Atkinson v. Sachno

Present: Carrico, C.J., Lacy, Keenan, Koontz, Kinser, and
Lemons, JJ.

MARGARET L. ATKINSON
OPINION BY
v. Record No. 000934 JUSTICE LAWRENCE L. KOONTZ, JR.
March 2, 2001
ROMAN SACHNO, JR., M.D.

FROM THE CIRCUIT COURT OF THE CITY OF STAUNTON
Humes J. Franklin, Jr., Judge

In this medical malpractice case, we consider whether the

trial court properly held that a physician providing consultant

services for an agency of the Commonwealth was not an

independent contractor and was entitled to the protection of the

doctrine of sovereign immunity from liability for his alleged

acts of negligence.

BACKGROUND

The material facts are not in dispute. Dr. Roman Sachno,

Jr., is a licensed physician specializing in internal medicine

in a private practice in Staunton, Virginia. Since 1972, Dr.

Sachno has contracted with Disability Determination Services

(DDS), a division of the Virginia Department of Vocational

Rehabilitation, to serve as a consultant physician. Pursuant to

this contract, Dr. Sachno performs various examinations of

claimants for DDS, which is responsible for making disability

determinations for claimants applying for Social Security and

Supplemental Security Income disability benefits.
 When DDS determines that the available medical evidence

needed to make a disability determination is insufficient, it

refers the claimant to a consultant physician to undergo a

special “consultative examination” to obtain the needed medical

information. The contract provides that the specific “type of

examination (complete or limited) and/or test(s) purchased

depends upon the specific additional evidence needed for

adjudication after DDS has obtained all available medical

evidence of record.” (Emphasis added). DDS does not provide

treatment or therapeutic services. Thus, the consultant

physicians are utilized by DDS for the limited purpose of

obtaining additional medical evidence to assist DDS in

determining a claimant’s eligibility for disability benefits.

Pursuant to the detailed consultant procedures contained in

the contract, DDS schedules appointments with Dr. Sachno for

claimants to undergo the consultative examinations. Although

Dr. Sachno is not required to accept any referrals from DDS, he

has agreed to perform two or three of these examinations per

week. After an examination is scheduled, DDS sends an

authorization letter to Dr. Sachno detailing the examination

and/or tests to be conducted by him. If Dr. Sachno determines

that further diagnostic tests are necessary, he is required to

obtain authorization from DDS before performing such tests.

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Without specific authorization from DDS, he is not compensated

for conducting additional tests.

In addition to the authorization letter, DDS provides Dr.

Sachno with “consultative examination requirements” which set

forth the various protocols and tests that must be performed in

specific examinations. Dr. Sachno is instructed to examine the

claimant in accordance with the protocols applicable to specific

examinations referred to in the authorization letter. The

protocols and designated tests merely outline what additional

evidence is needed to adjudicate the disability claim. For

example, the protocols and examination outline for the

assessment of a claimant's respiratory status requires the

physician to complete a detailed history and physical

examination of the patient, including a report of (1) height and

weight, without shoes; (2) ancillary studies as indicated on the

authorization; (3) diagnosis; (4) treatment and response; and

(5) prognosis. The consultant physician is free to delegate

certain parts of the examination to qualified support staff.

Dr. Sachno examines claimants referred by DDS in his

private office, using his own medical equipment. DDS does not

assist, directly or indirectly, Dr. Sachno in carrying out these

examinations. After a particular examination is completed, Dr.

Sachno submits a report detailing the results of the examination

to DDS. These reports are considered the property of the Social

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Security Administration. Dr. Sachno then bills DDS for each

examination that he has completed. He is paid a fixed fee by

the Commonwealth for the examination of each claimant referred

to him by DDS under a maximum fee schedule provided by DDS.

Claimants do not pay a fee to Dr. Sachno. No taxes or other

withholdings are deducted from the checks Dr. Sachno receives

from the Commonwealth for his services. Dr. Sachno does not

receive any benefits, such as health insurance, and he will not

receive retirement benefits from the Commonwealth as a result of

his contract with DDS.

It was in the capacity as a consultant physician that Dr.

Sachno examined Margaret L. Atkinson, the plaintiff below.

Atkinson had applied for Social Security disability benefits,

and DDS had referred her to Dr. Sachno in order to verify her

inability to perform work-related activities. Dr. Sachno was

requested to evaluate Atkinson’s respiratory and arthritic

impairments. Dr. Sachno’s examination of Atkinson included,

among other things, ordering a chest X-ray. This X-ray

reflected a possible 12mm nodule which the radiologist reported

as not ruling out “an active process including metastatic

disease.” Dr. Sachno did not advise Atkinson regarding the

results of this X-ray and the contents of the accompanying

report that he received from the radiologist. Approximately

five months later, Atkinson was diagnosed with lung cancer.

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Thereafter, Atkinson filed a motion for judgment against Dr.

