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BUSCHING-KAPOCHUNAS FINAL

2/4/2009 1:59:19 AM

2008]

TIMOTHY’S LAW

631

HMO subsidiary could be held vicariously liable for the negligence of doctors under contract with them to provide medical services to a member of a health care plan. 224

Second, the Petrovich court held that liability may also be imposed

under

the

doctrine

of

implied

authority.225

The

court

stated

that

the

doctrine of implied authority could be used against an HMO to nullify a

physician’s

position

as

an

independent

contractor.226

Further,

they

held

that “an implied demonstrated that doctor so as to contractor, at least

agency existed where the facts and circumstances an HMO exerted such control over a participating negate that physician’s status as an independent with respect to third parties.”227

The holding by the Petrovich court, that an HMO could be held liable for the medical malpractice of its employed physicians, opened the door for suits arising under employee benefits plans. “[HMO’s] provide health care services through employer-sponsored group insurance plans and had previously been covered by ERISA preemption.”228 However, as stated by the Supreme Court, the basic thrust of the pre-emption clause in ERISA was “to avoid multiplicity of regulation to permit the nationally uniform administration of employee benefit plans,”229 and “in

the field of health care . . . there is no ERISA preemption without

manifestation

of

congressional

purpose.”230

As

a

result,

courts

clear have

begun under

to differentiate cases arising as a result of physician malpractice HMO and employer-sponsored group health plans from those that

arise as a result by ERISA. 231

of

a

denial

of

coverage,

which

continue

to

be

preempted

  • 224.

    Id. at 153; see also Chase v. Indep. Practice Ass’n., Inc., 583 N.E.2d 251 (Ill. 1991).

  • 225.

    719 N.E.2d at 775. Apparent authority, or ostensible authority, is the basis for vicarious

liability; this is doctrine under which a contractor may be held vicariously liable for an individual acting as an agent or employee where the liability is based on the authority that the contractor or employer gives to that agent or employee. Id. at 765. Implied authority, however, can be described as actual authority established circumstantially; it arises where “the facts and circumstances show that the defendant exerted sufficient control over the alleged agent so as to negate that person’s status as an independent contractor, at least with respect to third parties.” Id. at 770.

  • 226.

    Id. at 772.

  • 227.

    Id.

  • 228.

    Epstein & Sykes, supra note 213, at 629.

  • 229.

    N.Y. State Conference of Blue Cross & Blue Shield v. Travelers Ins. Co., 514 U.S. 645,

657 (1995).

    • 230.

      Pegram v. Herdrich, 530 U.S. 211, 237 (2000) (referring to Blue Cross & Blue Shield, 514

  • U.

    S. at 654-55).

    • 231.

      Compare Dukes v. U.S. Healthcare, Inc., 57 F.3d 350, 361 (3d Cir. 1995) (ERISA did not

preempt vicarious liability claims), with Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 52, 53-54 (1987) (ERISA preempts any state law causes of action for denial of benefits and does not permit punitive damages).

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