Court Opinion

ID: 4027986
Source: CourtListenerOpinion
Date Created: 2016-08-24 17:10:01.742893+00
Date Added: 2024-06-11T14:22:43.337078
License: Public Domain

STATE OF MICHIGAN

                             COURT OF APPEALS

JAMIE LASTER,                                                       FOR PUBLICATION
                                                                    August 23, 2016
               Plaintiff-Appellee,                                  9:00 a.m.

and

DEPARTMENT OF COMMUNITY HEALTH,

               Intervening Plaintiff,

v                                                                   No. 324739
                                                                    Macomb Circuit Court
HENRY FORD HEALTH SYSTEM and HENRY                                  LC No. 2013-000761-NH
FORD MACOMB HOSPITAL CORPORATION,

               Defendants-Appellants,

and

JOHN JANGKIU LIM and SURGICAL
ASSOCIATES OF MACOMB PLC,

               Defendants.

Before: SERVITTO, P.J., and SAAD and O’BRIEN, JJ.

SAAD, J.

                                     I. NATURE OF THE CASE

        The narrow but consequential legal question posed by this appeal is whether defendants-
appellants, Henry Ford Health System and Henry Ford Macomb Hospital Corporation
(collectively, hereinafter “Henry Ford,” “the hospital,” or “defendants”), are liable for defendant
Dr. John Lim’s alleged malpractice in his treatment of plaintiff at the hospital.

      Normally, under Michigan law, a defendant is not vicariously liable for the tortious
conduct of another, unless that other person is an employee or agent of the defendant.

       Here, Dr. Lim is not on the payroll of the hospital and instead is employed by Surgical
Associates of Macomb, P.L.C. Dr. Lim has “on-call” privileges at Henry Ford and Beaumont
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Hospital, which allows him the opportunity to treat patients at both hospitals’ facilities.
Consistent with this arrangement, the hospital is not paid by the patient for Dr. Lim’s services,
nor is Dr. Lim paid by the hospital. Instead, Dr. Lim bills the patient directly, and the patient
pays Dr. Lim for his services. Indeed, plaintiff and her mother acknowledged Dr. Lim’s
employment status when they signed a “consent to surgery” form that expressly stated that Dr.
Lim was not an employee of Henry Ford.

        In light of these facts, plaintiff acknowledges that Dr. Lim is an independent contractor,
but nonetheless argues that the hospital should be vicariously liable for Dr. Lim’s medical
malpractice in evaluating and treating plaintiff under Michigan’s control test because Henry
Ford’s extensive “on-call” requirements constitutes sufficient control over Dr. Lim to impose
vicarious liability. And, while the hospital concedes that its on-call protocols are extensive and
comprehensive, it says that vicarious liability should not be imposed under Michigan’s control
test because it exerted no control over the precise matter at issue here, Dr. Lim’s diagnosis and
treatment of plaintiff. That is, the hospital points out that the extensive nature of the on-call
policy deals primarily with qualifications of physicians, availability, and coverage, but does not
in any way control the manner or methodology of diagnosis and treatment by the on-call
physician of his patient, which is the only issue at bar.

        Because, as noted above, plaintiff and her mother signed an agreement that expressly
acknowledges that Dr. Lim is not an employee of the hospital and because plaintiff failed to
produce any evidence that the hospital made any representations to the contrary, the trial court
ruled that plaintiff failed to prove ostensible agency and dismissed this count of plaintiff’s
complaint. But the trial court ruled that Henry Ford’s comprehensive on-call policy created a
question of fact as to whether the hospital exerted sufficient control over Dr. Lim under
Michigan’s control test to make Dr. Lim the hospital’s actual agent for the purpose of imposing
vicarious liability and the hospital appeals this ruling. While defendants appealed the trial
court’s denial of their motion on the issue of actual agency, plaintiff failed to appeal the grant of
the motion on the issue of ostensible agency.

        Because plaintiff failed to appeal the ostensible agency dismissal, this issue is not before
us and we decline to address it, and, for the reasons stated below, we reverse the trial court’s
ruling that denied the hospital’s motion for summary disposition on the control test and remand
for entry of judgment in favor of Henry Ford.

