Popovich v. Allina Health Sys., A18-1987

• Decision Date: 29 July 2020
• Docket Number: A18-1987
• Citation: 946 N.W.2d 885
• Parties: Alla K. POPOVICH, as wife and Guardian Ad Litem for Aleksandr M. Popovich, et al., Appellants, v. ALLINA HEALTH SYSTEM, Respondent, Emergency Physicians Professional Association, et al., Defendants.
• Court: Minnesota Supreme Court

946 N.W.2d 885

Alla K. POPOVICH, as wife and Guardian Ad Litem for Aleksandr M. Popovich, et al., Appellants,

v.ALLINA HEALTH SYSTEM, Respondent,Emergency Physicians Professional Association, et al., Defendants.

A18-1987

Supreme Court of Minnesota.

Filed: July 29, 2020

OPINION

HUDSON, Justice.

This appeal involves a medical malpractice action brought against a hospital system based on the alleged negligence of independent contractors involved in providing care for a patient in the emergency rooms of two different hospitals owned by the hospital system. At issue is whether a hospital can be held vicariously liable for the negligence of an independent contractor based on the doctrine of apparent authority. The court of appeals affirmed the dismissal of the medical malpractice action on the grounds that a hospital can be vicariously liable for a physician's negligence only if the physician is an employee of the hospital. We reverse and remand.

FACTS

Appellant Alla Popovich brought this medical malpractice action as wife and guardian ad litem for her husband, Aleksandr Popovich, alleging that her husband suffered a stroke

after receiving negligent medical care in the emergency rooms of two hospitals owned and operated by respondent Allina Health System.

In the early morning hours of February 9, 2016, 38-year-old Aleksandr Popovich went to the emergency room at Unity Hospital complaining of dizziness, loss of balance, blurry vision, and trouble breathing. One of the physicians on duty ordered a computed tomography

(CT) scan of Mr. Popovich's head, and a radiologist reviewed the scan. After spending approximately 2 hours in Unity Hospital's emergency department, Mr. Popovich returned home shortly before 7:00 a.m.

Later that morning, Mr. Popovich had trouble breathing and became unresponsive. An ambulance took him to the emergency room at Mercy Hospital, where he arrived at 11:16 a.m. A doctor working in the emergency room ordered a second CT scan

of Mr. Popovich's head. A radiologist reviewed both the scan from Mr. Popovich's first emergency room visit at Unity Hospital and the second scan taken at Mercy Hospital. The radiologist identified abnormalities in the scans and noted swelling in Mr. Popovich's brain that had increased since the first scan.

After more tests showed abnormalities in Mr. Popovich's brain, he was transferred to Abbott Northwestern Hospital for further care. He arrived at Abbott at 5:37 p.m., where doctors diagnosed him with "dissection of the left proximal vertebral artery with thrombus

." Mr. Popovich had suffered a stroke. The stroke left him with serious and irreversible brain damage. He spent several weeks in the hospital followed by a month of in-patient rehabilitation. He still cannot walk without great assistance, he has very little use of his right arm and leg, and he has severe speech and cognitive impairments. He will need therapy and nursing care for the rest of his life due to his permanent disability.

Allina owns and operates both of the hospitals where Mr. Popovich received treatment on February 9, 2016, Unity Hospital and Mercy Hospital. The emergency room doctors and radiologists involved in Mr. Popovich's care, however, were not Allina employees. The doctors working in the emergency rooms were employees of Emergency Physicians Professional Association (EPPA), an entity that contracted with Allina to provide doctors for emergency departments located within Allina-owned facilities. The radiologists that reviewed images of Mr. Popovich's brain were employees of Suburban Radiologic Consultants (SRC), a separate entity with a contract to provide radiology services to patients at Unity and Mercy Hospitals.

Alla Popovich¹ sued Allina, EPPA, and the emergency room physicians for medical malpractice in Hennepin County District Court. An amended complaint added a claim against SRC based on the alleged negligence of its employee, the unnamed radiologist who reviewed Mr. Popovich's first CT scan

at Unity Hospital. The amended complaint asserted that if the emergency room doctors and the radiologist had recognized Mr. Popovich's stroke symptoms at an earlier point in the course of his treatment, he would not have suffered catastrophic injuries.²

As against Allina, the amended complaint alleges that Mr. Popovich suffered a stroke after receiving negligent care from the radiologist and two emergency room physicians, and asserts that Allina is vicariously liable for their negligent acts and omissions through the doctrine of apparent authority. The amended complaint acknowledges that the physicians were not employed by Allina.

