Vicarious liability: Another helpful decision for Defendants using independent contractors

Hughes v Rattan – Another Court of Appeal decision on vicarious liability in favour of Defendants using independent contractors – but a non-delegable duty of care still means the Claimant succeeds

The Court of Appeal’s judgment in February 2022 affirmed that a dental practice owner was not vicariously liable for the actions of associate dentists operating as independent contractors. However he did owe his patients a non-delegable duty of care. The implications of this judgment extend beyond dentistry and will be of interest to many practice owners, clinics and healthcare providers, regardless of the type of healthcare services being provided. 

Background

The Defendant was the owner of a dental practice (the “Practice”). The Claimant was a patient of the Practice and she received NHS care from four different dentists, 3 of whom were self-employed associates. The Claimant alleged that the care provided by all four dentists was negligent.

At first instance the High Court found that the Defendant owed a non-delegable duty of care to the Claimant and also that he was vicariously liable for the actions of his associate dentists.

The Defendant appealed on both grounds.

Court of Appeal’s decision

Vicarious liability

The Court of Appeal disagreed with the High Court on this issue; after considering the key authorities in this area, namely Cox [2016] and Barclays [2020], the Court found that the Defendant was not vicariously liable for the actions of its associates.

Considering Cox, the Court of Appeal did agree that the associates had conducted activities (the provision of dental treatment) that were an integral and beneficial part of the Practice’s business. The concept of business integration was therefore satisfied but this is not the conclusive test in determining vicarious liability. The ‘critical question’ was set down by the Supreme Court in Barclays: i.e. whether the relationship between the Defendant and the associates was ‘sufficiently akin to employment’. In Hughes the Court found that the Practice/associate relationship was not akin to employment because the associates were free to work as much as they liked, they were responsible for their own tax, NI, professional clothing and development, and they had to indemnify the Practice against claims. For this reason the Court found that the Defendant was not vicariously liable for the associates of the Practice.

Non-delegable duty

The Court of Appeal did however uphold the High Court’s finding that the Defendant had a non-delegable duty of care to the Claimant. In doing so the Court considered three of the five factors set out in Woodland [2014], the leading case on non-delegable duties of care (it was accepted that if these three factors were satisfied, the fourth (that the Defendant had delegated to a third part an integral part of its function) and fifth (that the associates had been negligent in their performance of that duty) factors did not have to be considered).

In respect of the first factor, the Court found that the Claimant, as a patient of the Practice, was vulnerable and dependant on the Practice for protection against the risk of injury. She did not need to be an especially vulnerable patient in order to satisfy this factor.

In respect of the second factor, which was the focus of the Defendant’s appeal to the Court, the Court rejected the Defendant’s argument that for a pre-existing relationship to exist between the Claimant and the Defendant, it “must be one which places the Claimant in the actual custody, charge, or care of the Defendant”. The Court was not persuaded by the fact that each Associate had complete clinical control when treating the Claimant or that the Claimant’s interactions with the Practice were “entirely administrative”. Instead the Court found that there was a pre-existing relationship between the Claimant and the Practice; she had signed a treatment plan directly with the Practice which gave it an element of control over the patient. The Defendant therefore had a positive duty owed to protect his patients from injury, not simply to avoid acting in a way that foreseeably causes injury. Also relevant was the fact that the associates had signed an agreement with the Practice not to solicit its patients.

Finally in respect of the third factor, the Court found that the Claimant did not have control over how the Practice exercised its duty to provide dental services to her. While the Claimant could express a preference as to which dentist she saw, her right to choose went no further than this. The Court did not accept the Defendant’s argument that the Claimant did have control over her treatment because she could have refused to be treated at all at the Practice. This was on the basis that the right to refuse treatment applies to all sentient adult patients in any setting, and therefore did not seem to have anything to do with the third factor described in Woodland.

The Defendant’s appeal was dismissed.

Implications

While the development of the law on vicarious liability is a positive one for Defendants using independent contractors, the circumstances in which a non-delegable duty of care may arise are more complex: Hughes demonstrates how a non-delegable duty might be found in other healthcare settings.  

Those responsible for entities that offer healthcare services, be it a practice, clinic, company or other business should be aware that they may well remain responsible for the provision of those services, even if they have been delegated to and provided by independent contractors. It is however potentially relevant that Hughes involved NHS care; it remains to be seen if the same decision would be made for medical treatment provided in a private setting or on an elective basis. It will also be interesting to see if the Defendant seeks to appeal to the Supreme Court.

What Hughes does again highlight is the need for entities to reflect on the factors laid down in Woodland and what steps it might be possible for them to take to reduce the risk of a non-delegable duty of care arising. Organisations should also ensure that they are properly protected against the risk that a non-delegable duty of care is found. Firstly, where organisations would seek to transfer their liabilities to their independent contractors, they should ensure that they have appropriate indemnity provisions in their associate agreements to allow them to easily do so. This should be both in respect of the provisions relating to liability for the contractor’s own actions, but also a requirement that the contractors hold appropriate indemnity insurance. They should also ensure that suitable provisions for regular due diligence are in place to ensure their contractors have sufficient insurance cover in place.  Finally, organisations should also ensure that they also have suitable indemnity cover for themselves for when Claimants chose to sue them instead of or as well as those who treated them.

If you would like to discuss this topic in more detail, please contact Elena Goodfellow, Associate, or Tim Hodgetts, Partner.