Wilson v. Anonymous Defendant 1

183 N.E.3d 289

Darci WILSON, Appellant/Plaintiff,

v.ANONYMOUS DEFENDANT 1, Appellee/Defendant.

Supreme Court Case No. 21S-CT-371

Supreme Court of Indiana.

Argued: September 22, 2021

Decided: March 24, 2022

ATTORNEYS FOR APPELLANT: Mary Beth Ramey, Ramey & Hailey, Indianapolis, Indiana, Nicholas F. Baker, Nick Baker Law LLC, Indianapolis, Indiana

ATTORNEYS FOR APPELLEE: James F. Bleeke, Ashlie K. Keaton, Bleeke Dillon Crandall, PC, Indianapolis, Indiana

On Petition to Transfer from the Indiana Court of Appeals No. 20A-CT-923

David, Justice.

In Sword v. NKC Hospitals, Inc. , our Court adopted the Restatement (Second) of Torts section 429 and held that a hospital may be held vicariously liable for the tortious conduct of an independent contractor through apparent or ostensible agency. 714 N.E.2d 142, 152–53 (Ind. 1999).

Here, Anonymous Defendant 1—a physician group—argues that Sword does not extend its vicarious liability to a physical therapist with whom it had no contractual relationship. And we agree the rule articulated in Sword appears inapplicable on these facts.¹ However, today we also consider the Restatement (Second) of Agency section 267 and hold as a matter of first impression that under Section 267, a medical provider may be held liable for the acts of an apparent agent based on the provider's manifestations of an agency relationship with the apparent agent, which causes a third party to rely on such a relationship.

Accordingly, because there exist disputed issues of fact as to whether Anonymous Defendant 1 held out Darci Wilson's physical therapist as its apparent agent, we reverse the trial court's grant of summary judgment in Anonymous Defendant 1's favor and remand for further proceedings consistent with this opinion.

Facts and Procedural History

In September 2008, Anonymous Defendant 1, an orthopedic physician group ("Anonymous"),² and Accelerated Rehab, a physical therapy provider, executed a "Staffing Agreement." The Staffing Agreement required Accelerated Rehab to supply licensed, qualified rehabilitation personnel, including physical therapists, to staff Anonymous. Accelerated Rehab had "sole responsibility" for recruiting, vetting, training, supervising, evaluating, and monitoring the rehabilitation personnel. Appellant's Conf. App. Vol. II, p. 89. The Staffing Agreement also stated that "all [ ] Rehab Personnel shall be employees or independent contractors of [Accelerated Rehab] at all times[.]" Id.

Accelerated Rehab was subsequently acquired by Athletico, Ltd. and Athletico Management, LLC (collectively, "Athletico"), and apparently continued operating by the terms of the original Staffing Agreement executed between Anonymous and Accelerated Rehab. But while Athletico's therapy facility and Anonymous operated under very similar names, and Anonymous granted Accelerated Rehab (and, subsequently, Athletico) the use and occupancy of the second floor of its orthopedic care facility ("the Facility"), the record does not contain any contract, agreement, or other indication of a legal relationship between Anonymous and Athletico or its rehab personnel.

Anonymous provided Darci Wilson ("Wilson") with orthopedic care in 2015 and 2016. In December 2015, Wilson underwent knee surgery at Anonymous. Following surgery, Anonymous informed Wilson that she needed to undergo physical therapy and referred her to the second floor of the Facility for her therapy needs.

Wilson reported to the Facility for physical therapy on April 12, 2016. She was unaware that her physical therapist, Christopher Lingle ("Lingle") was employed by Accelerated Rehab—indeed, many signs indicated that Lingle was Anonymous's employee. Before her first appointment, Wilson signed the "Appointment Policy—PT/OT" that provided, "Thank you for choosing [Anonymous] for your therapy needs" and was signed by "[Anonymous] Physical/Occupational Therapy Department." Appellant's Conf. App. Vol. III, p. 88. The Facility featured only Anonymous's branding; there was no indication that the second floor was occupied by Accelerated Rehab or Athletico. Lingle filled out and used physical therapy forms supplied by Anonymous. And later, Anonymous's physician signed Wilson's physical therapy records, and Wilson received a bill from Anonymous for the physical therapy.

At Wilson's April 12 physical therapy appointment, Lingle performed a procedure that caused her "excruciating pain." Appellant's Conf. App. Vol. II, p. 18. When this pain did not subside, Wilson followed up with her orthopedist, who informed her that she had been reinjured and would need to undergo another surgery.

