Opinion ID: 2543369
Heading Depth: 2
Heading Rank: 4

Heading: Liability and Respondeat Superior

Text: Having decided that section 12-36-134 provides an exception to the corporate practice of medicine doctrine, we turn now to the question of whether a professional medical corporation may be held vicariously liable for the acts of its physician employees. In the 1960s, many states enacted statutes similar to section 12-36-134 to allow doctors and other professionals to take advantage of benefits that accompany corporate form. Sparkman, supra, at 81; Morris, supra, at 378. Incorporation allows certain tax benefits as well as limited liability, centralized management, continuity of life, and greater freedom of transferability of interests. 18 Am.Jur.2d Corporations § 37 (1985). Limited liability in the professional corporation context is the same as it is with ordinary business corporations. William Meade Fletcher, Fletcher Cyclopedia of the Law of Private Corporations § 112.10 (1993). Now that many of the tax benefits that accompany corporate form have been eliminated, limited liability remains one of the most important benefits to incorporation. Ronald L. Antonio, Operating a Personal Service Corporation, 17 Colo. Law.2011, 2011 (1988). Limited liability means that the individual shareholders of the professional corporation are not personally liable for claims against the corporation. [3] However, the corporate entity is held responsible for its employees' torts if the torts occur while the employees are acting on behalf of the corporation. 18B Am.Jur.2d Corporations § 1834 (1985); Morris, supra, at 377; Fletcher, supra, §§ 33, 4877. Likewise, the theory of respondeat superior provides that an employer may be held vicariously liable for an employee's torts when the act is committed within the course and scope of employment. Grease Monkey Int'l, Inc. v. Montoya, 904 P.2d 468, 473 (Colo.1995); Moses v. Diocese of Colo., 863 P.2d 310, 329 (Colo.1993). An act of an employee is within the scope of his employment if the work done is assigned to him by his employer, is necessarily incidental to that work, or is customary in the employer's business. Moses, 863 P.2d at 330. The court of appeals held that respondeat superior liability depends upon a showing that the corporate entity had some right to direct or control the actions of the employee. Russell, 15 P.3d at 291. We disagree. Although the court of appeals' holding correctly states the law, that court's holding compresses the two prongs of the test used to find the employer liable under the theory of respondeat superior. First, the plaintiff must show that an employer-employee relationship exists. Next, the plaintiff must show that the act occurred in the course and scope of the employee's employment. Courts only need address the question of control to determine the first prong of the test: whether the tortfeasor has an employee or independent contractor relationship with the employer. Norton v. Gilman, 949 P.2d 565, 567 (Colo.1997) ([T]he most important factor in determining whether a worker qualifies as an employee is the alleged employer's right to control the details of performance.); Dumont v. Teets, 128 Colo. 395, 397, 262 P.2d 734, 735 (1953). Once an employer-employee relationship is found, the question of control is no longer part of the court's inquiry. Pediatric Neurosurgery's motion to dismiss concedes that Hendee and McLeary were employees of the professional corporation when they cared for Michael Russell Neil. Therefore, the trial court need not address the question of control to determine that an employer-employee relationship existed between the professional corporation and the doctors. Further, neither party raised the question of whether the care of Michael Russell Neil was performed during Hendee and McLeary's course and scope of employment for Pediatric Neurosurgery. Therefore, we hold for the purposes of the defendant's C.R.C.P. 12(b)(5) motion to dismiss that Pediatric Neurosurgery, P.C. may be held vicariously liable for the negligence of Hendee and McLeary under a theory of respondeat superior. Accordingly, we reverse that portion of the court of appeals' judgment that held the trial court must determine whether Pediatric Neurosurgery had the right to exercise control over Hendee and McLeary.