Maryland Court Reverses Verdict Against Insurance Provider Under "Apparent Agency" Theory of Liability

In a decision that was filed earlier this year, the Maryland Supreme Court affirmed the Maryland Court of Appeals’ reversal of a jury verdict against a managed care organization (“MCO”) health insurance provider for the injuries suffered by the plaintiff after she had a foot surgery with a doctor whom she was referred to by her primary care physician.

The case of Bradford v. Jai Medical Systems was originally filed after the plaintiff needed to have a partial foot amputation because of a gangrene infection she suffered following a surgery to remove a bunion on her foot. The doctor who performed the surgery had already been held liable for medical malpractice, but the plaintiff also sued her health insurance provider, which was the managed care organization that included the doctor in its provider directory.

The doctor who performed the surgery was not an employee of the defendant, so in order to hold the insurance provider liable, the plaintiff needed to prove that the doctor was an “apparent agent” of the defendant, and the defendant should therefore be held liable for his malpractice. In this case, the owners of the defendant “managed care organization” also own a network of hospitals and medical clinics. The plaintiff argued at trial that she had seen the doctor in a hospital owned by the defendant and thought that he was employed by the defendant when she went in for treatment.

The Apparent Agency Doctrine
The apparent agency theory of liability is a legal doctrine that allows a plaintiff to hold a defendant vicariously liable for the actions of an independent subcontractor if certain conditions are met. If the defendant allows the appearance of an employer-employee relationship to exist between itself and the doctor, and the plaintiff relied on a reasonable belief that the doctor providing treatment was employed by the defendant, it is possible to hold the insurance provider liable as if the doctor was its employee. The plaintiff in this case convinced the jury that the defendant should be held responsible for the woman’s injuries, and the MCO appealed.

The Case Goes Up on Appeal
On appeal, the high court clarified the requirements of an apparent agency claim. A defendant cannot be held liable for the actions of a subcontractor unless the court finds that there was an objective appearance of an agency relationship between the two entities. The Court ruled that there was not the appearance of an agency relationship in this case. Since the doctor’s office was in a different location than the defendant-owned hospital, and since there was no sign of an agency relationship besides the inclusion of the doctor in the provider directory, along with over 4,000 other doctors, there was no appearance of an agency relationship between the defendant and the doctor as a matter of law. Even if it was proven that the victim believed that the doctor was an agent of the defendant, that belief would be unreasonable under the law, so the Court reversed the lower verdict.

The Court did specifically note in its decision that in different circumstances a managed care organization could be held responsible under a theory of apparent agency. This ruling could create confusion for victims and plaintiffs who are unsure exactly who is responsible for their treatment.

Have You Been the Victim of Medical Malpractice?

If you or a loved one has been the victim of medical malpractice, the insurance company may be partially responsible for the damages that were caused. This is especially true when treatment is being given at a clinic or hospital that is related to the managed care organization or insurance company. It is important to have the strongest legal representation available to increase your chances of being fairly compensated for the damages that resulted from the negligence of a medical provider involved with your health insurance company. If you think you’ve been a victim, contact Wais, Vogelstein, Forman & Offutt and let us look at your case. The Maryland malpractice attorneys at Wais, Vogelstein, Forman & Offutt have the experience and legal knowledge that you need to hold all of the responsible parties accountable for your injuries. Call (410) 567-0800 to schedule a no-obligation consultation, or contact us through our website.