Wilson later filed a proposed complaint with the Indiana Department of Insurance alleging that Anonymous and its employee or agent, Lingle, were negligent while providing her with medical care. Wilson later amended her proposed complaint to add Athletico as a defendant, alleging that Lingle "provided the physical therapy services through Athletico ... under the assumed name of [Anonymous]." Id. at 20–21.

In December 2018, Athletico and Lingle initiated a cause of action against Wilson and sought summary judgment, arguing that because Athletico was not a qualified healthcare provider under the Medical Malpractice Act, any potential negligence claims by Wilson against Athletico and Lingle were barred by the two-year statute of limitations. In January 2019, while the motion for summary judgment was pending, Wilson filed a complaint against Anonymous, Athletico, and Lingle in the trial court, and Athletico and Lingle moved to dismiss. The parties eventually agreed to consolidate the two proceedings, and in October 2019, the trial court entered summary judgment in favor of Athletico and Lingle, finding that Wilson's complaint was time-barred. In March 2020, the trial court determined that Sword did not apply on these facts and entered summary judgment in favor of Anonymous, finding that it could not be held liable for Lingle's actions without evidence of an employment or contractual relationship between the two.

The Court of Appeals affirmed in a memorandum decision, finding no genuine issue of material fact as to whether Anonymous could be liable for Lingle's acts as an apparent agent for Anonymous under Sword , 714 N.E.2d at 152–53. Wilson v. Anonymous Defendant 1, 167 N.E.3d 720 (mem.), 2021 WL 969218 at *6 (Ind. Ct. App. 2021), vacated.

Wilson petitioned this Court for transfer, which we granted, vacating the Court of Appeals opinion. See App. R. 58(A).

Standard of Review

When this Court reviews a grant or denial of a motion for summary judgment, we "stand in the shoes of the trial court." Burton v. Benner , 140 N.E.3d 848, 851 (Ind. 2020) (quoting Murray v. Indianapolis Public Schools , 128 N.E.3d 450, 452 (Ind. 2019) ). Summary judgment is appropriate "if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Campbell Hausfeld/Scott Fetzer Co. v. Johnson , 109 N.E.3d 953, 956 (Ind. 2018) (quoting Ind. Trial Rule 56(C) ).

The party moving for summary judgment bears the burden of making a prima facie showing that there is no issue of material fact and that it is entitled to judgment. Burton , 140 N.E.3d at 851. The burden then shifts to the non-moving party to show the existence of a genuine issue. Id. We will draw all reasonable inferences in favor of the non-moving party. Ryan v. TCI Architects/Engineers/Contractors, Inc. , 72 N.E.3d 908, 912–13 (Ind. 2017).

Discussion and Decision

At issue is whether Lingle was acting as an apparent or ostensible agent of Anonymous when he treated Wilson. Specifically, the parties dispute whether the rule articulated in Sword —that a hospital may be vicariously liable, as a principal, for its contractor's tortious conduct—applies when there is no record evidence of a legal relationship between Lingle and Anonymous. 714 N.E.2d at 152–53.

We first consider the scope of Sword and its requirement that a legal relationship exist between the principal and the alleged apparent agent. Next, we consider the Restatement (Second) of Agency section 267 and adopt its application specifically in the context of both hospitals and non-hospital medical facilities. Finally, we apply Section 267 to the facts before us and conclude that summary judgment in Anonymous's favor is unsupported.

I. Sword and the Restatement (Second) of Torts section 429 require a legal relationship between the alleged principal and the alleged apparent agent.

For many years, Indiana law held that because hospitals are corporations—and therefore cannot practice medicine—the doctrine of respondeat superior cannot apply to hold a hospital liable for the negligent acts of a physician contractor. See, e.g., Iterman v. Baker , 214 Ind. 308, 316–18, 15 N.E.2d 365, 369–70 (Ind. 1938).

In Sword , a hospital patient alleged that an independent contractor anesthesiologist committed malpractice while giving the patient an epidural. 714 N.E.2d at 145–46. We expressly adopted the Restatement (Second) of Torts section 429, finding that a hospital may be vicariously liable for the negligence of an independent contractor physician under the doctrine of apparent agency. Id. at 149. Section 429 provides that

One who employs an independent contractor to perform services for another which are accepted in the reasonable belief that the services are being rendered by the employer or by his servants, is subject to liability for physical harm caused by the negligence of the contractor in supplying such services, to the same extent as though the employer were supplying them himself or by his servants.

Id.

Under Section 429, the trier of fact must consider both the hospital's manifestations to a patient and the patient's reliance on these manifestations when deciding whether to hold a hospital liable for its contractor's acts. Id. Central to both factors is "whether the hospital provided notice to the patient that the...