Present: Carrico, C.J., Compton, Stephenson, Lacy, Hassell,
and Koontz, JJ., and Whiting, Senior Justice
JAMES J. MCDONALD
v. Record No. 961831 OPINION BY JUSTICE ELIZABETH B. LACY
June 6, 1997
HAMPTON TRAINING SCHOOL
FOR NURSES, d/b/a SENTARA
HAMPTON GENERAL HOSPITAL
FROM THE CIRCUIT COURT OF THE CITY OF HAMPTON
William C. Andrews, III, Judge
In this appeal in a medical malpractice case, we consider
whether the trial court properly held that, because a physician
exercised independent medical judgment in performing his
duties, he was an independent contractor as a matter of law.
The plaintiff, James J. McDonald, sued Hampton Training
School for Nurses, d/b/a Sentara Hampton General Hospital (the
Hospital) alleging that Richard F. Clark, M.D., a pathologist
at the Hospital, negligently interpreted McDonald's pathology
specimens and failed to timely diagnose cancer. McDonald did
not allege any independent acts of negligence by the Hospital,
but asserted the Hospital was liable solely through the
doctrine of respondeat superior. The trial court entered an
order granting the Hospital's motion to strike McDonald's
evidence and dismissing the case finding that, as a matter of
law, Clark was an independent contractor rather than an
employee of the Hospital. Because we conclude that the
evidence presented a jury question on the issue of Clark's
employment status, we will reverse the judgment of the trial
court and remand the case.
The doctrine of respondeat superior imposes liability on
an employer for the negligent acts of its employees. If,
however, the negligent acts were performed by an independent
contractor rather than an employee, no master-servant
relationship exists between the contractor and employer, and
the employer is not liable for the negligent acts. Norfolk and
Western Ry. Co. v. Johnson, 207 Va. 980, 983, 154 S.E.2d 134,
137 (1967). The factors which are to be considered when
determining whether an individual is an employee or an
independent contractor are well established: (1) selection and
engagement; (2) payment of compensation; (3) power of
dismissal; and (4) power to control the work of the individual.
The fourth factor, the power to control, is determinative.
Hadeed v. Medic-24, Ltd., 237 Va. 277, 288, 377 S.E.2d 589,
594-95 (1989). This factor refers to control over the means
and method of performing the work. Baker v. Nussman & Cox, 152
Va. 293, 304, 147 S.E. 246, 249 (1929). It is immaterial
whether the employer exercises this control; the test is
whether the employer has the power to exercise such control.
Smith v. Grenadier, 203 Va. 740, 746, 127 S.E.2d 107, 111-12
(1962).
The trial court's determination in this case turned upon
the Hospital's lack of control over Dr. Clark's exercise of his
professional judgment in carrying out his duties as a
pathologist at the Hospital. 1 The trial court found that there
1 1
The trial court also relied on its interpretation of
Messina v. Burden, 228 Va. 301, 321 S.E.2d 657 (1984), in
concluding that Dr. Clark was an independent contractor. The
trial court referred to the language in Messina stating that
the James doctors "were essentially independent contractors as
was "nothing contractually or factually" to suggest that the
Hospital controlled the way that Dr. Clark performed his duties
but that he used "his independent professional judgment, based
on his education and his training and his experience to do
that." Thus, the trial court held, as a matter of law, that
Clark was an independent contractor, not an employee, of the
Hospital.
The Hospital asserts that the trial court was correct in
relying on the Hospital's inability to control Dr. Clark's
exercise of his professional judgment as conclusive in the
determination of his independent contractor status. We do not
agree. The proposition adopted by the trial court and argued
by the Hospital here may have been a correct statement of the
law at one time; however, it is inconsistent with current case
law in this jurisdiction and with the methods of operation
currently utilized by health care providers.
As early as 1920, this Court held in Virginia Iron, Coal
far as their relationship with their patients was concerned,"
id. at 312-13, 321 S.E.2d at 663, as the Messina court's
explanation that the doctors in James were denied sovereign
immunity because they were independent contractors. Noting the
similarity between Dr. Clark's situation and that of the
doctors in James, the trial court concluded that Dr. Clark must
also be an independent contractor. This is an incorrect
application of the language in Messina. Neither James nor
Messina involved the status of an individual for purposes of
respondeat superior. The issues in these sovereign immunity
cases were governed by the test for determining whether a
governmental employee is entitled to sovereign immunity. This
test involves four factors, one of which is the control
exercised by the governmental employer; however, all four
factors must be considered, and the control factor is not
determinative of the result. Compare James v. Jane, 221 Va. at
53, 282 S.E.2d at 869, with Hadeed, 237 Va. at 288, 377 S.E.2d
at 594-95.