Sachno for medical malpractice alleging that he negligently

failed to advise her of the results of the chest X-ray. Dr.

Sachno responded by filing a plea of sovereign immunity.

Following the receipt of briefs, the trial court conducted

a hearing on the plea of sovereign immunity. Atkinson argued

that Dr. Sachno, based upon the undisputed facts, is an

independent contractor and not an employee of the Commonwealth

who may be entitled to the protection of sovereign immunity.

The trial court initially ruled that “[i]ndependent contractors

are not entitled to the protection of sovereign immunity” and

then proceeded to determine whether Dr. Sachno was an employee

of the Commonwealth or an independent contractor. Relying

primarily upon the four-part test for determining whether a

master and servant relationship exists that this Court approved

in Hadeed v. Medic-24, Ltd., 237 Va. 277, 288, 377 S.E.2d 589,

594-95 (1989), the trial court ruled, as a matter of law, that

Dr. Sachno is not an independent contractor.

After deciding that Dr. Sachno was not an independent

contractor, and by implication that he is therefore an employee

of the Commonwealth, the trial court applied the test

established in James v. Jane, 221 Va. 43, 53, 282 S.E.2d 864,

869 (1980), to determine whether Dr. Sachno is entitled to the

protection of sovereign immunity. The trial court concluded

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that Dr. Sachno is entitled to sovereign immunity and sustained

his plea. By final order entered on February 15, 2000, the

trial court dismissed Atkinson’s claim with prejudice. We

awarded Atkinson this appeal.

DISCUSSION

The doctrine of sovereign immunity is indeed alive and well

in Virginia. City of Virginia Beach v. Carmichael Development

Company, 259 Va. 493, 499, 527 S.E.2d 778, 781 (2000); Messina

v. Burden, 228 Va. 301, 307, 321 S.E.2d 657, 660 (1984).

Furthermore, in order for the purposes of the doctrine to be

fully realized, the immunity afforded by the doctrine cannot be

limited to the sovereign only. The cloak of immunity must be

extended to “some people who help run the government . . . for

the state can only act through individuals.” Messina, 228 Va.

at 308, 321 S.E.2d at 661.

The determination that a particular individual is entitled

to the protection of sovereign immunity frequently involves

unique factual considerations when that individual is a

physician. See, e.g., Benjamin v. University Internal Medicine

Foundation, 254 Va. 400, 403, 492 S.E.2d 651, 652 (1997); Lee v.

Bourgeois, 252 Va. 328, 331, 477 S.E.2d 495, 497 (1996).

Essentially this is so because while the Commonwealth may have

an interest and involvement in the function performed by the

physician to accomplish a governmental objective, the means and

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methods used by the physician to exercise his or her required

professional skill and judgment with regard to patients is not

readily subject to the control and direction of others. That

control, or lack of it, is the most significant factor in such

cases in resolving issues of sovereign immunity and respondeat

superior, which are, however, separate and distinct legal

concepts.

In James, we refused to grant immunity to a physician who

was a full-time member of the faculty of a Commonwealth medical

school. 221 Va. at 55, 282 S.E.2d at 870. In that case, we

established a four-part test to determine whether a physician

who was an employee of the Commonwealth was entitled to the

protection of sovereign immunity. Id. at 53, 282 S.E.2d at 869.

Subsequently, we applied that test in Lohr v. Larsen, 246 Va.

81, 85, 431 S.E.2d 642, 644 (1993). Application of the James

test, however, presupposes that the physician seeking the

protection of sovereign immunity is an employee or agent of the

Commonwealth. In other words, the James test is not applicable

if the individual is an independent contractor and, thus, not an

employee or agent of the Commonwealth. ∗ Contrary to Dr. Sachno’s

∗
In McDonald v. Hampton Training School for Nurses, 254 Va.
79, 486 S.E.2d 299 (1997), we observed that the trial court
incorrectly relied upon the sovereign immunity cases of James
and Messina in concluding that a physician was an independent
contractor. McDonald, 254 Va. at 81 n.1, 486 S.E.2d at 301 n.1.

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assertions in this case, the trial court properly ruled that

independent contractors are not entitled to the protection of

sovereign immunity. So that no doubt will exist on that issue,

we expressly hold that while some employees or agents of the

Commonwealth may be entitled to the protection of sovereign

immunity, all independent contractors are excluded from that

protection.

Accordingly, the dispositive question in this appeal is

whether Dr. Sachno is an employee or agent of the Commonwealth,

or is an independent contractor. We defined an independent

contractor in Epperson v. De Jarnette, 164 Va. 482, 486, 180

S.E. 412, 413 (1935). There we stated that an independent

contractor is

[a] person who is employed to do a piece of work
without restriction as to the means to be employed, and
who employs his own labor and undertakes to do the work
according to his own ideas, or in accordance with plans
furnished by the person for whom the work is done, to
whom the owner looks only for results.

Id.

