Using Independent Contractors Saved This Hospital an Arm and a Leg! (Really, Just a Leg)

leg broken independent contractor vs employee liabilityToday we attempt to answer a medical mystery: If I have to get my leg amputated because a doctor misdiagnosed me at the hospital, can I sue the hospital for malpractice?

Seems like an easy “yes,” right? Not so fast.

Suppose the doctor was an independent contractor, and suppose the hospital is a public institution. Those were the facts presented to the Supreme Court of Wyoming in a recent case (which also serves as a nice reminder that if you are admitted to the hospital with numbness and cramping in the legs and an “inability to walk,” it would be a good idea to get a vascular consult — assuming you want to keep your leg).

The Wyoming Supreme Court had to interpret a state statute that limited the liability of public hospitals to acts by its employees, except if a hospital extended its liability on purpose through an insurance policy. The hospital here had an insurance policy, but the policy did not reference coverage for acts by independent contractors.

The Court ruled that because the negligence (correction: alleged) “alleged” negligence was by a doctor who was seeing hospital patients as an independent contractor, the hospital was immune from liability for any negligence by the doctor.

Our fearless hero, the amputee, would have to sue the doctor instead. He could not sue the hospital. The case does not address how much malpractice insurance the doctor had, but I would bet my unamputated left leg that it was quite a bit less coverage than the hospital had.

The facts in this case are fairly specific, so I wouldn’t draw a lot of generalizations here. The case required the interpretation of a Wyoming statute and a specific insurance contract.

The case does serve as a reminder, though, of one of the many benefits of having work performed by legitimate independent contractors. The hospital would have been subject to liability if the doctor was an employee, but it faced no liability because the doctor was an independent contractor.

The key to victory, of course, is having a legitimate independent contractor relationship. As we have discussed many times in this blog, there are often disputes over whether a so-called independent contractor is properly classified or should really be considered an employee.

Courts will look to the facts of the relationship to determine Who Is My Employee? and will not just rely on what the parties call the relationship or the fact that a 1099 was issued instead of a W-2.

Depending on which law is being applied, the test for Independent Contractor vs. Employee may be a Right to Control Test, an Economic Realities Test, an ABC Test, or some other hybrid or variation. It’s important to understand whether your independent contractor relationships would hold up to scrutiny, and it’s important to conduct that review before you get sued.

Proper classification in this case meant the difference between zero liability and having to pay the going rate for an amputated leg.

© 2017 Todd Lebowitz, posted on WhoIsMyEmployee.com, Exploring Issues of Independent Contractor Misclassification and Joint Employment. All rights reserved.

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