Vicarious liability: Where does the buck stop in your practice?

As a dentist, your position of authority has some strings attached—the actions of partner dentists, associates, and auxiliaries under your direction (even if they have their own licenses). It's called vicarious liability, or respondeat superior, and you can learn what to watch out for in your dental practice here.

Jul 6th, 2016
Content Dam Diq Online Articles 2016 06 Liability1
As a dentist, your position of authority has some strings attached—the actions of partner dentists, associates, and auxiliaries under your direction (even if they have their own licenses). It's called vicarious liability, or respondeat superior, and you can learn what to watch out for in your dental practice here.

As a dentist, your position of authority has some strings attached. Have you ever had any of these experiences?

• You walk into the operatory just in time to see your assistant perform unsupervised dentistry . . .
• You catch the tail end of a conversation between patient and auxiliary recommending a completely wrong course of treatment . . .

Or what about these?

• You submit an insurance form with the wrong codes . . .
• You discover you billed a patient for a procedure that wasn't completed . . .

Or even worse, what about this?

• Your associate or partner dentist made an error and will be involved in a malpractice lawsuit . . .

If the answer to one of these questions is "yes," then congratulations—you're a dentist. If the answer is "no," then just wait—they will happen. When any of these or a million similar scenarios present themselves, it is important to know when you are on the hook and what the potential consequences may be.

Vicarious liability, or respondeat superior, is the legal responsibility that occurs when one party is liable for the actions of another party. As a dentist, your position of authority has some strings attached. Those strings include the actions of partner dentists, associates, and auxiliaries under your direction (even if they have their own licenses). In short, it applies to anyone who acts with the implied authority of your business entity.

You are even vicariously liable for the work of the lab technician who is completely outside of your control. Suffice to say, when it comes to vicarious liability in health care, dentists likely shoulder the greatest burden of any health-care provider.

The legal rubric for vicarious liability generally requires the following:

• The employee's action serves the employer.
• The action is not outside the scope of employment.
• The patient could have a reasonable belief that the action was an act of the employer.1

When vicarious liability is established, your state dental agency, most legal jurisdictions, the National Practitioners Data Bank, and your liability insurance carrier stop distinguishing your acts from the acts of staff under your supervision. You can imagine the potential consequences. Let's look at the most common scenarios, which involve employees, hygienists, employee doctors, partnerships, and referrals.

Employees

If you benefit from your employees' activities, you also assume the risk of those employees' activities. If an assistant or hygienist gives erroneous advice resulting in an injury to a patient, you may be liable. Generally, if the staff person is acting outside the scope of his or her job description or license without the dentist's knowledge, the dentist may avoid liability. However, if a dentist acts in a way that leads patients to believe the staff person is acting within the dentist's authority, the dentist may be held liable.

The key is to have a good idea what patient-staff interactions look like when you are not around, and this means effective training. Whether you are there or not, the patient may have a justifiable belief that the dental "advice" is yours and you are liable for resulting damages. Many offices find it effective to create scripts for the most common scenarios. Definitely spend some time discussing the home-care instructions given to patients. Printed care recommendations can go a long way toward rectifying a misunderstood phrase or demonstrating your typical conduct to a court.

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Billing issues can be especially tedious to dentists, but we have all heard the horror stories that result from False Claims Act violations: thousands and thousands of dollars in fines, license sanctions, even jail time. Check those explosion codes and train front office staff to verify procedures.

Dental hygienists

Most states require that the dental hygienist—though they are independent in some of their activities and semi-independent in others—be under the personal supervision of the dentist. Dentists not only have the right to control the activities of dental hygienists working under their supervision but also the duty to supervise the professional activities of hygienists. Thus, the dentist is responsible for the dental hygienist's wrongful acts. Even when the fee of the dental hygienist is decided and paid directly to the dental hygienist, the relationship between the dentist and the dental hygienist is that of an employer and agent.

Dentists protect patients and their licenses best by having a written hygiene protocol and directing their hygienists to recommend treatment accordingly. In practice, designing the protocol with the hygiene department's input leads to the most successful implementation.

Associate dentists

When it comes to legal material, vicarious liability through associate dentists provides the most plentiful source of cases. Unfortunately, there are some doozies.

Consider a 2003 case in which an associate dentist sexually molested a sedated female patient. The patient sued under a theory of vicarious liability. Although the court found that the theory did not apply to the associate dentist (the assault did not serve the employer and was outside the scope of employment, and the patient could not have had a reasonable belief that the dentist's sexual assault was an act of his employer), the court concluded that vicarious liability did apply to the owner-dentist because the dental assistant in the room failed to prevent the assault.2

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Associate dentist liability is somewhat affected by employment classification. The actions of an employee dentist are more likely to result in vicarious liability. However, independent contractor status does not create an impenetrable shield. The typical test for determining the liability relationship of the parties is whether the employer retains the right to control the time, manner, and method of the employee's execution of the work. In the dental setting, courts will consider whether the owner provided fully equipped offices and support staff, booked appointments and assigned patients to dentists, established charges, and did billing and collections.3 Since this describes the majority of independent contractor relationships, owners should be aware of the likelihood of vicarious liability in both employee and independent contractor relationships.

The good news for employee or associate dentists is that vicarious liability is a one-way road. You are not vicariously liable for the malpractice of another dentist employed by the corporation, even if that dentist is the officer or director of the corporation.

Partner dentists

There are a number of legal vehicles for creating your business entity. Most partnerships use some type of corporation, which provides significant liability protections known as the corporate shield. If you did not create a legal entity for your practice, the default legal entity is a partnership. The partnership legal entity may have some benefits, but it falls very short when it comes to protecting either partner from the acts of the other—there is no corporate shield. Each partner has unlimited liability for the negligent injuries associated with the practice. A patient who was seen by only one partner may sue all partners for recovery.

Specialist referrals

Cases involving "negligent referrals" seem to be cropping up more frequently. Legally, a dentist's duty of rendering dental care and attention is not excusable through delegation or referral. If the referral dentist performs his or her duty incorrectly, the referring dentist could be on the hook.

Negligent referrals hinge on a combination of three factors:

• Whether the referring dentist knew or should have known that the specialist was impaired or incompetent;
• Whether the referring dentist materially benefitted from the referral (generally monetarily, but not always); and
• Whether the referring dentist directed or took part in the treatment provided by the specialist.

Negligent referral cases are not restricted to out-of-office referrals. Multispecialty practices, husband-wife partnership practices, and even itinerant specialists working out of a general dental office have all been the subject of these types of legal suits. If your practice falls into one of these categories, be aware of the mutual risks and liability.

Conclusion

Vicarious liability can be tricky—and it can have just as great an impact on your license and career as your own acts. Sometimes practice growth, profitability, and turnover create increased liability. The law has determined that it is up to you to set the practice's tone, control work procedures, supervise all staff members, and help them recognize the importance of acting in your name. For the purposes of your legal defense, your employees' professional actions are extensions of your own.


References

1. American Jurisprudence Proof of Facts, 2d. 1984;(38)445.
2. Marie Y. v General Star Indemnity Co., 110 Cal.App.4th 928, 2 Cal.Rptr.3d 135 (3d Dist 2003).
3. Matter of Lane, 160 A.D.2d 1060, 553 (NY App Div 1990).


Benjamin Dyches, DDS, JD, practiced dentistry for more than a decade before studying law. Dr. Dyches is the founder of Aegis Lion, a company designed to provide comprehensive legal, tax, financial planning, compliance, and transition care for dental practices-all in one place.


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