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Hospitals May Face Increased Liability Under Michigan Supreme Court Decision

March 29, 2023

In the recent case of Markel v. William Beaumont Hospital, 982 N.W.2d 151 (2022), the Michigan Supreme Court changed the analysis for claims alleging that a hospital is vicariously liable for a non-employee’s alleged negligence in cases arising out of care provided to a patient presenting through an emergency room.  The Supreme Court reiterated the established precedent in Grewe v Mt. Clemens Gen. Hospital, 404 Mich. 240, 253; 273 N.W.2d 429 (1978) which held that a patient alleging a claim of vicarious liability must establish the following:

The person dealing with the agent must do so with belief in the agent’s authority and this belief must be a reasonable one; such belief must be generated by some act or neglect of the principal sought to be charged; and the third person relying on the agent’s apparent authority must not be guilty of negligence.

The Markel order stated that the rule from Grewe is that “when a patient presents for 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.” Markel, 982 N.W.2d at 153. The Court noted 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.” Id.  In so holding, the Markel order expressly overruled case law interpreting Grewe to require a patient to show “some additional, affirmative act by the hospital in every emergency room case to prove ostensible agency.” Id. (Emphasis added).

The Markel order recognized that “a hospital will not be vicariously liable under an ostensible agency theory every time a person receives medical treatment in a hospital.” However, the Court appears to have put an emphasis on whether there was a pre-existing relationship between a doctor and a patient as the primary manner in which a reasonable belief can be dispelled. The Supreme Court’s order in Markel seems to place an increased burden on the hospital to show that it took some steps to “dispel a patient’s belief or assumption that those providing treatment are employed by the hospital.” This could potentially be achieved through a signed consent form providing notice to the patient that health providers are not employees or agents of the hospital. Alternatively, the health provider could explicitly inform the patient that he or she is not an employee or agent of the hospital and is instead an independent contractor.

The practical effect of this order is that it lowers the patient’s burden on the issue of whether there was a reasonable belief that the health provider treating the patient was an agent of the hospital, as opposed to an independent contract for which there would be no liability. Under this new ruling, the act of presenting to a hospital’s emergency room seeking treatment is likely sufficient to, at a minimum, create a question of fact as to whether the patient had a reasonable belief that health providers were agents of the hospital so as to make the hospital liable for any potential negligence. Further, the Court Markel order held that “patient testimony is not required to establish ostensible agency under Grewe.” Id. at 154. Therefore, it appears that the evidentiary burden of establishing a reasonable belief for patients who were incapacitated, or who subsequently pass away, has been lowered.

Although this order will undoubtedly make it challenging to get an early dismissal of a vicarious liability case, the full impact of this decision will not be clear until other courts begin to apply and interpret the Markel decision. At a minimum, hospitals should become vigilant in providing affirmative notice – possibly including signed consent forms – to emergency room patients when health care services are being administered by those that are not employees or agents of the hospital.