Allina moved to dismiss the amended complaint for failure to state a claim upon which relief can be granted under Minn. R. Civ. P. 12.02(e). Allina argued that the amended complaint does not state a claim because Minnesota law bars a suit against a hospital based on the negligence of independent contractors. The district court granted Allina's motion to dismiss, ruling that a hospital is not vicariously liable for the acts of non-employees. The district court relied on the court of appeals’ decision in McElwain v. Van Beek , 447 N.W.2d 442, 446 (Minn. App. 1989), rev. denied (Minn. Dec. 20, 1989), which concluded that "a hospital can only be held vicariously liable for a physician's acts if the physician is an employee of the hospital."

Popovich appealed. A divided court of appeals affirmed the dismissal of the claims against Allina. Popovich v. Allina Health Sys. , No. A18-1987, 2019 WL 3000755, at *1 (Minn. App. July 8, 2019). Like the district court, the majority held that the court of appeals’ prior decision in McElwain forecloses the vicarious liability claims against Allina. 2019 WL 3000755, at *3. The dissent, however, concluded that the majority erred by relying on McElwain , arguing that "Minnesota has never properly established any rule categorically immunizing hospitals from vicarious liability premised on the tortfeasor's apparent authority to act for the institution." Id. at *6 (Ross, J., dissenting). We granted Popovich's petition for review.

ANALYSIS

The merits of Popovich's medical malpractice claims are not before us. Instead, the task before us is two-fold. First, we must decide whether Popovich may bring a claim against Allina to hold Allina vicariously liable for the medical malpractice of an independent contractor based on a theory of apparent authority. If the answer to that question is "yes," we must determine the proper legal standard for apparent authority in this context. We consider these issues in turn below.

I.

The question of whether hospitals should be exempt from vicarious liability where a plaintiff seeks to hold a hospital responsible for the medical malpractice of an independent contractor based on a theory of apparent authority is an issue of first impression for our court.³ This is a question of law that we review de novo. See Gieseke ex rel. Diversified Water Diversion, Inc. v. IDCA, Inc. , 844 N.W.2d 210, 214 (Minn. 2014).

Popovich argues that the court of appeals’ decision in McElwain misinterpreted our precedent, that Minnesota law implicitly recognizes vicarious tort liability premised on a theory of apparent agency, and that there should be no categorical exemption for hospitals. 447 N.W.2d 442. Allina contends that the court of appeals’ decisions, both in McElwain and in this case, represent a correct understanding of Minnesota law and that we should not recognize apparent authority as a theory of vicarious liability as it applies to hospitals and the negligence of medical personnel who are not hospital employees.

Before addressing the parties’ dispute over the court of appeals’ decision in McElwain , we provide a brief review of our vicarious liability precedent. Minnesota recognizes both respondeat superior and apparent authority as theories of vicarious liability. Under the doctrine of respondeat superior, "an employer is vicariously liable for the torts of an employee committed within the course and scope of employment." Schneider v. Buckman , 433 N.W.2d 98, 101 (Minn. 1988). A business or individual—a principal—is vicariously liable under the doctrine of apparent authority⁴ where they hold an agent out "as having authority" or "knowingly" permit the agent to act on their behalf, and the agent is negligent. Hockemeyer v. Pooler , 268 Minn. 551, 130 N.W.2d 367, 375 (1964). The "proof of the agent's apparent authority" is found in "the conduct of the principal, not the agent." Id.

We have previously held that respondeat superior applies to hospitals to impose vicarious liability on hospitals for the negligence of employees, including physicians and other medical personnel. See St. Paul-Mercury Indem. Co. v. St. Joseph's Hosp. , 212 Minn. 558, 4 N.W.2d 637, 638 (1942) ("It is well established in this state that a hospital, private or charitable, is liable to a patient for the torts of its employees under the doctrine of respondeat superior."). In St. Joseph's Hospital , we explained that a hospital is vicariously liable for the negligence of its employees where the hospital has control over the actions of the employees. Id. If there is a break in the chain of control between employer and employee, the hospital cannot be vicariously liable under the doctrine of respondeat superior. Id. at 639 (holding that the hospital was not vicariously liable for the negligence of its employees where a non-employee controlled their work at the time of the plaintiff's injury). We reaffirmed this rule of law with our decision in Moeller v. Hauser , 237 Minn. 368, 54 N.W.2d 639, 644–46 (1952), holding a hospital vicariously liable for the negligence of an employee where the negligence occurred in the course of the employee's regular hospital duties and there was no break in the chain of control.

Neither St. Joseph's Hospital nor Moeller involved the issue of whether a hospital was vicariously liable for the actions of a non-employee based on a theory of...