Are private hospitals immune from the negligence of their specialists? [Part-3]

Private hospitals have long been escaping blame for their specialists’ negligence. When a specialist falls into a terrible error, should not the courts – as a matter of policy – hold private hospitals liable? If so, what should be the principle behind the policy?

A patient walks into a hospital.

Who would argue that she is not ‘immediately  locked into’ the hospital’s system?

If the doctor makes an error, and the patient is injured, who is responsible?

The private hospitals say,

“We are not responsible.  You chose the specialist, you sue him. Leave us alone”.

Should private hospitals be also liable?

In Part-1 we saw how, if a court was asked if the hospital was liable, the answer depended on whether he was its employee.

If he was, the hospital was liable; if he was not, it was not.

In Part-2 we saw how hospitals enhanced their immunity by exploiting the concept of “independent contractor”.

If a doctor was an independent contractor, the hospital was not liable; if he was not, it was.

This resulted in an anomaly: patients treated by medical specialists have not been adequately protected. Private hospitals go scot free.

This article [Part-3] discusses how the law should develop – so that patients may get every protection they need.

Shouldn’t the law evolve with time?

When a new problem arises, the law must not use old medicine to cure it.

It must create a new one.

One court tried to do that against Herculean odds.

The case before it concerned a lady.

Her name was Catherine Jeya Sellammah.

Her husband was Vincent Manickam.

A lady with appendicitis dies of complete organ failure

In early March 2012, Catherine complained of vomiting, diarrhoea and severe abdominal pain. Her doctor referred her to the Damansara Specialist Hospital (DSH).

There she was examined by Dr. S. Hari Rajah. He advised immediate surgery. He performed a laparotomy on her.1It is a surgical incision through the abdominal wall, into her abdominal cavity He then performed an appendectomy.2This is the removal of appendix – it is a small sack at the beginning of the large intestine (caecum)

After a few days, she returned home.

She was back again a week later. Her complaints were the same – only this time they were worse.

Dr. Hari diagnosed her problem as intestinal obstruction caused by a loss of muscle function.3‘paralytic ileus’ He thought this caused her abdomen to swell.4‘abdominal distension’] He believed puss had collected in her abdomen.

She died a few days later.  The cause of her death was described as, “multiple organ failure – septicaemia acute appendicitis – peritonitis”.

In layman’s terms, the membrane surrounding Catherine’s abdomen had become infected.

This is also known as ‘blood poisoning’.

Her husband sued the doctor and the hospital.5Vincent Manickam s/o David (suing by himself and as administrator of the Estate of Catherine Jeya Sellammah, deceased] & and others v. Dr. S. Hari Rajah and Anor [2018] 2 MLJ 497 at p.506, paragraphs [3], [4]]

The case came to trial.

The trial judge concluded that had the doctor exercised reasonable skill, Catherine would not have died.6Ibid p. 506 para [5]

So the court found the doctor liable.

Was the Damansara Specialist Hospital (DSH) liable?

That was the question.

The hospital argued that the doctor was its independent contractor; and that it was not liable.7Dr Kok’s  case and Dr Hari’s case in 2018 had ruled that a negligent, independent-surgeon could not make a private hospital liable for his negligence

The CA took a different view.

The Court implied that that was not the real question:

The question, it said,  was whether such a doctor was ‘truly an independent contractor’ or had maintained a ‘special relationship’ with the hospital.

Surprisingly, a few years before that, in a case called Liau Mui Mui, a High Court had taken the same approach.8Liau Mui Mui v. Dr R Venkat Krishnan [1999] 1 CLJ 207, at p. 213

There, a lady had gone to a private clinic to perform an abortion.

A locum doctor had botched it.

The owner of the private clinic was held liable.

What does ‘special relationship’ mean?

The CA in Vincent Manickam’s  case said the doctor was,

“… in fact, very much part and parcel of the hospital”.9Ibid paras 61-63 & 75  

That idea came from a 1953 English case.10Bank Voor Handel En Scheepvaart NV v Slatford & Anor [1953] 1 QB 248 at p 295There, Lord Denning had remarked that,

“[The] test of being a servant does not rest nowadays on submission to orders. It depends on whether the person is part and parcel of the organisation”.11Ibid, p. 534, para.[90]  

The CA applied that test. It placed Dr S. Hari’s relationship with the hospital under a microscope.

