Relationship between Doctor, MCO and Patient:

The relation of appearance and reality is a fundamental question of philosophy.

Medical negligence by Doctor:

Petitioner Wilhelmina Bradford suffered a significant injury to her foot resulting in its partial amputation because of the negligence of Dr. Steven Bennett, a podiatrist whom she had chosen for her treatment. She was able to see Dr. Bennett because he participated as a specialty care provider in the network of Respondent Jai Medical Systems Managed Care Organization, Inc. (“Jai MCO”), an entity that contracts with physicians, hospitals, pharmacies, and other providers to provide health care services to individuals and families enrolled in the State Medicaid program. Dr. Bennett was not an employee or agent of Jai MCO. But Ms. Bradford sought to hold Jai MCO liable for Dr. Bennett’s negligence on a theory of apparent agency – essentially, that Jai MCO created the appearance that Dr. Bennett was its employee and that she reasonably relied on that appearance.

What is Medical Care Orgnisation (MCO)?

Different organizations are designed to provide health care benefits while containing costs. An MCO’s cost containment policies, and the amount of control the MCO exercises over its members’ health care decisions, may vary according to the type and structure of the MCO. There are many different types of MCOs, the most common being health maintenance organizations (“HMOs”) and preferred provider organizations (“PPOs”).
An HMO typically contains costs by paying a provider a fixed prepaid amount for each member – sometimes referred to as a “capitation” payment – regardless of the services rendered by the provider. It may restrict members to a defined list of providers – sometimes called a “network” – from which the members may seek care financed by the HMO. It may require members to select a primary care provider from that network for basic care, and require that members obtain a referral from that physician for other services such as hospitalization and consultation with specialists. The HMO’s relationship with the physicians who serve its members can take a variety of contractual forms, including direct employment.
Jai MCO was an MCO similar in structure and operation to an HMO. ……Jai MCO does not employ its own health care providers; rather, it enters into contracts with physician groups, pharmacies, hospitals, and others to participate in its network and to provide health care services to its members. The health care providers that participate in its network are not precluded from belonging to other networks. Under Jai MCO’s plan, a member selects a primary care provider – a physician who attends to most of the member’s health care needs – from Jai MCO’s network. If the member needs specialty care, the member accesses those services by obtaining a referral from the primary care provider to one of the more than 3,000 specialists.

Doctrine of Apparent Agency :

Apparent agency is an equitable doctrine, whereby a principal is held responsible for the acts of another because the principal, by its words or conduct, has represented that an agency relationship existed between the apparent principal and its apparent agent.

The doctrine of apparent agency has both subjective and objective elements: a plaintiff must show that the plaintiff subjectively believed that an employment or agency relationship existed between the apparent principal and the apparent agent, and that the plaintiff relied on that belief in seeking medical care from the apparent agent. But the plaintiff must also show that the apparent principal created or contributed to the appearance of the agency relationship and that the plaintiff’s subjective belief was “justifiable” or “reasonable” under the circumstances – an objective test.

Apparent agency between Doctor and MCO:

The doctrine of apparent agency can be expressed in three elements:

1. Did the apparent principal create, or acquiesce in, the appearance that an agency relationship existed?

2. Did the plaintiff believe that an agency relationship existed and rely on that belief in seeking the services of the apparent agent?

3. Were the plaintiff’s belief and reliance reasonable?

Decision of US Supreme Court:

Ms. Bradford testified that she believed that Dr. Bennett was an employee of Jai MCO for two reasons – first, she had previously seen him at Eutaw Medical Center, one of the medical centers operated by Seunarine P.A., and second, she believed that Jai MCO employed the physicians, including Dr. Bennett, who accepted her Jai MCO card – i.e., who were in Jai MCO’s network. Although Jai MCO introduced evidence suggesting that her sighting of Dr. Bennett at the Eutaw Medical Center was inaccurate, a jury could accept her version and reasonably conclude that Ms. Bradford believed that Dr. Bennett was an employee of Jai MCO and relied on that belief in seeking treatment. Thus, she presented sufficient evidence to satisfy the subjective element of apparent agency.

The only representations by Jai MCO concerning its relationship with Dr. Bennett that appear in the record are the listing of Dr. Bennett in the provider directory, the referral forms that permitted Ms. Bradford to see Dr. Bennett through Jai MCO under the Medicaid program, and some general passages concerning providers in the member handbook.  It does not identify any of these providers as an agent or employee of Jai MCO.

Finally, the circumstances of Dr. Bennett’s treatment of Ms. Bradford – which did not involve representations by Jai MCO – did not suggest that the MCO had an agency relationship with the podiatrist. The initial examination of Ms. Bradford’s foot and the post-surgery follow-up visits took place at Dr. Bennett’s private office at Penn North Foot Care. The surgery was performed at Bon Secours Hospital, which is not part of Jai MCO’s network. These there was insufficient evidence to create a question for the jury because Ms. Bradford’s reliance was not justifiable given the actual representations made by Jai MCO concerning its relationship with Dr. Bennett and the other circumstances of this case.
When a court makes reference to “common knowledge” in this context, it is essentially taking judicial notice of decisive facts without supporting its conclusion in the evidentiary record or by reference to any authoritative source. Cf. Maryland Rule 5-201(b) (facts subject to judicial notice). We should do so only when the “common knowledge” is so well accepted that there is no possibility that a person of ordinary intelligence and education would come to a different conclusion. In this regard, it is not clear that the details of health care finance are “common knowledge” even to well-educated members of our society.

[Source: Jai Medical v. Bradford (Maryland Supreme Court USA)]

Critical Analysis of the Jai Medical v. Bradford:

This judgement discloses that if right questions are not raised right answers can not be found. Why principle of apparent agency was invoked in this manner, is not clear. If a patient goes to a doctor for treatment, doctor does charge a fee. It is strange that court did not follow the common sense principle of ‘follow the money’ trail. The simple question was:

Weather the Doctor who operated upon the patient was acting in his personal capacity or on behalf of Jai MCO?

This question could only be answered by showing the trail of money which flowed to the Doctor. Who paid the Doctor? If the patient paid then it was personal contract between the Doctor and Patient but if Jai Medical paid the Doctor then obviously the Doctor was acting as an agent of Jai Medical. However the judges did not ask right question and justice was denied to a poor widow who was also saddled with cost.

Needless to add, the evidence of payment between Jai Medial and Dr. Bennett was a fact which was in personal knowledge of these two parties and plaintiff can not be saddled with burden of proving such fact. If these parties did not come clear of this fact, court should have drawn an adverse inference in terms of Morris v. Union Pacific R. R., 373 F.3d 896, 900 (8th Cir.2004).

Further if the right questions were not asked in the trial, the Supreme Court should have remanded the case for rehearing rather than jumping to a conclusion on question which obtruded the real issue.