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The Tort of Negligent Credentialing

The following post is part of our Law Student Blog Writing Project, and is authored by James Haney, a Juris Doctor student at NKU Chase College of Law, Northern Kentucky University.

The Tort of Negligent Credentialing:

A Look at a New Law in Kentucky, Regarding the Credentialing of Independent Physicians

Employees are, traditionally, under the umbrella of responsibility carried by their employers. Basically, if an employee behaves in a negligent way, while acting in regards to the job, then the employer is held equally responsible. Think of it this way: one would not want to hire a toddler to design a building. The ensuing catastrophe would be equally the fault of the person who decided that would be a good idea. Likewise, it would seem, a hospital would be held responsible for the actions of its staff, physicians included. This has not, nor it is now, always been the case, though.

The tort of negligent credentialing is currently recognized by at least twenty-eight (28) states. For the purposes of explanation, let us assume that the number is exactly twenty-eight (28). Commonly, physicians are seen as independent contractors, simply working in the hospital as a venue, rather than as an employee of the hospital. For a hospital, this meant that it could receive the benefit of having physicians on hand, without bearing any of the responsibility of the actions of the physicians. To put it more simply, a lawsuit against a physician would not also put the hospital at risk. Now, though, that protection is gone, thanks to the tort of negligent credentialing.

Negligence, in its base meaning, is when an entity acts in a way not in accordance with how it should act, and someone or something is damaged as a result. Credentialing generally refers to a person or group that signs off and attests to the abilities of another. Here, negligent credentialing would be a hospital allowing a physician to perform medical services, without ensuring the physician’s ability to do so. Again, to make it stark, think of a hospital allowing a toddler to perform a surgery. As an aside, no physicians or architects should take any of this as being called toddlers. Negligent credentialing is broken down into three (3) parts, each of which must be proved by a preponderance of the evidence (a greater than 50% certainty that the evidence says what either side contends that it does) before the plaintiff may succeed in the action. These parts are: 1) the defendant hospital owed the patient a duty to ensure a competent medical staff; 2) the hospital breached that duty by granting privileges to an incompetent or unqualified physician; and 3) the physician caused harm to the patient. Peter Schmit, 18 Causes of Action 2d 329 (2002).

A recent case in Kentucky has brought the tort back into the limelight. In 2011, the Kentucky Supreme Court discussed the tort, but then decided to leave adopting it in Kentucky “for another day…” in Trover v. Estate of Burton. The case that has brought the issue back up is Spalding v. Spring View Hospital. A number of other cases joined on the appeal, all claiming a breach of the tort of negligent credentialing. Jones, Adams, and the Spaldings all seek for the court to recognize the tort, allowing them the ability to seek redress. Originally, the various claims were dismissed, as Kentucky did not, at the time, recognize the tort. The appeal, now, asks the court, not to create law, but recognize law already in existence in numerous other jurisdictions.

In previous years, we have seen a major shift in hospital ownership from private firms, to large non-profit organizations. This has been the most significant argument for the rationale of recognizing negligent credentialing. Secondarily, courts have argued the expansion of recognition of torts (such as negligent hiring), negligent supervision, and corporate negligence. Kentucky, incidentally, recognizes all three. Ohio and Utah, though, have totally abolished the claim, thus granting hospitals full immunity to any such action. City of Hazard Mun. Housing Comm’n v Hinch is the basis of the law in Kentucky, stating that hospitals are not responsible for the actions of the physicians practicing within them, referring to the physicians as independent contractors. In fact, the court, in Spalding, even goes so far as to say that this is still the law. However, that said law does not bar a plaintiff from collecting based on a negligent credentialing claim.

The Spaldings, Jones, nor Adams brought a claim based on the idea that the hospital should be liable for the actions of physicians working within them. Instead, each desires that a hospital be held liable for hiring said physicians. Whereas respondeat superior (the notion that an employer is responsible for its employees), vicarious liability, and ostensible agency all rest in the idea that an employer is responsible for the actions of its employees, essentially. However, the various parties want the hospitals held directly liable for negligently credentialing their physicians involved in the cases. This idea, then, must be accepted in order for the parties to have their claims even considered. Otherwise, there is no claim.

The court notes that corporate negligence is the most appropriate context in which to view these cases. This is because hospitals are, almost exclusively, owned by corporations. Backing this decision, the court quotes Insinga v. LaBella (Fla. 1989), in which the Florida court said that hospitals “thus have an independent duty to select and retain competent independent physicians.”

Spring View and LCRH (Lake Cumberland Regional Hospital) both contended that recognition of such a claim would create a “chilling effect” on the participation of credentialing committee members, as they would be concerned about the prospect of personal liability. The two hospitals also argue that adding the liability would further add to the already high cost of healthcare within the state. The court denied both contentions, though, stating that the first was too speculative, and the second was irrelevant. The court said that imposing liability would only make the hospitals insure themselves against their own negligence of contracting with a physician that did not meet a certain standard.

That is the crux of the tort. A hospital would not be held liable for a physician who simply screws up one day. Rather, a hospital would only be held liable for hiring a physician that it either knew, or reasonably should have known, would act in a manner that would be considered less than satisfactory. Hospitals were, in fact, one of the only institutions immune from such a standard of responsibility.

Trover, the case introduced in 2011, in which the court decided to leave the question of negligent credentialing for another day, was decided in 2014. Now, in 2016, the Kentucky Court System has determined that “today is that day.” Negligent Credentialing is now a legally recognized cause of action within the state of Kentucky. Of course, this will almost certainly be appealed to the Kentucky Supreme Court by either LCHS or Spring View, if not both. This decision came down on March 11, 2016. As of today, April 4, 2016, no appeal has been filed.

Should the decision stand, Kentucky will officially join the ranks of the other states which have adopted the doctrine of Negligent Credentialing. This means that hospitals will be held responsible for who they contract with. It seems to stand to reason, as companies in other fields are held to the same standard. Physicians, who hold in their hands our very lives on a daily basis, should, then, be at least as scrutinized by a potential employer, thus mitigating the risk not only to us, but to themselves.