Dr Hari’s agreement with the hospital showed that the hospital was not merely his landlord.

The hospital provided not just the location, but also material, medication, prescription, staff and tools for the surgeon to give his medical treatment12which included diagnosis, advice and management of the patient to Catherine.

The hospital shared the profits from the doctor’s earnings.  It shared even his medical risks.

The terms of the agreement went even further.

It was “mandatory” that the doctor rendered medical services “at the hospital”.13Ibid p. 520, paragraph [50]

The doctor could not have moved his patient to another hospital to treat her there.

Had he done that he would have breached his agreement; that would have entitled the hospital to end its agreement with him.

Thus, said the CA, Dr S. Hari Rajah ‘was not truly independent’ of the hospital.

As he was liable, so was the hospital.

What have previous cases said on this area of the law?

A line of cases since 1948 suggest a different idea.  It concerned the concept of  ‘control’.

An old case had declared that if the employer had the power to select the employee, determine what salary he would receive, decide how his work was to be carried out, and could terminate him, then “a special relationship had arisen” between them.14Short v. J & W Henderson Ltd [1946] 62 TLR 4 to 7, at p. 429, and Vincent Manickam, p. 69, paragraph [35]

If that concept was used in a doctor-hospital situation, a hospital could be held responsible for the doctor’s negligence.

So if a hospital had ‘control’ over the way a doctor ran his clinic, his patients and his surgery, that would create a ‘special relationship’.  The hospital would thus be liable for the doctor’s negligence.15e.g. Tan Eng Siew and Anor. v. Dr Jagjit Singh Sidhu and Anor [2006] 1 MLJ 57 at p. 68

But this is all quite confusing16Cooke J in Market Investigations Ltd v. Minister of Social Security [1969] 2 QB 173, 183 said he was not concerned with the absence or presence of control or direction by an employer of the employee. Also in Vincent Manickam [at p. 517, paragraph 38]. See also Morren v. Swinton and Pendlebury Borough Council [1965] 1 WLR 576]. So control is not the beginning or end of the test: Privy Council in Lee Ting Sang v. Chung Chi-Keung and Anor.[1990] 2 AC 374].  There the Privy Council had ruled that control is “no longer to be regarded as the sole determining factor”: p. 4519, paragraph 46

How is such ‘control’ to be proven?

The confusing answer a UK case gave was, ‘it all depends’.17Paul William Lane v. The Shire Roofing  Company (Oxford) Ltd [1995] EWCA Civ 37; [1995] IRLR 493.  There the court ruled that  “there are many factors to be taken into account in answering this question … [and it]  all depends on the facts of each individual case”. For instance the first element of such a series of considerations could be “control”

To confound matters, a 1968 UK case ruled that one must use ‘the common sense approach’, whatever that was.18Ready Mixed Concrete (South-East] Ltd v. Minister of Pensions and National Insurance [1968] 2 QB 497; p. 69, paragraph [38]].

All these cases did not go far enough.

What was needed was a policy decision that would hold private hospitals liable.

What should be the legal principle behind such a policy?

That was the headache.

The Court of Appeal in Vincent Manickam  braves the roiling waters

What the CA did in Vincent Manickam was nothing short of intrepid.

It traversed vast areas of the law.

It inspected how the cases had developed over time.

The appeal judges sought a common thread, a universal principle, and a guiding policy.  It looked at legislation.

The judges were not concerned with labels.

They were more concerned with “the holistic relationship between the parties”.19Ibid, p. 516, paragraph 36 et seq.

Eventually the CA declared that it would “adopt a more realistic approach” by recognising “the way businesses and services are now arranged and provided”.20p. 514, para 31. They followed the UK case of Paul William Lane v. The Shire roofing company [Oxford] Ltd [1995] EWCA CIV 37 [1995] IR and 493

The judges recognised that the way people work today differed from the old days. There was a “greater flexibility in employment, with more temporary and ‘shadow’ employment”.21Ibid para 34  The way the parties wrote out their contracts made commercial life much easier (e.g. as an independent contractor).

That created problems as well; especially for vulnerable patients caught in bad situations.

The real value of the Vincent Manickam case

Several important points arise from the Vincent Manickam case.

