Are private hospitals immune from the medical negligence of their specialists? [Part-1]

First the courts said, ‘No’. Then they said, ‘Yes’. Afterwards they said, ‘It depends’. What does it all mean to you – and your loved ones?

It is time to examine this rapidly growing area of law.

Introduction to Vicarious Liability

Suppose you are the owner of a carpet cleaning company.

You have well-trained employees.

One employee answers a client’s call.

He damages the client’s Persian carpet.

As his employer, you are ‘vicariously liable’ for the client’s claim.

That you were 50km away, or were not at fault, is wholly irrelevant.

Thus if, after work, an employee takes the company car, and injures someone on the way home, you are liable.1Irwin v Waterloo Taxi-Cab Company Ltd [1912] 588

Or if he steals the Persian carpet, you are still liable.2United Africa Co Ltd v Saka Owoade [1931] 3 All ER 216; also Barwick v English Joint Stock Bank [1867] LR 259

Note a few points:

Vicarious liability is strict, you cannot escape its clutches.

For it to work between two parties one of them must be an ‘employee’.3Barwick v English Joint Stock Bank [1893] AC 170  It does not work if a non-employee is the wrongdoer.

It is ‘on the move’

The law of vicarious liability grows apace. It is said to be constantly ‘on the move’.4Various Claimants v Catholic Child Welfare Society and Others [2013] 4 LRC 241, UKSC; per Lord Phillips P., at 250 para [19]

Afterwards, the principle was extended not only to an employee, but also to a fraudulent agent.5Lloyd v Grace, Smith & Co [1912 AC 716

Soon it was extended to a wrong done by an agent;6Lloyd v Grace, Smith supra] even if the wrongful act had been deliberate or malicious.7(1) Bernard v Attorney General [2004] UKPC 47, p. 561; (2) Lister v Hesley Hall Ltd [2001] UKHL 22, [2001] 2 All ER 769; (3) Dubai Aluminium Company Ltd v. Salaam [2003] 2 LRC 682 UKHL; (4) Minister of Police v Rabie 1986 (1) SA 117 (a South African Appellate Division case); (5) Feldman (Pty) Lrd v. Mall 1945 AD 733,  741. The principle there was that if an employer creates a risk of injury to others, regardless of his own intention, he bears the burden of its management or minimisation. This was the principle in Children’s Foundation v Bazley [1999] 4 LRC 327 at para [37]

Vicarious Liability is flexed to catch paedophiles

The UK Supreme Court once deployed the principle, as one would a weapon, against a religious institute.  Some Catholic priests there had sexually abused boys under their care. They were not employees of the institute.

Had the court used the vicarious liability principle, the case would have failed.  How was the court to make the institute – and the priests – liable?

The court developed a new principle to deal with this terrible situation.

It said the legal principle of vicarious liability was applicable to anyone whose duties were ‘akin to employment’.

So even if the priests were not the institute’s employees, the institute was vicariously liable to the students.8Ibid

If you are an enthusiast about vicarious liability, it is a good idea to cut your teeth by reading Ward LJ’s decision in E. v English Province of Our Lady of Charity.9[2012] EWCA Civ [2012 4 All ER 1152

The Supreme Court liked his work so much, that it complimented him! 10In Various Claimants v Catholic Child Welfare Society and Others [2013] 4 LRC 242, UKSC; per Lord Phillips P., at 250 para [19]  A rare moment!

What happens if an Independent Contractor messes up?

Suppose, in the Persian Carpet example above, you do not use an employee but an independent contractor: and he damages it.

What happens?

If the customer sues you, you can ask the independent contractor to pay over the damages to the client.

Or you can sue the independent contractor yourself, recover damages – and pay it over to the customer.

If the independent contractor makes a mistake, he must cover your loss.  You yourself remain unscathed.11[Williams, Glanville,‘Liability for Independent Contractors’ [1956] CSA 180, 183].  See also D & F Estates v Church Commissioners [1989] 1 AC 177, 208D

In these ‘carpet’ examples, you are not personally responsible to the customer for the act of cleaning the carpet.

