Hospital avoids vicarious liability for VMO10 May 2017
The decision of Page v Healthscope Operations Pty Ltd  NSWSC 1608 (Page), handed down on 16 November 2016, confirmed that visiting medical officers (VMOs) who treat patients on their own behalf rather than on a hospital's behalf are not considered employees and, therefore, do not have the same rights, entitlements or insurance protections as those of hospital employees.
The case involved a VMO who alleged that he had been bullied by hospital staff. His solicitors argued that the VMO's relationship with the Hospital was akin to an employer/employee relationship governed by an employment contract. The principles in Ellis v Wallsend (1989) 17 NSWLR 553 (Ellis) have long been applied to medical negligence cases in determining the respective liabilities of hospitals and VMOs, however, Page re-examined these principles in the context of a workplace dispute.
What did the case involve?
The Plaintiff, a specialist anaesthetist, was accredited to work at Norwest Private Hospital. Applying the Ellis principles, the Supreme Court of New South Wales concluded that he was classed as a VMO acting on his own behalf. He did not receive an income from the Hospital and merely used the Hospital's facilities for his practice.
The Plaintiff alleged he lost the opportunity to work on a particular surgical list after he complained to management of being bullied by two nurses and that this was a breach of the re-accreditation agreement.
This hearing was an interlocutory proceeding to determine whether the agreement was a contract between the Plaintiff and the Hospital (the Defendant being the owner and operator of the Hospital).
What was the Court's decision?
The Court found that the agreement between the parties was no more than a conditional licence granted by the Defendant to the Plaintiff, allowing the Plaintiff to enter the Hospital and provide medical services in his area of expertise. This was on the basis that:
- The agreement did not give the Plaintiff any rights or entitlements—he was not guaranteed access to a particular space, work or patients and was not granted a right to practice.
- The Plaintiff's right to enter and practice in the Hospital was dependent on the General Manager granting him authority, as stipulated in the agreement. It was within the Defendant's right to accredit the Plaintiff and subsequently withhold authority.
- A key criterion in determining whether a contract exists is consideration, that is, a promise from a party in return for something of value from the other party. In the context of the agreement, the Plaintiff promised to abide by the Hospital's by-laws, however, in return the Defendant did no more than allow the Plaintiff conditional access to the Hospital's facilities. This did not constitute something of value being exchanged for the promise, so there was no consideration that would give rise to a contractual relationship between the parties.
Justice Wilson determined that in the absence of a contract, this was not an employee-employer relationship. Accordingly, the agreement did not contractually require the Defendant to enforce the code of conduct and associated policies for the Plaintiff's benefit, as these were intended for employees only.
How does this affect insurance cover?
Where VMOs are acting on their own behalf, they are not entitled to the benefits of an employment contract. Equally, a hospital is not vicariously liable for the conduct of VMOs. In medical negligence cases, hospitals regularly deny vicarious liability on the basis that a VMO acts of his or her accord and simply uses the hospital's premises under a conditional licence. The Page decision raises an interesting question for insurers providing cover for VMOs and hospitals: is there a legal basis for a cause of action in a case such as this? Absent any employer-employee relationship, what duty did the Hospital owe Dr Page to ensure that he was not bullied? And conversely, what would the Hospital's cause of action be against a VMO if he or she bullies a hospital employee?
Litigation involving allegations of bullying is increasingly frequent, and the Page decision raises a number of legal conundrums that insurers of hospitals and VMOs will no doubt be forced to scrutinise in the near future.