Vicarious Liability

You didn't do it, but your employee did. Sorry, you are liable. Such is vicarious liability. Strictly defined, vicarious liability is the imposition of responsibility on one party for the negligence or intentional tort (an action that injures) of another.

It is easiest to appreciate the vicarious liability standard in the case of an employee who is authorized by the employer to perform an act and who, in the course of his or her employment, negligently injures another person. The injury would not have occurred but for the negligence of the employee, which would not have occurred but for his or her employment. Vicarious liability ties the employer to the actions of the employee relative to the following:

• The degree of control the employer has over the actions of the employee
• The benefit to the employer of the actions of the employee
[Page 584]
• The degree of power deferred to the employee by the employer and the vulnerability of the victim
• The degree of notice which the employer had or should have had relative to the negligent or intentional actions of the employee
• The degree of oversight reasonably required of an employer in the circumstances of the employer– employee relationship

Efforts to prevent vicarious liability in the health field should be concentrated in the areas of sexual harassment, billing and collections, and compliance with government regulations. The classic scenario is the hospital or physician using a billing service. Progress notes are forwarded to the service, which “appropriately” codes for the level of care of each visit. If overcharging occurs, regulators will look to the provider and not to the billing agent for reimbursement of overcharges, and any penalties that result from improper billing will be directed to the provider. The provider must maintain close review of all agents representing its financial interests and follow a strict compliance policy with periodic reviews to assure compliance with governmental regulations.

Automotive accidents and injuries are common cases where vicarious liability attaches to employers. If an employee is driving during working hours or on behalf of an employer, then the employer will be held liable for accidents caused by the employee. Hospitals and physician employers are often subject to the vicarious liability of sexual harassment cases. As such, every employer should have and actively maintain a sexual harassment policy. An incident in which an employee sexually harasses another employee or a patient must be addressed immediately. For employees who feel they are subject to sexual harassment, a means to seek redress should be in place. Any complaint should be taken seriously and immediately investigated. If it is determined that the potential for repeated harassment exists, then the offending employee should be educated, monitored, reprimanded, and possibly terminated.

Suffice it to say, all actions of employees should be known to and authorized by the employer. An employer cannot claim ignorance as a defense when it is reasonable and possible to create and adhere to compliance policies.