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Judicial Rulings                      

Hospitals liable for
nonemployee malpractice:
consider hospital billboard ads

If a physician appears to be the employee (agent) of a hospital, the hospital may be held liable for his or her malpractice. The situation is most likely to arise in emergency room situations. The Illinois Supreme Court ruled on October 21.

In this case a patient had requested his own physician at the hospital's emergency room but, because his doctor was not on call, had been treated by another doctor in his physician's professional group. After the patient's death his estate sued both the doctor and the hospital for malpractice. In a settlement with the physician the executor reserved the right to continue the action against the hospital.

The hospital did not pay physicians for emergency room services; they were billed separately. The hospital argued that it was, therefore, not vicariously liable for the doctor's negligence since he was not an employee. On the other hand, the consent form signed by patients said, "The treatment and procedures will be performed by physicians and employees of the hospital."

In Illinois a hospital may be liable if there is a principal-agent relation with the doctor, the theory in this case. Appellate courts have been split on the question of a hospital's vicarious liability in such cases. The Illinois Supreme Court ruled "that liability attaches to the hospital only where the treating physician is the apparent or ostensible agent of the hospital. If a patient knows, or should have known, that the treating physician was an independent contractor, then the hospital will not be liable." It applied case law on the doctrine of "apparent authority," under which "the element is satisfied if the hospital holds itself out as a provider of emergency room care without informing the patient that the care is provided by independent contractors" — a possibility in the present world in which hospitals advertise their emergency room services on highway billboards.

The hospital also argued that the claim against it should have been closed by the settlement with the doctor. The court ruled, based on its decision in American National Bank v Columbus Cuneo-Cabrini Medical Center (154 111. 2d 347 (1992)), that "'any settlement between the agent and the plaintiff must also extinguish the principal's vicarious liability' ...regardless of whether the plaintiff's covenant not to sue the agent expressly reserves the plaintiff's right to seek recovery from the principal." Holdings to the contrary, including some of the court's earlier decisions are overruled, but the ruling applies prospectively.

Gilbert v Sycamore Memorial Hospital (156 111. 2d 511) was remanded for proceedings based on the decision, with the opinion written by Justice Charles E. Freeman, Justice John L. Nickels not participating.

Frequent flyer miles
can't be changed without notice

The Illinois Supreme Court stood by its March 1992 ruling that American Airlines could not retroactively alter its frequent flyer plan. The case had been remanded by the U.S. Supreme Court (American Airlines v Wolens, 113 S.Ct. 32 (1992)) for consideration in light of the federal court's ruling in Morales v Trans World Airlines (112 S.Ct. 2031 (1992)).

In Wolens v American Airlines (147 111. 2d 367 (1992)) the Illinois court had held that the plaintiff could collect damages from American for breach of contract and violation of Illinois' Consumer Fraud Act (see Illinois Revised Statutes 1987, ch. 121 1/2, par. 261 et seq.) because the airline had retroactively placed limitations on frequent flyer miles already earned. The Morales court cited language in the Airline Deregulation Act (see 49 U.S.C. sec. 1305(a)(l) (1988)) forbidding state laws "having the force and effect of law relating to rates, routes, or services of any air carrier." It said that the words "relating to" are to be broadly interpreted so that state laws having "a connection with or reference to airline 'rates, routes or services' are pre-empted." It said that the application to "state regulation of the nonprice aspects of fare advertising ... would be far more tenuous" but refrained from drawing a line between preempted and excluded provisions.

The Illinois court seized on this apparent loophole to rule that "the claims at issue do not relate to the rates, routes, or services of an airline. A frequent flyer program is not an essential element to the operation of an airline." It said that in such programs "a contractual relationship is formed which vests the frequent flyer with the right to earn specific awards."

Justice Michael A. Bilandic wrote for the majority in the December 16 decision Wolens v American Airlines (Docket No. 71418). Justice Charles E. Freeman did not participate. Justice Mary Ann McMorrow's dissent said, "Plaintiff's claims for damages ... are based upon allegations of American's deceptive advertising promotions, and inducements

February 1994/Illinois Issues/33

relating to airline fares ... and services" and thus preempted by the deregulation act.

Revised rules of
appellate practice

On December 17 the Illinois Supreme Court entered an order revising the rules governing appellate practice. This is the last general revision of rules under the leadership of Chief Justice Benjamin K. Miller whose term as chief justice expired at the end of 1993, with Michael A. Bilandic now chief justice of Illinois' entire judicial system.

There are four new rules, and 43 existing rules are affected. The text of the revisions runs to 85 pages. There seem to be no major changes, but the many small details will undoubtedly require close study by attorneys and their staffs.

Changes were suggested by the court's Rules Committee. According to the covering statement, "Obsolete provisions have been deleted; some rules have been reorganized to promote ease of use; and language has been made gender neutral." In at least one commentary the purpose of the revision was "to eliminate wordiness and redundancy."

F. Mark Siebert

34/February 1994/Illinois Issues