8 Ways That ACOs Can Increase Your Malpractice Risk

Brian S. Kern, Esq.


September 09, 2011

In This Article

Vicarious Liability

5. ACO Vicarious Liability

In addition to the potential new duties, all of the old duties remain. Under general corporate law principles, an employer can be held vicariously liable for the acts of its employees and may be sued accordingly.

Through successful extension of these principles -- mainly under a theory known as apparent authority -- corporations may also be held liable for independent contractors. Apparent authority holds contracting parties liable for their independent contractors if it appears that they work for the corporation, conceivably such as an ACO.

If an ACO wants to try to limit its apparent authority exposure, some guidance was provided in a 2008 New Jersey appellate decision. In Cordero v Christ Hospital, the Court mentioned 6 relevant factors when determining whether independent contractors ("IC"s) create apparent authority: whether the facility provided the IC; whether the IC service was typical to the hospital and an integral part of the treatment; whether notice of the IC status was given to the patient; whether the patient could choose the IC; whether there was prior contact with the IC; and whether any special knowledge of the IC relationship existed. Satisfying these criteria may be difficult, if not impossible, for an ACO that wants to hold itself out as the home of all medical care.

The more an ACO markets itself as a fully integrated care system, the harder it will be to shed vicarious liability for contractors.

6. Direct Liability

ACOs may also have direct liability. Examples of potential direct theories of recovery include the failure to properly credential physicians and the failure to properly train or oversee personnel.

Another emerging area of direct liability may be related to a system failure or failing to properly integrate care.


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