Who cleans the Persian carpet is irrelevant.

All the client wants is a clean Persian carpet.

Hold on to that idea.

The medical specialist in a private hospital

‘Specialists’ work from ‘private clinics’ situated either within or outside the private hospitals.

They usually rent a space from the private hospital.

When a patient wishes to undergo a procedure, the specialists use the private hospital’s facilities.

These could range from analytical procedures, to blood tests, X-rays imaging, CT scans, or radiation therapy, or indeed, a major surgery.

Sharing of medical bills with private hospitals

Their patients pay the bills. The specialists share their income with the hospital.

Specialists are not ‘employees’ but ‘Independent Contractors’

An ‘independent contractor’ is not an employee.

Unless they work for the Government, private medical specialists are always ‘independent contractors’.  They draw no ‘salary’ from the private hospitals in which they work.

The Contract: ‘‘We are not liable for anything – ask the specialist’’ clause

The specialist always signs a contract with a private hospital.

The contract will have all sorts of clauses: these completely exclude the private hospital from any kind of liability.

It will stipulate that the specialist is not an ‘employee’; that the specialist ‘assumes all the risks’ over any procedure, medication or advise he or she gives.

He or she must ‘hold the hospital harmless against all claims’.

If someone sues the specialist and the hospital, the specialist must pay all the damages the hospital is ordered to pay.

When the specialist makes a mistake, the private hospitals will show this Contract to the court.

The hospital will argue,

‘We have washed our hands off any liability.’

‘The specialist assumes all risks. Ask him to pay’.

We now come to ‘non-delegable duties’

The three ‘Persian carpet’ examples above have nothing to do with the concept of ‘non-delegable duties’.

A ‘non-delegable duty’ is a duty which is a parallel concept to vicarious liability.

It was a recent creation of the common law.  It is an exception to the general rule that an employer is not liable for the negligence of an independent contractor.12Grubb, Andrew, ‘Medical Law’, 3rd edition, 2000. See p.298, where the author refers to Picard ‘The Liability of Hospitals in Common Law Canada’ ; cited with approval by the Malaysian Court of Appeal in Dr Hari Krishnan & Anor v Megat Noor Ishak bin Megat Ibrahim & Ors and another appeal  [2015] MLJU 1857.  It was reversed by the Federal Court

You cannot outsource certain responsibilities to third-parties

The law imposes – for wholly policy reasons – that some duties are so important that you cannot ‘outsource’ them to third party contractors.  These include the responsibilities assumed by schools and hospitals.

No matter to whom you hand over the duties, you have to keep a personal eye on the job.

If something goes wrong, the courts do not go after the independent contractor.

They hold you personally liable.

See some examples

Burning Hillyer’s arm

Some 110 years ago, one Hillyer’s arms were burnt while he was being examined by Dr. Lockwood, a consulting surgeon.

Was the hospital liable for negligence?

The court said, ‘No’, because Lockwood was not a servant of the hospital.

Court said that the hospital could not be faulted for what happened to Hillyer.13Hillyer v St Bartholomew’s Hospital (Governors) [1909] 2 KB 820

More than 70 years ago, another court held that a consulting surgeon’s negligence did not affect a hospital.14Gold v Essex County Council [1942] 2 All ER 237, at 242 per Lord Greene M.R

A workman’s inward curling fingers

Cassidy, a 59-year old labourer, suffered from a contraction of the third and fourth fingers of his left hand (‘Dupuytren’s contraction’).

After a surgery, his hands and forearms were bandaged to a splint –  for 14 days.

Cassidy bitterly complained of pain. The doctors gave him sedatives. No other action was taken. Cassidy’s four fingers had become stiff.

His hand became practically useless.

Cassidy sued the hospital.

