Arrendale v. Am. Imaging & Mri, LLC
| Decision Date | 24 March 2022 |
| Docket Number | Supreme Court Case No. 21S-CT-370 |
| Parties | Harold ARRENDALE, Appellant/Plaintiff, v. AMERICAN IMAGING & MRI, LLC a/k/a Marion Open MRI; Isa Canavati, M.D.; Amy Sutton, N.P.; Allied Physicians, Inc. a/k/a Fort Wayne Neurological Center; Alexander Boutselis, M.D.; John Dean, M.D. ; Donald Bruns, M.D.; Marion General Radiology, Inc.; Jon Karl, M.D.; and Orthopaedics Northeast, P.C., Appellees/Defendants. |
| Court | Indiana Supreme Court |
ATTORNEY FOR APPELLANT: Mary A. Findling, Findling Park Conyers Woody & Sniderman, P.C., Indianapolis, Indiana
ATTORNEYS FOR APPELLEES: Carol A. Dillon, Christopher A. Farrington, Bleeke Dillon Crandall, P.C., Indianapolis, Indiana, Benjamin D. Ice, Barrett McNagny LLP, Fort Wayne, Indiana, Chad J. Bradford, Kathleen E. Watson, O'Bryan Brown & Toner, PLLC, Indianapolis, Indiana
ATTORNEYS FOR AMICUS CURIAE INDIANA TRIAL LAWYERS ASSOCIATION: Steven L. Langer, Sara A. Langer, Langer and Langer, Valparaiso, Indiana
ATTORNEYS FOR AMICUS CURIAE DEFENSE TRIAL COUNSEL OF INDIANA: Peter H. Pogue, Beth A. Behrens, Schultz & Pogue, LLP, Indianapolis, Indiana Lucy R. Dollens, Quarles & Brady, LLP, Indianapolis, Indiana
On Petition to Transfer from the Indiana Court of Appeals, No. 20A-CT-2184
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). Today, we consider Sword and Section 429 ’s reasoning and application to a non-hospital diagnostic medical imaging center.
We hold that Sword and Section 429 ’s apparent agency principles apply to non-hospital medical entities that provide patients with health care. Therefore, because plaintiff Harold Arrendale has shown there are genuine issues of material fact whether the radiologist who read and interpreted his MRIs was an apparent agent for the defendant Marion Open MRI, we reverse summary judgment in Marion Open MRI's favor and remand for further proceedings consistent with this opinion.
Harold Arrendale's primary care physician sent him to American Imaging & MRI, LLC a/k/a Marion Open MRI ("Marion Open MRI") to get MRIs of his spine in April 2013. Marion Open MRI is not a hospital. It is an outpatient diagnostic imaging center that is not a qualified healthcare provider under the Indiana Medical Malpractice Act ("the Act"). Marion Open MRI contracted with radiologist Dr. Alexander Boutselis to read MRIs on an independent contractor basis. Pursuant to this contract, Marion Open MRI sent Arrendale's images to Dr. Boutselis for review and interpretation. Dr. Boutselis read and interpreted these MRIs from his home office, and he was never physically present at Marion Open MRI. Dr. Boutselis's reports and conclusions from reviewing Arrendale's MRIs appeared on Marion Open MRI letterhead and gave no indication of his independent contractor status.
Arrendale filed his complaint in December 2017 against multiple defendants, alleging medical malpractice related to his MRI and imaging care. He specifically alleged that the defendant entities, including Marion Open MRI and Dr. Boutselis, failed to diagnose and treat his spinal arteriovenous fistula, which has now resulted in permanent injuries.1
Marion Open MRI moved for summary judgment, arguing that it was not liable for Dr. Boutselis's actions because Sword ’s Restatement (Second) of Torts section 429 analysis does not apply to non-hospital entities. In response, Arrendale argued there was a dispute of material fact whether Dr. Boutselis was acting as an apparent agent for Marion Open MRI under Sword , despite the fact that Marion Open MRI is not a hospital. To oppose summary judgment, Arrendale designated an affidavit attesting that Marion Open MRI never provided him with any notice that the radiologist reading his MRIs was not an employee, that he had no independent knowledge of the relationship between Marion Open MRI and Dr. Boutselis, and that he assumed that Dr. Boutselis was an employee of Marion Open MRI. He also designated photographs of Marion Open MRI, which show a sign outside its building advertising "Save $$ on your next MRI!" Appellant's App. Vol. II, pp. 190–91.
