Raglin v. HMO Illinois, Inc.

• Decision Date: 05 June 1992
• Docket Number: No. 1-91-2775,1-91-2775
• Citation: 230 Ill.App.3d 642,172 Ill.Dec. 90,595 N.E.2d 153
• Parties: , 172 Ill.Dec. 90 Gerik RAGLIN, a minor, by Jasper Raglin and Gwendolyn Raglin, his parents and next friends; Jasper Raglin, Individually; and Gwendolyn Raglin, Individually, Plaintiffs-Appellants, v. HMO ILLINOIS, INC.; Health Assurance Plan; Blue Cross & Blue Shield of Illinois; Blue Cross and Blue Shield Association; and Health Care Service Corporation, Defendants-Appellants (Pronger-Smith Medical Associates, Alfonso Mejia, M.D.; Mario Irigoyen, M.D.; Jose I. Manglano, M.D., Defendants).
• Court: United States Appellate Court of Illinois

Page 153

595 N.E.2d 153

230 Ill.App.3d 642, 172 Ill.Dec. 90

Gerik RAGLIN, a minor, by Jasper Raglin and Gwendolyn Raglin, his parents and next friends; Jasper Raglin, Individually; and Gwendolyn Raglin, IndividuallyPlaintiffs-Appellants, v.HMO ILLINOIS, INC.; Health Assurance Plan; Blue Cross &amp Blue Shield of Illinois; Blue Cross and Blue Shield Association; and Health Care Service CorporationDefendants-Appellants (Pronger-Smith Medical AssociatesAlfonso Mejia, M.D.; Mario Irigoyen, M.D.; Jose I. Manglano, M.D., Defendants).

No. 1-91-2775.

Appellate Court of Illinois, First District, Fifth Division.

June 5, 1992.

Larry R. Rogers, of counsel, Power Rogers Lavin, Chicago, for plaintiffs-appellants.

G. Christian Kronberg, Terri Abruzzo, Kirkland & Ellis, Carolyn Clift, of counsel, Health Care Service Corp., a Mut. Legal Reserve Co., Chicago, for defendants-appellees.

Justice MURRAYdelivered the opinion of the court:

Plaintiffs appeal from the grant of summary judgment in favor of Health Care Service Corporation(HCSC) and HMO Illinois, Inc.(HMOI)¹.The issue before this court is whether HCSC and HMOI may be held vicariously liable for the negligence of doctors under contract with them to provide medical services to the members of their health care plan.

The facts of this case are as follows:

Gwendolyn Raglin(Raglin) became a member of HMOI through her employment and in June 1985, because of her membership in HMOI, became a patient of Pronger-Smith Medical Associates(Pronger-Smith), a medical group under contract with HMOI to provide medical services to HMOI members.A medical history taken in November 1985 revealed that Raglin had diabetes in her family history.

In April 1986 a pregnancy test confirmed that Raglin was pregnant and Pronger-Smith physicians Alfonso Mejia, Mario Irigoyen and Jose I. Manglano, provided Raglin with medical care throughout her pregnancy.Although these doctors were aware of Raglin's medical history, which presented a strong likelihood that Raglin could develop diabetes during pregnancy, which in turn could lead to a larger than normal birth size baby, tests to monitor Raglin's blood sugar were not performed.

On November 16, 1988, Raglin delivered a son, Gerik Raglin(Gerik).The delivery was complicated by a condition known as shoulder dystocia.Apparently this means that, because of its size, the baby's shoulders become lodged in the birth canal and caused delivery to be arrested.In response to this situation, Dr. Mejia applied pressure to Raglin's abdomen and used forceps to assist the delivery.Because of this forced delivery, Gerik sustained permanent damage to his brachial plexis nerve resulting in paralysis.

On November 15, 1988, a medical malpractice action was filed against all of the above-named defendants for the alleged negligent medical care provided to Raglin during her pregnancy and for the negligent prenatal care and delivery of her son, Gerik.On March 10, 1989, HCSC and HMOI filed a motion to dismiss the complaint with prejudice for failure to state a cause of action against them.This motion was resubmitted on January 5, 1990, as a motion for summary judgment.On February 22, 1990, the trial court granted HCSC and HMOI summary judgment in their favor.Plaintiffs now appeal from that order ².

The only issue before this court is whether the trial court erred by granting HCSC and HMOI summary judgment in their favor.Summary judgment is a drastic measure which should only be taken when the pleadings, depositions, admissions and affidavits on file show that there is no genuine issue of material fact and plaintiffs are entitled to judgment as a matter of law.(Ill.Rev.Stat.1989, ch. 110, par. 2-1005(c).)A triable issue exists where there is a dispute as to material facts or where, although the facts are not in dispute, reasonable minds might differ in drawing inferences from those facts.Greene v. Rogers(1986), 147 Ill.App.3d 1009, 101 Ill.Dec. 543, 498 N.E.2d 867.