& Coke Co. v. Odle's Administrator, 128 Va. 280, 105 S.E. 107
(1920), that, although a mining company could be liable for the
malpractice of a physician employed by it based on the
company's agreement to furnish medical services to the
employee, this liability could not be based upon the doctrine
of respondeat superior. There could be no master-servant
relationship between the company and the physician, the Court
explained, because the doctor was employed "to render
professional services requiring special education and training,
and involving the exercise of skill and judgment, which could
not, in the nature of things, be controlled by the will and
direction of the company. . . . The position of the doctor was
rather that of an independent contractor." Id. at 288-89, 105
S.E. at 109. This was the prevailing rationale throughout the
country at that time. See, e.g., Schloendorff v. Society of
New York Hospital, 105 N.E. 92 (N.Y. 1914); Runyan v. Goodrum,
228 S.W. 397 (Ark. 1921); Joel D. Cunningham, The Hospital-
Physician Relationship: Hospital Responsibility for
Malpractice of Physicians, 50 Wash. L. Rev. 385, 388-90 (1975).
Weston's Administratrix v. Hospital of St. Vincent of
Paul, 131 Va. 587, 107 S.E. 785 (1921), decided a year after
Virginia Iron, reconfirmed that view in Virginia. In that
case, a patient sought to impose liability on a charitable
hospital based on the negligence of a nurse in its employ.
Justice Burks, writing for the Court, stated that hospitals
were not liable for the negligence of nurses and physicians
because there can be no master-servant relationship between a
hospital and a physician or nurse. 107 S.E. at 787. 2
A physician's status as an independent contractor rather
than an employee of a hospital was again reiterated, albeit in
dicta, in Stuart Circle Hospital Corp. v. Curry, 173 Va. 136, 3
S.E.2d 153 (1939). There, a hospital was held liable to a
patient for the negligent acts of an intern and a nurse based
on an implied contract between the hospital and the patient to
provide medical services. In the course of its opinion, the
Court recited that it was "conceded" that a physician is an
independent contractor and "alone is responsible for the
exercise of professional skill and judgment, subject to no
control by the hospital in the execution thereof." Id. at 149,
3 S.E.2d at 158.
The proposition that a physician is an independent
contractor solely because the nature of his profession prevents
his employer from acquiring the requisite ability to control
his medical activities has not been explicitly overruled in
Virginia by case or statute. Subsequent cases, however, have
reached directly contrary results.
In Ritholz v. Commonwealth, 184 Va. 339, 35 S.E.2d 210
(1945), the Commonwealth sought a declaratory judgment and
injunction against Ritholz and others claiming that they were
practicing optometry without a license based on the doctrine of
2
This portion of the opinion does not appear in the
Virginia Reports; however, the version of the opinion which
includes this discussion is the version on file in our Clerk's
office and remains the official copy of the opinion.
respondeat superior. 3 Ritholz operated stores in which
licensed physicians examined each customer's eyes, wrote a
prescription for eyeglasses, and collected a $2 fee. The
prescription was given to an employee in the store to be
filled. Ritholz claimed that his business was the filling of
prescriptions by producing the prescribed eyeglasses. He
argued that the physicians in his stores were independent
contractors because he neither exercised, nor attempted to
exercise, any supervision or control over the means and method
used by these physicians in eye examinations. Id. at 355-57,
35 S.E.2d at 219. The Court held that the physicians were
employees, not independent contractors, referring specifically
to the decisions of other jurisdictions holding that physicians
in identical circumstances were employees "notwithstanding the
fact that the defendants actually exercise no control over 'the
mode, manner or result of the examination of the eyes of the
customer and the doctor is left free to exercise his own will
(and) judgment and to use his own professional skill and
methods in making such examination.'" Id. at 358-59, 35 S.E.2d
at 219 (citations omitted).
Forty years later, this Court held that the Virginia Beach
S.P.C.A. was engaged in the illegal practice of veterinary
medicine because it operated a full-service veterinary clinic
through the services of its licensed veterinarian. Virginia
3
In contrast, by statute, hospitals are deemed not to be
engaged in the unlicensed practice of medicine when they
provide medical services. Stuart Circle, 173 Va. at 146, 3
S.E.2d at 156.