In its summary judgment order, the trial court noted the "evolving nature of medical care that has taken place since [ Sword ]," and found "very good logic in Arrendale's argument that apparent authority in medical malpractice cases should be applicable to claims arising outside of a hospital setting." Id. at 42. However, the trial court ultimately granted summary judgment in Marion Open MRI's favor, finding that Indiana's appellate courts have only applied Sword ’s apparent agency rules to hospitals and not yet to non-hospital medical entities.
The Court of Appeals reversed the trial court, holding for the first time that Sword may apply to a non-hospital diagnostic imaging facility because "it is reasonable for a patient in a diagnostic imaging center to believe that the radiologists interpreting images for the center are employees or agents of the center, unless the center informs the patient to the contrary." Arrendale v. American Imaging & MRI, LLC , 171 N.E.3d 1004, 1009 (Ind. Ct. App. 2021), vacated.
Marion Open MRI petitioned for transfer, which we granted. See App. R. 58(A).
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, 955–56 (Ind. 2018) (quoting Ind. Trial Rule 56(C) ).
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). We review summary judgment de novo. Hughley v. State , 15 N.E.3d 1000, 1003 (Ind. 2014).
On transfer, Marion Open MRI contends that because it is not a hospital, it cannot be held liable under Sword for Dr. Boutselis's alleged negligence in reviewing and interpreting Arrendale's MRIs. It argues that the Court of Appeals failed to consider the specific context in which Sword ’s rule was applied exclusively to hospitals.
We first look at Sword and its apparent agency analysis for hospitals that use independent contractor physicians. Next, we consider Sword ’s application outside the hospital context and expressly adopt its application to non-hospital medical entities that provide health care, including diagnostic imaging facilities like Marion Open MRI. Lastly, we decline to apply this rule only prospectively and apply Sword to this record to conclude there is a genuine issue of material fact as to whether Dr. Boutselis was an apparent agent for Marion Open MRI.
"[Vicarious liability] is a legal fiction by which a court can hold a party legally responsible for the negligence of another, not because the party did anything wrong but rather because of the party's relationship with the wrongdoer." Sword , 714 N.E.2d at 147. Respondeat superior is the doctrine most often associated with vicarious liability in the tort context. It relies on an employer-employee or principal-agent relationship and generally does not apply to independent contractors. However, even absent an actual agency relationship, a principal may sometimes be vicariously liable for the tortious conduct of another under the doctrine of apparent agency. Id. Apparent agency may be established when a third party reasonably believes there is a principal-agent relationship based on the principal's manifestations to the third party. Id.
Although this Court has previously used the terms apparent agency and apparent authority interchangeably, we pause to note these are two distinct doctrines. Apparent authority concerns only the scope of an agent's authority and requires an agency relationship. See Pepkowski v. Life of Indiana Ins. Co. , 535 N.E.2d 1164, 1166 (Ind. 1989) (). Apparent agency, in contrast, concerns only whether a principal's manifestations induce a third party to reasonably believe there is a principal–agent relationship. See id. at 1166–67 (). In certain circumstances, apparent agency can establish vicarious liability by examining the ability of an agent with "apparent authority" to bind the principal to a contract with a third party. Sword , 714 N.E.2d at 148–49.
In Sword , a patient seeking medical attention for the birth of a child alleged that an independent contractor anesthesiologist working at a hospital committed malpractice while giving the patient an epidural. Id. at 145–46. Prior to Sword , Indiana courts followed the general rule that hospitals could not be held liable for the negligent actions of independent contractor physicians. Id. at 149. Courts also viewed respondeat superior as inapplicable to hospitals "because the hospitals could not legally assert any control over the physicians." Id. ; see also Iterman v. Baker , 214 Ind. 308, 316–18, 15 N.E.2d 365, 369–70 (1938). However, we acknowledged the "ongoing movement by courts to use apparent or ostensible...
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