Corporate Liability for Hospitals

February 1, 2016 Published Work
For the Defense, February 2016 Issue

As plaintiffs continue to search for the "deep pocket" in negligence claims, direct liability claims against hospitals will inevitably continue to grown and expand.

Historically, hospitals have been named as defendants in medical malpractice lawsuits predominantly based on claims of respondeat superior, whether (1) employment/actual agency, (2) apparent agency/ostensible agency, or (3) non-delegable duty. These vicarious liability claims generally do not assert that the hospital – as an institution – did anything to contribute to the plaintiff's alleged injuries. Instead, vicarious liability claims seek to hold the hospital liable based solely upon the conduct of individual health care providers.

As hospitals have grown and expanded, and charitable immunity laws have eroded, the types of claims that hospitals face in litigation have multiplied. Today, in addition to defending derivative claims based upon agency theories, as mentioned above, hospitals are increasingly faced with claims of direct liability. Under a broad theory of "corporate negligence," courts have held that hospitals owe duties directly to their patients, and can be found liable for a breach of those duties, even when an individual health care provider was not negligent. The duties of a hospital can take many forms, and extend to functions such as hiring, staffing, credentialing, maintaining safe equipment and facilities, and issuing and enforcing policies.

State law governs the viability and scope of direct liability claims against hospitals, and different states recognize different types of claims. Some state courts have adopted "corporate negligence" that is limited to negligent hiring and credentialing. Other states have adopted a more broad interpretation of corporate negligence that extends beyond credentialing and establishes additional duties. A 50-state survey is beyond the scope of this article. Instead, this article will provide a broad overview of direct liability claims, defense strategies, and recent trends, with a special focus on negligent credentialing claims.

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