Beach S.P.C.A., Inc. v. South Hampton Roads Veterinary Ass'n,
229 Va. 349, 353, 329 S.E.2d 10, 12 (1985). The veterinarian
was an employee, not an independent contractor, the Court
concluded, because the employment contract showed that the
S.P.C.A. retained substantial control over the doctor's
performance. 4 Id. Finally, in Hadeed v. Medic-24, Ltd., a
case involving the negligent acts of several physicians, we
concluded that the issue whether the doctors were independent
contractors or employees was a matter for the jury to
determine. 237 Va. at 288, 377 S.E.2d at 595.
Clearly, these cases have undermined the applicability of
the principle set out in Virginia Iron, Weston's
Administratrix, and Stuart Circle. 5 This jurisprudential
4
The contract provided that the doctor receive an annual
salary, a percentage of the gross receipts, and a portion of
the charges for spaying and neutering. The contract also
provided that the doctor "accepted his employment 'subject to
the general supervision and pursuant to the orders, advice and
direction of' the S.P.C.A., and that he would perform his
duties 'to the reasonable satisfaction of' the S.P.C.A." Id.
at 351, 329 S.E.2d at 11.
5
Other cases, although not addressing the independent
contractor issue directly, are not consistent with the
principle as originally stated in Virginia Iron. For example,
in P.M. Palumbo, Jr., M.D., Inc. v. Bennett, 242 Va. 248, 251,
409 S.E.2d 152, 153 (1991), we held that physicians cannot be
independent contractors but must be employees or officers of
professional corporations providing health care services. In
Lohr v. Larsen, 246 Va. 81, 88, 431 S.E.2d 642, 646 (1993), a
case involving a physician working for the state, we noted that
"when a government employee is specially trained to make
discretionary decisions, the government's control must
necessarily be limited in order to make maximum use of the
employee's special training and subsequent experience."
Earlier this year, in Schwartz v. Brownlee, 253 Va. 159, 163-
64, 482 S.E.2d 827, 829 (1997), we held that a physician was an
agent of a corporate non-health care provider when providing
post-operative treatment to a patient.
evolution is consistent with changes adopted in other
jurisdictions. See, e.g., Beeck v. Tuscon General Hosp., 500
P.2d 1153 (Ariz. App. 1972); Medi-Stat, Inc. v. Kusturin, 792
S.W.2d 869 (Ark. 1990); Rice v. California Lutheran Hosp., 163
P.2d 860 (Cal. 1945); Moeller v. Hauser, 54 N.W.2d 639 (Minn.
1952); Bing v. Thunig, 143 N.E.2d 3 (N.Y. 1957); John D.
Hodson, Annotation, Liability of Hospital or Sanitarium for
Negligence of Physician or Surgeon, 51 A.L.R. 4th 235, 281-85
§ 9[c] (1987). 6
The federal courts also recognize that the exercise of
professional judgment in providing medical treatment alone
cannot be determinative of the employment relationship between
a physician and an employer for purposes of the Federal Tort
Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680 (1994 & Supp.
1997). Some circuits have treated the contract terms as
critical to the determination of the relationship, Robb v.
United States, 80 F.3d 884, 891 (4th Cir. 1996), while others
look to the intent of the parties, Lilly v. Fieldstone, 876
F.2d 857, 859 (10th Cir. 1989).
Retention of the blanket rule articulated over 70 years
ago in Virginia also does not reflect the changing
circumstances surrounding the practice of medicine. "The
6
Jurisdictions retaining the prohibition against the
existence of a master-servant relationship generally subscribe
to the view that if a such a relationship exists between a
hospital and a physician, the hospital would be illegally
practicing medicine without a license, a view rejected in this
jurisdiction. Stuart Circle Hospital Corp. v. Curry, 173 Va.
at 146, 3 S.E.2d at 156.
conception that the hospital . . . undertakes . . . simply to
procure [doctors] to act upon their own responsibility, no
longer reflects the fact." Bing v. Thunig, 143 N.E.2d at 8.
In addition to the staff privileges granted physicians with
private practices, hospitals "regularly employ on a salary
basis a large staff of physicians, nurses and internes, . . .
and they charge patients for medical care and treatment." Id.
"To an increasing extent" patients no longer select their
physicians; they are often supplied by the hospital or clinic.
"Hospital and other corporate institutions that provide
medical care have increased the number and the frequency of
salaried arrangements for physicians. . . . [C]ontracts with
hospital-based specialists have dramatically increased."
