Is a Hospital Liable for the Negligence of Physicians?

Health systems and hospitals are increasingly acquiring medical practices and employing the practices’ physicians, a trend that has accelerated over the past decade. According to the American Medical Association (AMA), the percentage of physicians working in private practices declined from 60.1% in 2012 to 46.7% in 2022. Conversely, the share of physicians employed by hospitals or health systems rose from 5.6% to 9.6% during the same period. Additionally, the proportion of physicians working in practices partially owned by hospitals increased from 23.4% to 31.3%.

The shift from a privately-owned medical practice to a hospital-owned medical practice is reshaping the healthcare landscape, influencing how care is delivered, and impacting both providers and patients. It presents opportunities for improved resource allocation and care coordination but also necessitates careful consideration of its impact on healthcare costs, physician autonomy, and patient outcomes. It also raises questions about the legal relationship between, and the legal liability of, the hospital and physician. For example, if a physician employed by a hospital commits malpractice, who is liable—the physician, the hospital, or both?

In New York, a physician employed by a hospital can be held personally liable for his/her own negligence. This liability arises from the general principle that individuals are accountable for their own actions, including medical malpractice. In cases where a physician’s negligence leads to patient harm, the physician can be named as a defendant in a medical malpractice lawsuit. Therefore, physicians employed by hospitals should maintain their own malpractice insurance to protect against potential personal liability.

However, in Hill v. St. Clare's Hospital, the New York Court of Appeals held that a hospital also can be liable for an employed physician’s malpractice under the legal principle of respondeat superior, which holds employers vicariously liable for the negligent actions of their employees committed within the scope of employment. Since then, the holding in the Hill case has been broadened. For example, in N.X. v. Cabrini Medical Center, the New York Court of Appeals held that the hospital was liable under respondeat superior because a physician, who had committed a sexual assault on a patient, had been performing an exam when the misconduct had occurred, and this was sufficiently related to his employment. This was a broadened interpretation of the scope of employment in holding a hospital liable even when a physician committed an intentional tort because the act was intertwined with the physician’s job duties.

A key factor in determining hospital liability is whether the physician is considered an employee or an independent contractor. In Pinnock v. Mercy Medical Center, the court noted that a hospital is generally not vicariously liable for the malpractice of a private attending physician who is not its employee. Liability is contingent upon the nature of the employment relationship and the specific circumstances of the case. Many hospitals hire physicians as independent contractors rather than employees to limit liability. In such cases, the hospital may argue that it is not responsible for the physician’s malpractice. Courts sometimes override this defense using the ostensible agency doctrine, meaning that if a patient reasonably believes the physician is acting on behalf of the hospital, the hospital may still be held accountable.

In sum, a hospital, not only its employed physician, may be held liable for the negligence of such physician if an act is committed during the scope of the physician’s employment.