The hospital protested that the doctor was not its employee, but an independent contractor. It relied on an earlier case of Collins v Hertfordshire, which said so.15[1947] 1 All ER 633

The other two judges in the case, Somerwell and Singleton LJJ, went on the traditional basis that the Medical Officer, Dr. Fahrni was a servant of the hospital.  He had been negligent.  So the judges found the hospital and the Ministry liable.

The birth of ‘non-delegable duties’

The third judge was Lord Denning.

He was famous for making new law.

He did not stick to the traditional view.

He said something entirely new.  And his view was in the minority; but it stuck.

He began in this way:

“In my opinion, authorities who run a hospital, … are in law under the selfsame duty as the humblest doctor. Whenever they accept a patient for treatment, they must use reasonable care and skill to cure him of his ailment.”

Then Denning makes this historic statement:

“I take it to be clear law, as well as good sense, that, where a person is himself under a duty to use care, he cannot get rid of his responsibility by delegating the performance of it to someone else, no matter whether the delegation be to a servant under a contract of service or to an independent contractor under a contract for services.16Cassidy v Minister of Health (Fahrni, Third Party) [1951] 2 KB 343

This was how the principle of non-delegability came to be formulated.

A swimming teacher’s tragic error

Since Denning’s remark in the Cassidy case, over some six decades, other cases added details to this principle.

The most complicated one to explain is a case in Essex. Judges and lawyers around the Commonwealth are still trying to wrap their heads around it.

It happened in 2010.

It concerned a 10-year old student, Annie Rachel Woodland.

She was a pupil at a local school at Basildon, Essex.

Her case was not a medical case at all.

Her school had arranged for swimming lessons.

The swimming pool facilities did not belong to the school.

They fell under the care of the Basildon Council, a local authority.

It was the education authority responsible for Annie’s school.

The lessons were supervised by a swimming teacher and a lifeguard.

Both were independent contractors.

They worked for a concern called ‘Direct Swimming Services’ (‘DSS’).

It was owned by one Beryl Stopford.

DSS organised the children’s swimming lessons and arranged for pool services.

Annie attended the swimming lessons.

It was the duty of the independent contractors to secure the children’s safety during the lessons.

On one occasion they did not pay attention.

During one such lesson, after she had taken a dive, Annie was found ‘hanging vertically in the water’.  She was pulled from the pool. Resuscitation was attempted. It did not help poor Annie.

She suffered severe brain injury.

Annie’s mother sued the local authority and the school.

The school said it was not to be faulted for the negligence of an independent contractor.

Were both the school and the local authority duty-bound to take care of Annie?

Had they handed over that crucial duty to third parties?

In other words, did the school, and the local authority, breach a ‘non-delegable duty’?

The court ruled that the school was liable for Annie’s injury, the independent contractors’ error or no.17Woodland v Swimming Teachers Association and Others [2014] AC 537.

The school, said the court,  had no business delegating its ‘education function’ and its ‘control’ over a pupil during a school day.

The court felt that it was ‘fair, just and reasonable’  to hold the school liable for Annie’s injury.

So also, the education authority.

What was the Supreme Court’s  reasoning? 

The UK Supreme Court held that the Teachers Association and the local authority had ‘control’ over a ‘vulnerable’ student like Annie.

They both had agreed to perform a function for which they ‘had assumed responsibility’.

And this had been during school hours.

The court ruled that where a person performs services for a group of ‘particularly vulnerable or dependent persons’, then that person accepts responsibility to take care.18 Ibid, p. 552, paragraph 25

And so we see here how the courts side-stepped the principle of vicarious liability [that required some kind of ‘employment relationship’].

In this ingenious way, the courts adapted the law to the situation, over-reached the employment problem (or lack of it), and found fault with the independent contractor.

The UK Supreme Court traced their fault back to the school, and eventually, the local authority.

And what has all that got to do with our main question?

What has a school’s duty to do with a private hospital?

The answer is – after Woodland – the courts, particularly Australian courts, tried to use this ‘particularly vulnerable or dependent persons’ test to make private hospitals liable.

Were they successful? How have Malaysian courts dealt with the issue?

We shall see this in [Part-2].


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