|On December 7, 2022, the Michigan Supreme Court, in a 4-3 decision, altered the established law of hospital ostensible agency liability, in Markel v William Beaumont Hospital. Rather than specifically decide whether the Markel case facts legally lacked the proofs for ostensible agency, the Court remanded the case back to the Court of Appeals, holding the Court of Appeals had dismissed the case under the wrong legal standard. It overruled a number of Court of Appeals cases, and severely limited (without expressly overruling) an earlier Supreme Court case, Reeves v MidMichigan.The Court ruled the Court of Appeals was to review the case under the following standard enunciated in 1978 in Grewe v Mt Clemens General Hospital:
To establish a claim of ostensible agency, a plaintiff must show: [First] The person dealing with the agent must do so with belief in the agent’s authority and this belief must be a reasonable one; [second] such belief must be generated by some act or neglect of the principal sought to be charged; [third] and the third person relying on the agent’s apparent authority must not be guilty of negligence. [Grewe v Mt Clemens Gen Hosp, 404 Mich 240, 253(quotation marks and citations omitted; alterations in original.] Markel, supra, at 1
The Markel Court confirmed the Grewe requirement that “the person dealing with the agent must do so with the belief in the agent’s authority and this belief must be a reasonable one,” but the order did decrease the Plaintiff’s burden of proof on this requirement.
The Markel order held that “when a patient presents from treatment at a hospital emergency room and is treated during their hospital stay by a doctor with whom they have no prior relationship, a belief that the doctor is the hospital’s agent is reasonable unless the hospital does something to dispel that belief.”
The question remains unresolved as to what evidence Plaintiff is still required to present to create a question of fact as to the patient looking to the hospital. It would appear that, Plaintiff still must provide some evidence that the Plaintiff had the belief that the doctors treating her were hospital agents. Whether that proof is Plaintiff or someone else testifying that Plaintiff went to the hospital for treatment by the hospital, is unclear. In Grewe itself, the patient did testify he was looking to the hospital for treatment when he presented to the hospital after first going to a clinic. The Markel order stated (without any cited authority, in what is arguably dicta) that “patient testimony is not required to establish ostensible agency under Grewe.” But the Markel majority did not make the ultimate leap and state Plaintiff did not have to provide any evidence of a patient’s belief to establish ostensible agency.
Further, it would appear that Defendants can still argue that a Plaintiff who makes no decisions as to seeking treatment (such as an unconscious patient or a person for whom EMS chooses the hospital), does not meet her burden of proof.
The Markel order more clearly changed the burden of proof for Plaintiff on the test regarding the patient’s belief of the doctor being a hospital agent, and that the belief must be generated by some act or neglect of the principal. The Court concluded that: “‘the act or neglect’ of the hospital is operating an emergency room staffed with doctors with whom the patient, presenting themselves for treatment, has no prior relationship.” The patient’s agency belief is presumptively reasonable under this new standard. It is now the hospital’s burden, rather than the Plaintiff’s, to establish the hospital or treating doctor has “dispelled” a patient belief or assumption regarding hospital agency.
Once again, it does appear that a hospital is still permitted to provide evidence negating this presumption through previously accepted means: such as a hospital consent form which provides notice that physicians are not hospital employees; a physician indicating she is an independent physician; or preexisting patient knowledge of the doctor’s independent status.
This new Markel standard does not provide direct answers on the question of ostensible agency in many situations. To hold that a hospital’s “act or neglect” is a failure to discuss independent physicians in the context of an unconscious or incompetent patient makes little sense, although such a case may already be insufficient if Plaintiff cannot show that they looked to the hospital for treatment. In such a context, the patient is receiving treatment, and the hospital has no ability to provide any evidence to the patient which could give them notice that the doctors are not its agents. Thus, even if such evidence was present in a consent form, signage, or direct communication with a patient, the patient himself is unable to receive the information. To permit Plaintiff to prevail in such situations flips the entire purported reliance standard of ostensible agency on its head. In such contexts, Defendant hospitals should continue to attempt to persuade the court that it should utilize the general principle stated in Grewe: “generally speaking a hospital is not vicariously liable for the negligence of a physician who is an independent contract who merely uses the hospital facilities to render treatment to his patients.”
Ultimately, while Markel made the burden of proof to create a question of fact easier for some Plaintiffs, the Markel Court did not take the step of mandating hospital ostensible agency for all emergency department presentations, and a hospital should continue to present evidence to dispute such liability.