Institutional Liability: What It Is & What You Should Know

Posted By Power Rogers & Smith, P.C. || Feb 15, 2012

Chicago attorney Sean M. Houlihan of Power Rogers & Smith, L.L.P. recently published an article entitled Institutional Liability in the Medical Malpractice Trial Notebook for the Illinois Trial Lawyers Association. Mr. Houlihan described the origin of institutional liability, the plaintiff’s burden of proof in an institutional negligence case, and institutional liability based on the theory of agency. Below are the key points of his article.

The Changing Perspective on Hospitals

Institutional liability has become very prevalent in the court system today based on society’s changing perception of hospitals. People no longer look at a hospital as simply an avenue to be used by doctors for their interaction with and treatment of patients. The modern-day hospital is viewed as a service or an entity, which undertakes to cure people. There are a couple of main reasons for this change: first, hospitals today are a business that is much broader than simply furnishing facilities; second, hospitals today employ their own staff physicians, nurses, interns, administrators and maintenance employees.

In Illinois, institutional liability had its origin in a case before the Supreme Court, Darling v. Charleston Community Memorial Hospital.1 The factual setting was as follows: On November 5, 1960, Dorrence Darling broke his leg while playing in a college football game. Dorrence was taken to Charleston Hospital where he was seen by Dr. Alexander. Dr. Alexender, with the assistance of hospital personnel, applied traction and placed the leg in a plaster cast. Shortly after the cast was applied, Mr. Darling began suffering pain and his toes became swollen and dark. Later, the toes became cold and insensitive.

On November 6th, Dr. Alexander notched the cast around the toes and cut the cast three inches up from the Dorrence’s foot. On November 8th, Dr. Alexander took the cast off. “Blood and other seepage” appeared along with a stench that one witness described as the worst he had smelled since World War II. Following several futile attempts to save Dorrence’s leg, another doctor had to amputate it eight inches below the knee.

In upholding a verdict for the plaintiff, the Illinois Supreme Court found that liability against the hospital was supported by evidence that the nurses did not adequately test for circulation in the leg and/or the hospital failed to review Dr. Alexander’s work. In rejecting the defendant’s contention that “it is a fundamental rule of law that only an individual properly educated and licensed, and not a corporation, may practice medicine,” the Court stated that “…Present-day hospitals, as their manner of operation plainly demonstrates, do far more than furnish facilities for treatment.

They regularly employ on a salary basis a large staff of physicians, nurses and internes, as well as administrative and manual workers, and they charge patients for medical care and treatment, collecting for such services, if necessary, by legal action. Certainly, the person who avails himself of ‘hospital facilities’ expects that the hospital will attempt to cure him, not that its nurses or other employees will act on their own responsibility.”

Mr. Houlihan’s article went on to discuss the plaintiff’s burden of proof in an institutional negligence case. In an action in medical negligence based on allegations that a hospital was directly negligent, the plaintiff bears the burden of demonstrating that the hospital violated a standard of proper care and that the violation was the proximate cause of plaintiff’s injuries.2 The hospital’s duty is to conform to the legal standard of reasonable care.3 Reasonable care is judged in light of the patient’s known condition as well as the patient’s actual condition, which would be discovered through reasonable steps.4

What Determines the "Standard of Care"?

On the issue of what evidence is required to prove the standard of care, the Illinois Supreme Court has noted that while various medical judgments are necessarily a daily part of hospital administration, they do not constitute the entirety of a hospital’s function, as is the case with single medical practitioners. Thus, Courts deem it appropriate to the diversity in hospital care that a broad range of evidence be available to establish the correct standard.5

Generally, expert testimony is required unless defendant’s conduct is so grossly negligent or the treatment is so common that a layperson could readily appraise it.6 Additionally, state licensing regulations, hospital bylaws, and accreditation standards and regulations are admissible, but they do not conclusively determine the standard of care.7

Mr. Houlihan’s article also discussed institutional liability based on agency. Illinois Courts have generally ruled that the negligence of a physician cannot be imputed to a hospital where the physician is not under the direction of the hospital.8 Evidence of some form of agency usually must be shown before a hospital is liable for the malpractice of a doctor.9 There are two types of agency that Illinois courts deal with; actual agency and apparent agency.

The Difference Between Agency Types

Actual agency occurs when the control is retained by the principal. Under the doctrine of apparent agency, a hospital can be held vicariously liable for the negligent acts of a physician providing care at the hospital, regardless of whether the physician is an independent contractor, unless the patient knows or should have known that the physician is an independent contractor.10 Due to the complexity of institutional liability, Mr. Houlihan felt the need to educate his fellow attorneys on the subject, and our firm feels compelled to pass that information on to our readers.

The Illinois courts protect those who have been injured or killed as a result of carelessness or negligence. Whether the incident was a car accident, birth injury, medical malpractice, work-related, or any other factor, personal injury law makes sure that grieving individuals or families are given justice and financial reparation. However, many people are unfamiliar with the legal system and the processes required to ensure justice is served.

That is why Power Rogers & Smith, L.L.P. exists. We represent injured individuals or grieving families through a difficult time, helping them retrieve the compensation they need to move forward. As Chicago wrongful death lawyers, we can help you with decades of legal experience and proven results.

Do not hesitate to contact us today to answer your questions about your legal situation.

**The use of this website is for informational purposes only and does not provide legal advice or form an attorney/client relationship without the written agreement of all parties.

Sources Cited

1. Darling v. Charleston Cmty. Mem’l Hosp., 33 Ill. 2d 326, (1965)
2. Jackson v. Michael Reese Hosp. & Med. Ctr., 294 Ill. App. 3d 1 (1st Dist. 1998)
3. Longnecker v. Loyola Univ. Med. Ctr., 383 Ill. App. 3d 874 (1st Dist. 2008)
4. Gill v. Foster, 232 Ill. App. 3d 768 (4th Dist. 1992), aff’d, 157 Ill. 2d 304 (1994)
5. Greenberg v. Michael Reese Hosp., 83 Ill. 2d 282 (1980)
6. Frigo v. Silver Cross Hosp. and Med. Ctr., 377 Ill. App. 3d 43 (1st Dist. 2007)
7. Frigo v. Silver Cross Hosp. and Med. Ctr., 377 Ill. App. 3d 43 (1st Dist. 2007)
8. Zajac v. St. Mary of Nazareth Hosp., 212 Ill. App. 3d 779 (1st Dist. 1991)
9. Brooks v. Leonardo, 204 Ill. App. 3d 97 (1st Dist. 1990)
10. Gilbert v. Sycamore Mun. Hosp., 156 Ill. 2d 511 (1993)

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