On appeal plaintiffs contend that summary judgment was improperly granted because a material issue of fact exists on the question of whether a principal-agency relationship, either actual or apparent, exists between HMOI and the doctors who deliver medical care to HMOI members.Defendants, however, contend that the trial court ruled properly, finding that no agency relationship exists, as a matter of law, so that they were entitled to judgment in their favor.For reasons that follow we affirm the judgment of the trial court.

Initially we note that plaintiffs devote much of their argument in their appellate brief to the issue of whether HMOI is a "provider" of health care within the meaning of the HMO Act.(Ill.Rev.Stat.1989, ch. 111 1/2, par. 1402(12).)The thrust of their argument seems to be that if HMOs may be deemed "providers" of health care, then they are not immune from liability for malpractice.However, we believe this argument is misdirected since there appears to be no question that HMOs are not immune from liability.(SeeMoshe v. Anchor Organization for Health Maintenance(1990), 199 Ill.App.3d 585, 145 Ill.Dec. 681, 557 N.E.2d 451;American National Bank & Trust Co. of Chicago v. Anchor Organization for Health Maintenance(1991), 210 Ill.App.3d 418, 155 Ill.Dec. 128, 569 N.E.2d 128.)Nor do defendants here contend that they are immune from the potential of malpractice liability.However, a lack of immunity from prosecution for malpractice does not mean a fortiori that HMOs may be held strictly liable for any injury that might occur to one of their medical care plan subscribers during the course of medical treatment.Some recognized legal theory must be the basis for holding an HMO liable for medical malpractice.

A review of case law reveals that there have been few malpractice actions wherein HMOs have been named as defendants.However, we are unaware of any case in which an HMO has actually been held liable for medical malpractice.Nevertheless, it has been observed that a potential exists for HMOs to be held liable for medical malpractice based on one or more of several tort theories: (1) vicarious liability on the basis of respondeat superior or ostensible agency; (2) corporate negligence based upon negligent selection and negligent control of the physician; and (3) corporate negligence based upon the corporation's independent acts of negligence, e.g. in the management of utilization control systems.Contract law might also be utilized to hold HMOs liable for malpractice based on breach of contract or breach of warranty.See Oakley and Kelley, HMO Liability for Malpractice of Member Physicians: The Case of IPA Model HMOs, 23 Tort and Insurance Law Journal 624, 626 (1988).

In the present case, plaintiffs have not alleged any negligent acts on the part of the HMO itself nor have they alleged any breach of contract.Therefore, the only manner in which HMOI might be held liable for medical malpractice in this case is if it could be found vicariously liable for the negligent acts of a servant or agent, on the basis of respondeat superior or ostensible agency.Therefore, the real issue is whether, under the facts in this case, there exists any basis upon which to hold HMOI, and thus its parent corporation HCSC, vicariously liable for the negligence of the doctors who were under contract with HMOI to deliver health care services to HMOI members.This issue turns on the question of whether plaintiffs were able to show the necessary nexus between HMOI and the doctors charged with negligence.

In order to establish liability under the doctrine of respondeat superior one must show that a master-servant relationship existed between the parties and that the allegedly negligent activity was within the scope of employment.(Greene v. Rogers(1986), 147 Ill.App.3d 1009, 101 Ill.Dec. 543, 498 N.E.2d 867.)In this case there seems to be no question that HMOI is an IPA model health maintenance organization and, therefore, does not directly employ its own physicians.Instead, HMOI contracts with independent medical groups, who employ private physicians who maintain their own offices.Consequently, no direct master-servant relationship exists between HMOI and the physicians.For this reason the medical groups, and thus the physicians who work within the medical group, may be considered independent contractors with respect to HMOI and the doctrine of respondeat superior would normally not apply.

However, we must consider whether there is a factual issue on the question of whether an agency relationship may be inferred, despite the legal relationship that exists between HMOI and the physicians.There are two avenues by which one may attempt to create a fact question on the issue of the liability of HMOI: (1) by a showing of implied authority, i.e., that the facts and circumstances indicate that HMOI actually exerted sufficient control over the physicians to negate the independent contractor status, at least with respect to third parties, (seeJohnson v. Sumner(1987), 160 Ill.App.3d 173, 111 Ill.Dec. 903, 513 N.E.2d 149;Mateyka v. Schroeder(1987), 152 Ill.App.3d 854, 105 Ill.Dec. 771, 504 N.E.2d 1289, implied authority is actual authority circumstantially proved by facts and circumstances) or (2) by a showing of apparent authority, i.e., that HMOI, by its actions or statements, led a third party, who may have been unaware of the independent contractor relationship, to believe that the physicians were controlled by HMOI.SeeWeil, Freiburg & Thomas, P.C. v. Sara Lee Corp.(1991), 218 Ill.App.3d 383, 160 Ill.Dec. 773, 577 N.E.2d 1344.

The practice of extending liability beyond the normally limited legal relationship has already been legitimized in the hospital context.Courts of law have opened the possibility that hospitals might incur liability for the negligence of physicians, despite the fact that an independent contractor relationship may have existed between the...