                            II. FACTS & PROCEDURAL HISTORY

        Dr. Lim testified that he is a board-certified surgeon, employed by Surgical Associates of
Macomb, who has privileges at Henry Ford and Beaumont Hospital. At his deposition, Dr. Lim
established that he and not the hospital bills for his services, and that he is not employed by, nor
does he receive any compensation from the hospital. Dr. Lim also testified that he would bill
plaintiff for his services and that plaintiff would pay him, not the hospital.

        Henry Ford permitted Dr. Lim to treat plaintiff at its hospital pursuant to its “Unattended
Call” policy (“on-call policy”). This policy applies to a range of medical providers, not simply
to Dr. Lim or his medical group. To be entitled to on-call privileges, a physician must meet
certain obligations while on-call, such as responding to a call within 30 minutes, treating all

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patients assigned to him and staying on the on-call roster for a certain number of years.
Importantly, the requirements of the on-call policy do not address the manner or methodology of
an on-call doctor’s diagnosis or treatment of patients. Nor does the on-call policy give Henry
Ford the right to supervise or have any input regarding the physician’s treatment of patients.

       At 11:40 p.m. on September 3, 2010, plaintiff arrived at the emergency room of Henry
Ford and complained of sharp pain in the right-lower quadrant of her abdomen, nausea,
vomiting, and a history of Crohn’s disease. The emergency room physician and radiologist who
reviewed a CT scan of plaintiff’s abdomen believed she was suffering from appendicitis. Dr.
Lim, who was on-call at the time, was called to perform the appendectomy. Before the surgery
took place, plaintiff and her mother, who served as a witness, signed a “consent to surgery” form,
which stated in pertinent part that “I know my physician, like most physicians, is not a hospital
employee.”

        At around 1:00 a.m. the following morning, plaintiff was taken to an operating room in
the hospital and Dr. Lim performed a laparoscopic appendectomy, which was converted to an
“open” appendectomy with resection of omentum and drainage of abscess. Afterward, plaintiff
started suffering complications, which included elevated heart rate, sharp pains, and the presence
of a dark brown, foul-smelling liquid from a Jackson-Pratt drain. Five days later, Dr. Lim
performed an exploratory laparotomy and ileocecal resection. And five days after that surgery,
Dr. Lim performed another surgery, this time a laparotomy with evacuation of abdominal
abscess and end ileostomy. During this surgery, Dr. Lim determined that plaintiff was suffering
from a bowel perforation secondary to her Crohn’s disease, so he performed an ileocecectomy.

       In her complaint, plaintiff alleged that Dr. Lim was negligent in evaluating plaintiff’s
condition and in performing surgery because he failed to diagnose and treat the perforation of her
bowel. Furthermore, plaintiff contended that Henry Ford is vicariously liable for Dr. Lim’s
negligence because Dr. Lim is an actual agent or an ostensible agent of Henry Ford.

        After the close of discovery, Henry Ford moved for summary disposition on the grounds
that (1) the hospital did not have sufficient control over Dr. Lim to make Dr. Lim its agent for
purposes of vicarious liability, and (2) plaintiff’s ostensible agency theory failed because Henry
Ford said and did nothing to represent that Dr. Lim was its employee and because plaintiff
signed an acknowledgement that Dr. Lim was not Henry Ford’s employer. Henry Ford
maintained that Dr. Lim is an independent contractor and not its actual agent because it did not
have control over him or his methods of diagnosis or treatment of patients, which allowed Dr.
Lim to treat patients based on his own professional judgment. And based on the
acknowledgement signed by plaintiff, Henry Ford maintained that plaintiff could not establish
ostensible liability because plaintiff failed to produce any evidence that Henry Ford said or did
anything contrary to the acknowledgement. Plaintiff filed a response and argued that the on-call
policy provisions established that the hospital had actual control over Dr. Lim and asserted that
an ostensible agency relationship arose because the acts, facts, and circumstances led plaintiff to
believe that Dr. Lim was an employee of the hospital.