Whether a person is an independent contractor or an

employee is generally a question of fact for a jury; however,

when “the evidence admits of but one conclusion, the question is

We specifically rejected the applicability of James and Messina
to issues regarding respondeat superior, thus limiting their
application to sovereign immunity issues. Id.

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one of law.” Hadeed, 237 Va. at 288, 377 S.E.2d at 594. This

case presents such a question of law.

We recognize that there are abundant tests and criteria

that can be used to determine whether the relationship between

the individual and the Commonwealth is that of an independent

contractor or an employee. See Ross v. Schneider, 181 Va. 931,

939, 27 S.E.2d 154, 157 (1943)(noting numerous criteria to

determine relationship); The Texas Co. v. Zeigler, 177 Va. 557,

566, 14 S.E.2d 704, 707 (1941)(recognizing that many potential

tests exist for determining whether a person should be

classified as an independent contractor). A survey of the many

tests and cases “makes it clear that the individual

circumstances of each case play an important part in answering

the query.” The Texas Co., 177 Va. at 566, 14 S.E.2d at 707.

In Hadeed, a case involving the issue of a physician’s

status as an employee or independent contractor, we used four

factors to resolve that issue: (1) selection and engagement;

(2) payment of compensation; (3) power of dismissal; and (4)

power to control the work of the individual. It is well

established that the fourth factor, the power of control, is

determinative. 237 Va. at 288, 377 S.E.2d at 594-95. We will

apply the Hadeed analysis here.

The following facts are pertinent to that analysis. Dr.

Sachno conducts his full-time practice of internal medicine in

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his private office, using his own equipment, and employing his

own support staff. The number of examinations he may perform in

a given week for DDS is not substantial when compared to the

volume of his regular patients. Dr. Sachno is not obligated to

accept any referrals from DDS. He is paid a fixed fee for the

examination of each claimant referred to him by DDS. No

withholdings of any form are deducted from his compensation

received from the Commonwealth for conducting these

examinations. Dr. Sachno considers himself to be “an

independent physician that is asked to do certain work for the

State.” These facts weigh heavily in support of the conclusion

that Dr. Sachno is an independent contractor and not an employee

or agent of the Commonwealth. However, consideration of the

fourth factor, the power of control, established in Hadeed

compels that conclusion in this case.

The numerous regulations, protocols, and procedures under

which Dr. Sachno must perform the various examinations and tests

sought by DDS merely ensure that the specific and objective

medical evidence needed by DDS is obtained. Indeed, the

contract between Dr. Sachno and DDS provides that the type of

examination and/or tests “purchased” by DDS depends upon the

specific additional medical evidence needed by DDS to resolve a

particular disability claim. In this context, Dr. Sachno

essentially provides a product to DDS: a report detailing the

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results of the requested examinations and/or tests, and

providing objective medical evidence, if any, of a claimed

impairment. Accordingly, the various regulations, protocols,

and procedures under which Dr. Sachno produces that report, or

product, do not constitute control by DDS of the means and

methods by which he performs the examinations and tests.

Rather, Dr. Sachno exercises his professional judgment in making

the medical assessments of a particular claimant’s condition in

order to accurately produce the report requested by DDS. See

McDonald, 254 Va. at 86, 486 S.E.2d at 303 (exercise of

professional judgment by a physician is a factor in determining

extent of control).

Finally, that Dr. Sachno is required to obtain additional

authorization before performing any diagnostic test not

specifically listed in the authorization letter is the result of

pragmatic and monetary concerns, and is not evidence that DDS

controls, or has the right to control, the means and methods by

which Dr. Sachno performs the examinations and tests that are

authorized. The DDS justifies this requirement on the basis

that frequently the information obtainable from additional tests

is already in a claimant’s file and, thus, additional tests

would cause an unnecessary duplication of expense.

“It is only by consideration of all the facts
pertaining to the relationship in any case, including
the provisions of the contract, the actual conduct of

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 the parties, and the conditions of the business in
which they are engaged, that it can be determined
whether the [individual] is endowed with that control
over his own methods and means of doing the work which
is the test of an independent contractor.”

The Texas Co., 177 Va. at 568, 14 S.E.2d at 708 (quoting Gulf

Refining Co. v. Brown, 93 F.2d 870, 873 (4th Cir. 1938)).

Because the evidence in this case “admits of but one

conclusion” under Hadeed, we hold, as a matter of law, that Dr.

Sachno is an independent contractor, and not an employee or

agent of the Commonwealth. We further hold that because Dr.

Sachno is an independent contractor he is not entitled to the

protection of sovereign immunity with regard to Atkinson’s claim

against him for medical malpractice.

CONCLUSION

For the reasons stated above, the trial court erred in

sustaining Dr. Sachno’s plea of sovereign immunity.

Accordingly, the final order dismissing the case will be

reversed, and the case remanded to the trial court for further

proceedings consistent with the views expressed in this opinion.

Reversed and remanded.

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