Arthur F. Southwick, The Law of Hospital and Health Care
Administration, 546 (2d ed. 1988).
Finally, consistent application of the proposition
advanced by the Hospital here would require that virtually
every professional who is expected to exercise independent
judgment in the performance of the duties of the workplace
would have to be deemed an independent contractor, regardless
of the scope of his or her duties or the limitations on the
employment.
Therefore, after reviewing our prior cases and considering
the current manner in which medical services are provided, we
conclude that, for purposes of determining employment status,
the exercise of professional judgment by a physician in the
performance of professional duties is a factor, but not the
only factor, to be considered in evaluating the employer's
power to control the means and method utilized to perform the
work. Having resolved the nature of the test to be applied, we
now consider whether the record supports the trial court's
holding that Clark was an independent contractor as a matter of
law.
Dr. Clark is the Director of Pathology at the Hospital.
He is a licensed and board certified physician and has worked
under a contract at the Hospital for thirty-three years. As
Director of Pathology, Dr. Clark's general responsibilities
include interpreting various specimens, performing autopsies,
bone marrow aspirations and biopsies, and, to a lesser extent,
consulting with patients who have problems related to
hematology pathology, although he did not meet or consult with
McDonald, the patient in this case.
The Hospital owns the pathology laboratory, and laboratory
personnel are employees of the Hospital. Dr. Clark’s contract
provides that he "shall provide all the administrative,
professional, supervisory, quality assurance and educational
services relating to the operation of the" laboratory, but he
has no authority to hire or discharge employees of the
laboratory. Although Dr. Clark has no authority to purchase
supplies or equipment for the laboratory, he participates in
the Hospital's annual budget process.
The Hospital pays Dr. Clark a set monthly fee for his
services and reimburses him for all of the costs of his
practice, including his business license tax, malpractice
insurance, and professional dues. The Hospital does not
withhold federal, F.I.C.A., state or local income or
occupational taxes from his salary, and his income is reported
on a 1099 federal tax form, not a W-2 form. The Hospital is
not responsible for his unemployment compensation, workers'
compensation contributions, vacation pay, sick leave, or
retirement benefits.
Dr. Clark must interpret all slides that the Hospital
presents for review, and his salary is not related to the
number of slides he evaluates. He may render services to other
entities and receive compensation for such work, but he must
obtain the Hospital's written authorization before working
7
elsewhere. His contract requires that he maintain board
certification, a requirement not otherwise necessary to perform
pathology services.
The Hospital has no control over Dr. Clark's independent
medical judgment nor has it influence over his diagnostic
opinions about pathologic material. His contract provides,
however, that he must satisfy the Hospital in the performance
of his duties and that he will "comply with the bylaws, rules
and regulations, policies and directives of the Hospital and
7
During his tenure with the Hospital, Dr. Clark has
performed services and has been compensated as a consultant at
Kecoughtan Veteran's Hospital and McDonald Army Hospital and
has served as Director of the Laboratory at Langley Air Force
Base and the Director of Pathology at Mary Immaculate Hospital.
Dr. Clark currently performs services for the state medical
examiner's office. Although he has never been refused
permission to work for another entity, the Hospital did require
him to choose between working for it or Mary Immaculate
Hospital.
its medical staff."
All laboratory reports are printed on Hospital letterhead
and are the property of the Hospital. Additionally, the
Hospital sets the fees charged patients, bills patients, and
collects payments. Dr. Clark is required to keep time records
for these billing purposes. The Hospital's contract explicitly
refers to Dr. Clark as an independent contractor, but when
asked whether he thought he was an employee of the Hospital,
Dr. Clark responded "[w]ell, in some regards I think that might
be the case, although this [contract] states differently."
Whether a person is an employee or an independent
contractor is generally a question of fact for the jury.
Hadeed, 237 Va. at 288, 377 S.E.2d at 594. Where the evidence
admits of only one conclusion, the question is a matter of law.
Stagg v. Taylor's Adm'r, 119 Va. 266, 270, 89 S.E. 237, 238
(1916). Taking these facts and the inferences they raise in
the light most favorable to McDonald, as we must do when
reviewing a motion to strike, Hadeed, 237 Va. at 280-81, 377
S.E.2d at 590, the facts do not lead to a single conclusion,
and the issue should have been left to the jury for
determination.
Accordingly, we will reverse the judgment of the trial
court and remand the case for further proceedings.
Reversed and remanded.