        The trial court granted Henry Ford’s motion for summary disposition in part and denied it
in part. The court granted the motion regarding plaintiff’s claim under the ostensible agency

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theory.1 But the court relied on the on-call policy to deny the hospital’s motion for summary
disposition with respect to the issue of actual agency.2

        This Court granted Henry Ford’s application for leave to appeal “limited to the issues
raised in the application and supporting brief.” Laster v Henry Ford Health Sys, unpublished
order of the Court of Appeals, entered December 26, 2014 (Docket No. 324739). Plaintiff did
not file a cross-appeal regarding the trial court’s grant of summary disposition on the other
issues, including the issue of ostensible agency.

                                  III. STANDARD OF REVIEW

       This Court reviews a trial court’s decision on a motion for summary disposition de novo.
Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich. App. 362, 369; 775
NW2d 618 (2009). When reviewing a motion for summary disposition under MCR
2.116(C)(10), this Court considers the affidavits, pleadings, depositions, admissions, and other
evidence submitted by the parties in the light most favorable to the party opposing the motion to
determine whether a genuine issue of material fact exists. Maiden v Rozwood, 461 Mich. 109,
120; 597 NW2d 817 (1999). The motion is properly granted “if there is no genuine issue
regarding any material fact and the moving party is entitled to judgment as a matter of law.”
Latham v Barton Malow Co, 480 Mich. 105, 111; 746 NW2d 868 (2008).

                                    IV. LEGAL PRINCIPLES

        Generally, Michigan law will impose liability upon a defendant only for his or her own
acts of negligence, not the tortious conduct of others. However, an exception exists under the
theory of respondeat superior, wherein an employer can be liable for the negligent acts of its
employee if the employee was acting within the scope of his employment. Hamed v Wayne Co,

1
  The trial court rejected plaintiff’s alternative theory under MCL 333.21513(a) which provides
that entities like defendants “[a]re responsible for all phases of the operation of the hospital . . .
and quality of care rendered in the hospital.” The trial court relied on Fisher v W A Foote Mem
Hosp, 261 Mich. App. 727; 683 NW2d 248 (2004), and noted that the statute does not create a
cause of action for private plaintiffs.
2
  Each of these aspects were addressed separately and denoted by different subheadings under
section IV in the trial court’s opinion and order. In subsection A, the court granted defendants’
motion for summary disposition with respect to plaintiff’s claims of direct negligence. In
subsection B, the court granted defendants’ motion with respect to plaintiff’s claim that
defendants were liable because of a non-delegable duty under MCL 333.21513(a). In subsection
C, the court denied defendant’s request for summary disposition with respect to plaintiff’s claim
that Dr. Lim was an actual agent of defendants. And in subsection D, the court granted summary
disposition to defendants on the issue of ostensible agency.

                                                 -4-
490 Mich. 1, 10-11; 803 NW2d 237 (2011); Hekman Biscuit Co v Commercial Credit Co, 291
Mich. 156, 160; 289 N.W. 113 (1939).3

        Similarly, in the absence of an employer-employee relationship, vicarious liability can
also attach through the concept of agency. As this Court has explained,

       A principal may be vicariously liable to a third party for harms inflicted by his or
       her agent even though the principal did not participate by act or omission in the
       agent’s tort. Vicarious liability is indirect responsibility imposed by operation of
       law. Courts impose indirect responsibility on the principal for his or her agent’s
       torts as a matter of public policy, but the principal, having committed no tortious
       act, is not a “tortfeaser” as that term is commonly defined. Because liability is
       imputed by law, a plaintiff does not have to prove that the principal acted
       negligently. Rather, to succeed on a vicarious liability claim, a plaintiff need only
       prove that an agent has acted negligently. Concomitantly, if the agent has not
       breached a duty owed to the third party, the principal cannot be held vicariously
       liable for the agent’s actions or omissions. [Bailey v Schaaf, 304 Mich. App. 324,
       347; 852 NW2d 180 (2014), vacated in part on other grounds 497 Mich. 927
       (2014) (quotation marks and citations omitted).]