The first is that the Federal Court did not consider it at all in its two recent 2018 decisionsDr Kok Choong Seng v Soo Cheng Lin22[2018] 1 MLJ 685 and  Dr Hari Krishnan & Anor v Megat Noor Ishak bin Megat Ibrahim & Anor and Another Appeal.23[2018] 3 MLJ 281, p. 291

Had the Federal Court done so, the law could well have been different.

Look at the dates:

Vincent Manickam was decided on 29 March 2017.

Dr. Kok’s case was decided on 26 September 2017: six months later.

Dr. Hari Krishnan’s case was decided on 14 December 2017:  nine months later.

But both these (later) Federal Court cases did not seem to have had the benefit of the CA’s opinion in Vincent Manickam’s case.

Second, in Vincent Manickam, the trial judge had ruled that the doctor had been an independent contractor: so he said the hospital was not liable.

The CA disagreed.

It ruled that the hospital was liable.

The CA gave several reasons.24Ibid, p. 506, para 5  This is a decision of Olympian proportions.

Suppose a patient comes to a hospital for medical services.

The hospital owes an automatic “non-delegable duty of care” to him.

What that means is that the responsibility is a direct duty.

The hospital cannot hand over that responsibility to someone else.

Whether he is an employee or an independent contractor is not important.

What agreement the specialist had with a hospital is unknown to the patient – why should she be caught by what she knew nothing of?

The moment Catherine had been admitted into the hospital, she became its patient.

She depended on the hospital to protect her from injury or harm.

She was in a vulnerable position.

By admitting Catherine into its facility, the hospital had “assumed a positive duty of care” over her.

It had a duty to protect Catherine “from harm or risk of injury”.25Ibid,p. 533, para 88

When the doctor had breached his duty and had injured her, the hospital’s responsibility had been triggered.26Ibid, paragraph 76 & 88

The court finally pointed to the Private Healthcare Facilities and Services Act 1998.   On its proper interpretations, said the court, the Act imposed non-delegable responsibilities on the hospital. [We dealt what the Act did in Part-2, remember?]

The real value of the Vincent Manickam lies in the court’s use of the principle of “special relationship” between the patient and the hospital.

That was the legal tool the court used to rule that the hospital owed its patient a non-delegable duty.

The obvious contradictions

The question now is to examine the obvious contradictions between Vincent Manickam, and the two most recent cases from the highest court in Malaysia:  the Dr Hari Krishnan and Dr Kok cases.

These two Federal Court cases had ruled that the answer to whether a hospital owed a non-delegable duty to a patient “depended on the facts”.

Such a position is untenable.

It takes us back to the 1948 line of cases.

It makes the law uncertain.

It places patients in a precarious position.

Contrast that with the CA’s decision in Vincent Manickam.

That stands on firmer ground.

But could the courts have gone a little further than what the CA did in Vincent Manickam?

Of course Parliament can improve the law, but what do we do in the meantime?

The courts meanwhile, can – and should – go further than the perilous journey that Vincent Manickam took.  So the answer is a ‘Yes’.

And happily, there is a shortcut to that.

The ‘one millimetre at a time’ method of legal growth

Courts avoid making new law.

They leave it to Parliament.

Where courts cannot wait on a busy Parliament for decades, they might pronounce a new common law principle to do justice in a particular situation.

Such was Mrs Donoghue’s case.

The Ginger Beer bottle

Mrs Donoghue and a lady friend went to a café in Scotland.

Her friend bought her a bottle of ginger beer.

The bottle was opaque.

The café owner gave them clear glass tumblers.

Mrs Donoghue poured some ginger beer into a glass, and took a sip.

Afterwards, her friend began filling Mrs Donoghue’s glass with more ginger beer.

And out popped the decomposed body of a snail.

Mrs Donoghue could not sue the café owner.  She had no contract with him.

She had not bought the ginger beer – her friend had.

So Donoghue sued the manufacturer.

A previous case involving a dead mouse within a ginger beer bottle had failed.

There the court said the manufacturer owed no duty to the ultimate drinker.27Mullen v Barr & Co; v Burr 1929 SC 461; 36 Digest [Repl.] 19, * 69

So the manufacturer argued that he had no contract with the lady:

Otherwise, said he, too many consumers would sue him.

His business would go bankrupt.

