Medical centre found liable for acts of one of its GPs

A full bench of the Supreme Court has had the final say in relation to an issue arising out of a complaint to the office of the Health and Disability Commissioner (Commissioner). Four of the five Judges found that in certain circumstances a medical centre will be found liable under the Health and Disability Commissioner Act 1994 (HDC Act) for the acts of one of its GPs.

This issue arose in 2016 when a patient at the Moore Street Medical Centre (Medical Centre), whose regular GP (Dr Ryan) was on leave, saw another GP (Dr Sparks).  Dr Sparks prescribed the patient with medication for which they had a documented allergy causing an allergic reaction that required the patient to be hospitalised.

The patient complained about the actions of Dr Sparks to the Commissioner.  After investigating the complaint, the Commissioner unsurprisingly found that Dr Sparks had breached the Code of Health and Disability Services Consumer’s Rights (Code).  The Commissioner also went on to determine that while the Medical Centre did not directly breach the Code, it was also liable for Dr Spark’s actions.

Section 72 HDC Act provides for something similar to vicarious liability, but with a broader reach in that it includes non-employment situations (agency and membership).  The actions of an employee, member or agent are treated as having been done by the employing authority/provider as well as by the individual, even where it is done without the authority’s knowledge, approval or authority.

Dr Ryan began judicial review proceedings against the Commissioner’s decision based on his concerns around the impact the decision would have on his reputation and practice, and that of the Medical Centre.

The High Court determined that Dr Sparks was the Medical Centre’s agent and as such was acting within the Medical Centre’s implied authority when the Code was breached.  As a result, the Medical Centre was found to be liable for Dr Sparks’ prescription error.

On appeal, the Court of Appeal also held the Medical Centre liable whilst noting that the provision in s 72 in relation to agents’ actions was problematic.  It found that Dr Sparks was acting as the Medical Centre’s member when the Code was breached and was therefore liable under s 72(4) of the Act.

Dr Ryan was granted leave to appeal to the Supreme Court but was again unsuccessful.  In the recently released decision a four to one majority found that the Medical Centre was liable.  While expressing some reservations around the meaning of an agent’s express or implied authority when viewed through the lens of traditional legal concepts of agency and partnership law, it concluded that the wording of s72 HDC Act should be interpreted broadly given its role as consumer protection legislation stating that:

As we see it, the scope of liability under section 72 of the HDC Act is intended to be as broad as under the other rights protective statutes in which equivalent provisions appear.

The Court went on to say that its decision was fact specific and there will be circumstances where doctors conduct sufficiently independent practices from the same premises where s 72 will not apply.

Given that the Commissioner does not have powers to order the payment of fines or compensation, the decision does not have any direct financial impact for health providers (or their insurers).  However, as demonstrated by Dr Ryan’s determination to litigate the issue through to the Supreme Court, a breach finding under s 72 will have clear reputational and practice implications for medical centres and the other practitioners who are associated with them.  This is something that health practitioners will need to consider when making commercial decisions around the organisational structure and liability protection of health collectives and clinics.

If you would like to know more about the issues discussed in this article, please contact Jo Stafford.

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