Sample fact pattern No. 1: Dental group ABC rents a suite of office space for its general dental practice. It employs four full-time, general dentists. When an office space becomes available in the building, the group rents that space to Dr. Johnson, a pediatric dentist who sees patients in that office twice a week, in addition to a separate office. Dr. Johnson keeps her charts in her own locked storage cabinet and maintains her own practice and billing. She uses some of the practice’s dental and office supplies and does not have a separate phone line. The practice refers patients to her. Dr. Johnson is listed separately on the door to the group’s office. She has her own Yellow Pages ad that lists the suite as her office, and the group’s phone number is on her materials so the ABC office staff can maintain her appointment schedule. A child patient has a bad reaction to anesthesia administered in Dr. Johnson’s office at the group’s suite. What is the risk to ABC in renting space to Dr. Johnson if Dr. Johnson is sued for dental malpractice?
Analysis: To analyze this issue, one must look to the law-governing agency issues in each state, but the general principles are fairly uniform. If an entity employs a practitioner, then generally that entity or group is responsible for its employees’ negligent acts in the course of that employment. If the practitioner is not employed but is independent or a true independent contractor, then generally the group is not responsible for negligent acts or malpractice. Purely in the context of civil lawsuits (and not, for example, in the context of tax- or employment-law issues), the question of whether an individual is an employee or independent contractor is a fact-based determination. Thus, a court would look to whether the independent practitioner was truly independent by examining the specific facts of that situation. In the fact pattern above, one would need to look to all the details of the situation to closely assess the risk to the group.
Facts a court could consider that would tend to indicate Dr. Johnson is an independent dentist and that the group is not responsible for her actions include the following:
- Dr. Johnson only rents space in the form of one office.
- Dr. Johnson keeps her own charts and bills patients separately.
- Her name is separate from the group on the door and in advertising materials.
- Facts that tend to show that the group has some type of vicarious liability for Dr. Johnson’s actions could be that:
- Dr. Johnson uses the practice’s dental and office supplies.
- She allows appointments to be set through the practice’s receptionist.
- She does not have a separate entrance to her office.
- She does not have a separate phone line.
- She sometimes sees children from the practice on referral without formality.
In more conservative courts and jurisdictions, this set of basic facts could be enough for a court to find that the practice is not vicariously liable for Dr. Johnson’s actions, but in more liberal courts, it could easily go the other way. From a risk-management perspective, these relationships must be handled with caution. Demarcation of the separate practices, even if burdensome, is a better protection than loose-knit relationships. Key office staff and practitioners must know and understand the reasons for needed formalities. Maintenance of insurance coverage by both parties to assure no gaps or lack of coverage is critical, too. Because of the potential risk issues, both sides should examine the qualifications and risk potential of those with whom they intend to share space or a practice. For example, in the aforementioned fact pattern, a bad anesthesia reaction in a child could be a big case. The more inherently high-risk the practitioner, the higher the risk to the group. Addressing these issues before such a relationship is begun is the key to better risk management.
Sample fact pattern No 2: Dr. Bell, a general dentist, is growing her practice. She knows another general practitioner looking to join a group. Dr. Bell wants to take on the help but is not certain what to do to evaluate how helpful this will be for her practice.
Analysis: Dr. Bell should enter into such a relationship with good preparation and consider the benefit to her business with additional work that may come with a new associate. She should also consider the costs for another chair, increased administrative needs, and additional overhead.
Dr. Bell should consider what type of relationship she wants. Hiring an employee creates a simpler method of retention but also includes taking on additional risk and responsibility for the associate’s care. Hiring an independent contractor could limit risk but increase administrative costs for maintaining the lines of demarcation. Dr. Bell must determine how and who should pay for professional liability coverage, the impact on other types of coverage premiums, and any employment and tax issues. Another consideration is how to protect Dr. Bell’s business if the associate leaves so she will not take all of Dr. Bell’s business. Some issues can be resolved through a written contract or covenant not to compete. (The law on covenants not to compete varies by state. The law in the area of practice must be examined to determine whether such an agreement will hold up in court.) These evaluations should often be made with the input of legal counsel to assure that arrangements comply with the law of the area.
Discussing alternative arrangements with a potential associate can streamline issues before legal counsel is involved and clarify issues should problems arise. Evaluation of the needs of the parties, as well as the ways to best protect the business and minimize risk, are important areas of consideration before sealing the deal.
Linda J. Hay, JD
Hay is a partner at Alholm Monahan Klauke Hay Oldenburg, LLC in Chicago. She graduated from The John Marshall Law School in 1986 and has defended dental professionals for more than 15 years. She may be reached at [email protected]