In an agency relationship, it is the power or ability of the principal to “control” the agent that
justifies the imposition of vicarious liability. See Breighner v Mich High Sch Athletic Ass’n, Inc,
255 Mich. App. 567, 583; 662 NW2d 413 (2003); Little v Howard Johnson Co, 183 Mich. App.
675, 680; 455 NW2d 390 (1990). Conversely, it is this absence of “control” that explains why
an employer generally is not liable for the actions of an independent contractor. See Campbell v
Kovich, 273 Mich. App. 227, 233-234; 731 NW2d 112 (2006). “An independent contractor is one
who, carrying on an independent business, contracts to do a piece of work according to his own
methods, and without being subject to control of his employer as to the means by which the
result is to be accomplished, but only as to the result of the work.” Utley v Taylor & Gaskin, Inc,
305 Mich. 561, 570; 9 NW2d 842 (1943) (quotation marks and citation omitted; emphasis added).
The labels that the parties use in such a relationship are not dispositive; instead,

       [t]he test for whether a worker is an independent contractor or an employee is
       whether the worker has control over the method of his or her work: If the
       employer of a person or business ostensibly labeled an “independent contractor”

3
  As our Supreme Court stated nearly 150 years ago, “[T]he master is bound to keep his servants
within their proper bounds, and is responsible if he does not. The law contemplates that their
acts are his acts, and that he is constructively present at them all.” Smith v Webster, 23 Mich.
298, 299-300 (1871). Although one of the reasons for imposing vicarious liability in this context
is because employers typically have a greater ability to pay than an employee, other rationales
exist, which include “providing an incentive for employers to attempt to reduce tortious conduct
by their employees and the fair distribution of risk associated with activity characteristic of a
business or other entity.” Rogers v J B Hunt Transport, Inc, 466 Mich. 645, 651-652; 649 NW2d
23 (2002); see also Prosser & Keeton, Torts (5th ed), § 69, p 500.

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       retains control over the method of the work, there is in fact no contractee-
       contractor relationship, and the employer may be vicariously liable under the
       principles of master and servant. [Campbell, 273 Mich. App. at 234 (quotation
       marks and citations omitted; emphasis added).]

Thus, it is clear that not just any type of “control” will suffice to transform an independent
contractor into an employee or agent; rather, the “control” must relate to the method of the work
being done.

        With these legal principles in mind, we agree with Henry Ford’s contention that it was
entitled to judgment as a matter of law because the hospital exerted insufficient control over the
acts of Dr. Lim.

                                          V. ANALYSIS

                                       A. CONTROL TEST

        Consistent with the above case law, a hospital will not be held vicariously liable for the
negligence of a physician who is an independent contractor, unless the hospital has assumed
control over the physician. Grewe v Mt Clemens Gen Hosp, 404 Mich. 240, 250; 273 NW2d 429
(1978). Here, the parties do not dispute that Dr. Lim is, an independent contractor. Dr. Lim was
employed by Surgical Associates of Macomb—not Henry Ford. But plaintiff claims that under
the on-call policy, the hospital possessed a sufficient amount of control over Dr. Lim to make
him an agent under Michigan’s control test. Our review of the record suggests that Dr. Lim is
clearly an independent contractor because Henry Ford did not control the manner or method used
by on-call doctors, like Dr. Lim, to diagnose or treat their patients.

         Here, Henry Ford had very little control over Dr. Lim, and no “control over the method
of his . . . work.” Campbell, 273 Mich. App. at 234. His on-call responsibilities notwithstanding,
Dr. Lim was generally free to see as many or as few patients as he desired, he could generally
select his own patients, he did not and was not required to use the administrative machinery of
the hospital to bill patients, and he was part of an entirely separate practice with its own staff and
employees. Also, the hospital never paid Dr. Lim for his services, and he was free to obtain
privileges at other hospitals. The mere fact that a physician is required to maintain privileges at a
hospital and undertake on-call responsibilities is not sufficient under Michigan law to constitute
“control” over the physician’s professional practice of medicine.

       The trial court relied on select provisions of the on-call agreement when it found that a
question of fact existed regarding whether Dr. Lim was an actual agent of Henry Ford. The court
explained:

       The on-call agreement establishes that the on-call physician’s schedule is
       determined by Defendants, that it must be followed, and scheduling changes are
       controlled and limited by Defendants. The on-call agreement sets forth time
       standards on responding to a request for an on-call physician, and requires
       minimum admission levels. The on-call agreement also limits consultations to
       other on-call physicians, thereby directing the path of a contractual relationship
       between the patient and physicians selected by Defendants. The on-call
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       agreement further requires acceptance of all patients assigned, and requires at
       least one office visit after discharge.

