospitals alone. However, Pennsylvania courts have expanded the use of ostensible agency liability beyond hospitals in some circumstances. While cases expanding the use of ostensible agency predate the enactment of the MCARE Act, they have received no negative treatment and appear to remain good law. Because some courts express skepticism about the expansion of ostensible agency, application to non-hospitals likely requires significant hospital-like characteristics and parallel policy rationale.