BLM’s healthcare experts provide insight for healthcare entities and individual practitioners following last week’s Supreme Court judgment.
In recent years, the court’s decisions in a series of cases have generated a good deal of uncertainty about the scope of the liability of an entity for the actions of those with whom it contracts to perform its business.
The issue of vicarious liability, not only the extent to which a contracting party might be liable for self-employed contractors, but also the scope of an employer for its employees, has now been explored by the Supreme Court and strong judgments were handed down on 1 April 2020 in Barclays Bank v Various Claimants and WM Morrison v Various Claimants. The implications of the second case for the healthcare industry, WM Morrison v Various Claimants, will be explored in a separate article.
The two cases considered the circumstances where it may be appropriate for the law to intervene and make one party pay for the fault of another. Generally speaking in the past, vicarious liability had been limited to the relationship of employer and employee but had evolved beyond that relationship as the line of cases were decided.
The Barclays Bank decision focussed on the liability which might be imposed on a party for the actions of independent contractors.
Barclays Bank - the facts
The facts of the Barclays Bank case concerned medical examinations performed by a doctor, Dr Bates, on behalf of Barclays Bank in the course of assessing potential employees for employment with the bank. The examinations took place between 1968 and 1984. It came to light that during the course of these examinations, Dr Bates sexually assaulted the claimants.
Dr Bates had what was referred to as ‘a portfolio practice’; only some of the work that he undertook was for Barclays Bank. Some of his practice involved performing medical examinations not connected to Barclays Bank; for emigration purposes and some was work for insurance companies, a mining company and a government board. He also wrote a column in a newspaper.
The question before the court was how far and to what extent Barclays Bank might be liable for his actions in the assessment of their potential employees.
The court reviewed the line of cases on vicarious liability and the potential policy reasons as set out in the Christian Brothers case which might make it fair, just and reasonable to impose vicarious liability for the torts committed by an employee in the course of employment. They were that:
- The employer was more likely to have the means to compensate the victim than the employee and might be expected to have insured against that liability.
- The tort was being committed as a result of activity being taken by the employee on behalf of the employer.
- The employee’s activity was likely to be part of the business activity of the employer.
- The employer by employing the employee to carry on the activity created the risk of the tort committed by the employee and;
- The employee will to a greater or lesser degree have been under the control of the employer.
In Christian Brothers it was clear that although the case referred to the relationship of employer and employee, these principles extended beyond the strict employee/employer relationship to a relationship akin to employment.
In the giving their judgment in Barclays, the Supreme Court said there was nothing however in any of the cases reviewed to suggest that the classic distinction between employment relationships or those akin or analogous to employment on the one hand, and the relationship with an independent contractor on the other, has been eroded.
This is a key statement for those organisations which employ professional staff as independent contractors. What remains unclear is where the line will be drawn between relationships akin to employment and contracts for services.
The Supreme Court made it clear that where there is doubt then the five incidents identified in the Christian Brothers case, might be deployed to assess whether it is fair, just and reasonable to impose vicarious liability in the circumstances.
Whether liability is to be imposed therefore will depend on the exact nature of the relationship in question.
Where an independent contractor is carrying out his own business, it would seem not to be necessary to go on and consider the five incidents set out in the Christian Brothers case. The question in individual cases, whether a medical practitioner was in fact an independent contractor, will need to be scrutinised carefully in each case.
It may be that the understanding between the contracting parties as to where any tortious liability would land could be decisive. The fact that most entities do not insure fully for the tortious liability of their professional subcontracted staff, and that the professionally subcontracted staff understand that and maintain their own indemnity to cover such liability, may be determinative.
The case does provide some clarification of the law although it is likely that there will still be some uncertainty in relation to how any particular factual scenario might be interpreted by a court.
It does however reflect a significant retreat from the extension of vicarious liability that the courts appeared to be advocating through the existing case law on the topic and this decision (and that of the Morrisons case) hopefully will result in a degree of certainty being restored, not least to the insurance market. Healthcare entities may feel that the requirement for them to purchase an insurance product to protect against liability arising from the actions of their contracted staff now recedes. We suggest that may be premature given the continuing uncertainty around the nature of these relationships.
At the very least we suggest that healthcare entities need to be clear regarding the position between them and their contracted staff. They will need to ensure that their contracts are clear in relation to the requirement of the contracting individual to maintain indemnity for negligent acts and omission and a requirement to reimburse the contracting entity in relation to any sums paid as a result of any tortious liability imposed.
Individual practitioners however, who had perhaps envisaged vicarious liability being accepted by organisations for its self-employed staff may be disappointed that the financial burden of obtaining an indemnity or insurance product will likely remain with them.