       We disagree that the above aspects of the on-call agreement create a question of fact
regarding whether Dr. Lim was an agent of defendants. Notably, none of the above requirements
speaks to how Dr. Lim is to diagnose patients or how he is to perform surgery while at Henry
Ford. The fact that defendants may have required some logistical and quality-assurance
measures does not rise to the level of “control over the method of [Dr. Lim’s] work,” id.,
especially when the “work” that is alleged to have been negligently performed is not addressed
by the on-call agreement. As we explained in Samodai v Chrysler Corp, 178 Mich. App. 252,
256; 443 NW2d 391 (1989), which involved the plaintiff’s claim that the employer retained
substantial control over the construction work performed by its independent contractor,

       [C]ontractual provisions subjecting the contractor to the contractee’s oversight are
       not enough to retain effective control. The requisite nature of this standard
       requires that the owner retain at least partial control and direction of actual
       construction work, which is not equivalent to safety inspections and general
       oversight. [Citation omitted.]

Similar to the defendant in Samodai, Henry Ford did not retain any, much less sufficient, control
and direction of Dr. Lim’s actual work, i.e., his practice of medicine.4 It is key to our holding
that the on-call policy relied on by plaintiff and the trial court does not give Henry Ford the right
to address or control how any on-call physician, including Dr. Lim, diagnoses or treats a patient.
Importantly, there is no record evidence that Henry Ford directed, supervised, or otherwise had
any input on how Dr. Lim made his diagnosis or conducted surgery. Accordingly, because
plaintiff’s medical malpractice claim is predicated on Dr. Lim’s exercise of professional
judgment, over which the hospital had no control or influence, we hold that under Michigan’s
control test, Dr. Lim was not an agent of Henry Ford.

        Therefore, the trial court erred when it relied on the on-call policy to find that there was a
question of fact regarding whether Dr. Lim was an actual agent of Henry Ford under Michigan’s
control test and erred when it denied defendant’s motion for summary disposition on this issue.

4
  In our view, the closest that defendants come to exerting any amount of control over how Dr.
Lim engaged in the practice of medicine is found is § 2.X of the on-call agreement. This section
provides that Dr. Lim is “to utilize solely the designated primary care physicians or designated
specialists on the Unattended Call lists for all consultative or admitting care provided to the
unattended patient, for at least the first 3 days after admission.” However, it is clear that to the
extent that defendants were exerting control over this aspect of Dr. Lim’s ability to practice
medicine (i.e., requiring him to utilize certain physicians or specialists during a patient’s first
three days after being admitted to the hospital), no control was exerted over how Dr. Lim
performed the alleged negligent acts of misdiagnosis, surgery, etc. in this case. Accordingly,
imposing vicarious liability on defendants when they had no ability to control the alleged
negligent acts would run counter to the supporting rationale behind the imposition of vicarious
liability.

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                                    B. OSTENSIBLE AGENCY

         In its October 30, 2014, opinion, the trial court found that plaintiff failed to produce
sufficient evidence to create a question of fact to support her ostensible agency theory of
liability. As noted above, plaintiff’s written acknowledgement (and her mother’s written
acknowledgement, as a witness) that Dr. Lim was an independent contractor and not an
employee of Henry Ford, coupled with a failure to produce any evidence that the hospital made
any representation to the contrary, supported the trial court’s ruling. And because plaintiff failed
to file a cross-appeal regarding the trial court’s dismissal of this theory of liability, this matter is
not before us, and we decline to address it. Moreover, in this Court’s order that granted leave to
appeal, we expressly limited review to “issues raised in the application and supporting brief,”
and only the issue of actual agency liability was presented. Therefore, we are not at liberty to
review this issue.

                                        VI. CONCLUSION

        For the foregoing reasons, we reverse the trial court’s decision to deny Henry Ford’s
motion for summary disposition on the issue of actual agency and remand for the trial court to
grant summary disposition in favor of defendants. We do not retain jurisdiction. We decline to
address the issue of ostensible agency, as it was not properly raised on appeal. Defendants, as
the prevailing parties, may tax costs pursuant to MCR 7.219.

                                                               /s/ Henry William Saad
                                                               /s/ Deborah A. Servitto
                                                               /s/ Colleen A. O’Brien

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