For good measure he pointed to previous cases, which he said protected him.

Mrs Donoghue was up the creek without a paddle.

The case eventually found its way to the House of Lords.

Lord Atkin made an opening remark. He said:

“[A] more important matter has not occupied’  the House because of its bearing on public health”.28Donoghue v. Stevenson [1932] All ER 1, at 10(I)

He asked:

“Does a manufacturer who intends his drinks to be consumed by the public, owe a duty to the ultimate buyer not to injure her?”

Atkin answered, “Yes”.

He created a new principle.

The rest is history.

The importance of this case is this:  it authorised the courts, by themselves, to impose a new duty in a novel situation.

Courts encounter new questions like this all the time

Fifty years ago we did not have (too many) private hospitals.

Now, private hospitals mushroom everywhere.

Only the penurious go to Government hospitals.

The worst medical negligence cases come from where, do you think?

How should the courts deal with private hospitals?

How should courts resolve new problems? 

Sixty years after Donoghue, the House of Lords in Caparo Industries plc v Dickman29Caparo Industries plc v Dickman and others [1990] 1 All ER, 568was confronted with a new problem.  It was asked whether a public listed company’s auditor owed any duty to a shareholder who had relied on its audit report.30Dickman was a shareholder of a plc.  He studied the audited accounts of the company for the year 1984. The report showed that profits fell far short of the predicted figure. This resulted in a dramatic drop in the quoted share price. Relying on the audit report, Dickman bought more and more shares. He made a successful takeover bid for the company. After the takeover, he realised the report showed a pre-tax profit of £1.2 million, whereas the company had sustained losses over £400,000.00.  He sued the auditors. He said their report had been inaccurate and misleading. He said the auditors had been negligent. He said the auditors owed shareholders a duty of care as ‘potential bidders for the plc’ because the 1984 audit results had made the company ‘vulnerable’ to a takeover bid.

The House of Lords refined the proposition in Donoghue.

Don’t use the same tool for all problems

This is how the House of Lords put it:

“[The] common law has abandoned the search for a general principle capable of providing a practical test applicable in every situation” – to determine whether each of these bodies owed a duty of care to those who came into contract with it – if so, what was its scope”.

The House devised a two-stage approach.

First, does the case before it resemble any previous cases where the court had recognised a similar duty of care?

If the answer was ‘Yes’, the court would use the pre-existing precedent to resolve the issue.

If the answer was ‘No’, and the situation was new, the court must ask itself a second question:

Was it ‘just, fair and reasonable’ to impose such a duty?

If the answer was ‘Yes’, then a duty would be imposed.

Incremental improvement by analogy

In this way, common law courts were willing to move beyond previously recognised situations. But they did this only ‘on an incremental basis’,31see Donoghue, at p.574 accepting or rejecting a duty of care in novel situations, ‘by analogy with established categories’.  The House of Lords said:

“[The] law should develop novel categories of negligence incrementally and by analogy  with established categories, rather than by a massive extension of prima facie duty of care”.

This approach was reaffirmed three decades later, in 2019, by the UK Supreme Court.32Darnley v Croydon NHS trust [2019] 1 All ER, at p. 33, paragraph [15] per Lord Lloyd-Jones

The usefulness of Caparo Industries plc v Dickman is in this:

Whenever the court encounters a new medical negligence case – like what happened to Megat (remember, he became blind?) or Soo (went to operate the lump and ended-up losing 90% of his meridian nerve?), or Catherine, then the court should apply the Caparo Industries test, by asking itself certain questions – in this order: –

“Have previous cases dealt with this?”

“Answer: No”.

“Should the principle be extended?”

“Answer: Yes”.

“Is it fair, just and reasonable for the court to impose this kind of ‘non-delegable duty’ on a private hospital?

If the answer should be, “Yes” – then courts should impose a new duty.

That would be a far better mechanism.

It comes from a well-tested principle.

It has been received with approval across the Commonwealth.

It has more than six decades of accumulated judicial wisdom behind it.

Should we adopt the Donoghue and the Caparo tests?

What do you  think?


[The author wishes to thank Ms. Sharmini Navaratnam, Ms. KN Geetha, Mr. JP Kirat Singh, Mr. GS Saran, Miss KP Kasthuri, and Miss Shobhana Jeyasingham for their assistance.]




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