Farlow v. Harris Methodist Fort Worth Hosp. (Summary)

RESPONDEAT SUPERIOR – RECRUITMENT AGREEMENT

Farlow v. Harris Methodist Fort Worth Hosp. (Tex. App. May 7, 2009)

The Texas Court of Appeals affirmed the decision of a trial court which granted summary judgment to a hospital in a medical malpractice claim. The plaintiffs alleged that the hospital was vicariously liable through the theory of respondeat superior, since the hospital and physician had entered into a recruitment agreement, as well as other ancillary agreements, which gave the hospital control over the physician and therefore established an employer-employee relationship.

The hospital and physician entered into a recruitment agreement, promissory note and security agreement in which the hospital gave the physician financial assistance through a collections guarantee, signing bonus, and reimbursement of moving expenses. The plaintiffs contended that the agreements gave the hospital a right to control the physician since the documents obligated him to provide one-third of the hospital’s emergency room coverage for his specialty, and required him to engage in the full-time practice of medicine, maintain complete and accurate medical records, obtain and maintain active staff privileges, give a reasonable amount of care to indigent patients, participate in the third-party payor programs in which the hospital participates, and provide the hospital information regarding expenses incurred by him in setting up his practice, among other things.

The appeals court concluded that the recruitment agreement, promissory note and security agreement evidenced an intent by the hospital to assist the physician in setting up a private practice, and that the majority of the provisions pointed out by the plaintiffs as the hospital having control over the physician were functions to safeguard the money advanced by the hospital, either by repayment or continued emergency room coverage by the physician.

The court also ruled in the hospital’s favor in a vicarious liability ostensible agency claim.