In reversing the holding of Illinois First District Appellate Court, the Illinois Supreme Court in Yarbrough v. Northwestern Memorial Hospital, 2017 IL 121367 (Dec. 29, 2017), limited the application of the doctrine of apparent agency for the first time since Gilbert v. Sycamore Hospital. The closely divided Illinois Supreme Court held that a hospital cannot be held vicariously liable under the doctrine of apparent agency for the negligence of the employees of an unrelated, independent family practice clinic that was not party to the litigation. Id.
In Yarbrough, the pregnant plaintiff sought treatment at the Erie Family Health Center, a Federally Qualified Health Center, to which the defendant Northwestern Memorial Hospital provides financial support, technological assistance, and strategic support. Id. at §4-5. After having been treated on several occasions at Erie Family Health center, the plaintiff delivered a premature infant at Northwestern Memorial Hospital. Id. at §8-10. The plaintiff sought to impose liability on Northwestern Memorial Hospital for care and treatment provided by employees and agents of Erie Family Health Center, alleging that Erie Family Health Center employees were the actual or apparent agents of Northwestern Memorial Hospital because she was told to have ultrasounds and deliver at Northwestern Medicine Prentice Women’s Hospital and received informational materials regarding tours of the hospital’s birthing/delivery area, having the installation of an infant car seat inspected at Northwestern Memorial Hospital, and attending birthing classes at Northwestern Memorial Hospital. Id. at §6.
After the trial judge denied Northwestern’s motion for summary judgment on the agency claims, the Circuit Court of Cook County certified the following question pursuant to Illinois Supreme Court Rule 308: “Can a hospital be held vicariously liable under the doctrine of apparent agency set forth in Gilbert v. Sycamore, 156 Ill. 2d 511 (1993), and its progeny for the acts of the employees of an unrelated, independent clinic that is not a party to the present litigation?”
On an interlocutory appeal, the First District Court answered the question in the affirmative, thereby purporting to broaden the application of the doctrine of apparent agency. Yarbrough v. Northwestern Memorial Hospital, 2016 IL App (1st) 141585. The appellate court held that nothing in the Gilbert decision limited a plaintiff from recovering against a hospital “merely because the negligent conduct of the physician did not occur in the emergency room or some other area within the four walls of the hospital.” Id. ¶ 40.
The Illinois Supreme Court reversed the First District, noting that that Erie Family Health is neither owned nor operated by Northwestern Memorial Hospital. Yarbrough, 2017 IL 121367 at §44. While Erie Family Health receives some charitable financial and technical assistance from Northwestern Memorial Hospital, Erie Family Health relies heavily on federal grants and Medicaid reimbursement to provide underserved communities with primary and preventative care regardless of an individual’s ability to pay. Id. Moreover, Erie’s employees are considered federal employees, and suits against Erie or its employees can only be maintained under the Federal Torts Claim Act. Id. Erie does not utilize the Northwestern name and there is no Northwestern-related branding or the use of Northwestern Memorial Hospital’s trademark purple color by Erie Family Health. Id. Accordingly, the Supreme Court found the First District’s reliance on the Malanowski decision to be misplaced, noting that unlike Malanowski, the care outside of the hospital did not occur at a hospital affiliated clinic or practice. Id. at §44-49.
In reversing the First District, the Illinois Supreme Court reiterated that the doctrine of implied agency remains viable and relevant to modern health care scenarios where there has been consolidation of practices and clinics under a hospital or system name in order to achieve cost savings. Yarbrough, 2017 IL 121367 at §40. Notably, a plaintiff may still pursue claims of apparent authority against a hospital arising out of treatment at an outside facility that is owned or operated by the hospital.
While the Illinois Supreme Court refused to impose broad vicarious liability this time, the recent Illinois Supreme Court decision should serve as a roadmap for hospital systems in setting explicit boundaries between its owned and operated hospitals/ facilities and independent clinics and physicians where there is any appearance of connection or relationship to avoid imposition of liability under apparent agency.
Victoria Shoemaker is a senior associate attorney in the firm's Chicago Office. She practices civil litigation, with an emphasis on medical malpractice defense, product and premises liability defense, and general healthcare law.