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In this case, the Florida Supreme Court ruled, for the first time, that the doctrine of corporate negligence was applicable to a hospital for failure to properly credential a physician on its staff. Since this case arose prior to the existence of the current statutory imposition of liability on hospitals for negligent credentialing, the question posed to the Court was whether hospitals have a common law duty to their patients to select and retain competent physicians who, although they are independent practitioners, provide in-house patient care through their hospital staff privileges.
Case Summary: On January 19, 1981, “Dr. Michelle LaBella” admitted 68-year-old Mildred Insinga to Biscayne, a hospital in North Miami. Mrs. Insinga died in the hospital on February 6. Subsequently, it was discovered that Dr. LaBella was really Morton Canton – who was not a doctor, but rather a fugitive who had been indicted in Canada for the manufacture and sale of illegal drugs. Canton had fraudulently obtained a medical license from the state and staff privileges at the hospital using the name of a deceased physician. Mr. Insinga sued Canton, the state, and Humana, the corporation that owned the hospital. He alleged that the hospital was negligent in failing to follow its own procedures to verify “LaBella’s” application and in granting Canton privileges and that negligence had caused his wife’s death. It was noted that
Mrs. Insinga had sought treatment from “Dr. LaBella” for her illness several months before she was ever admitted to the hospital. Her husband claimed, however, that he and Mrs. Insinga relied on LaBella’s representations that he had staff privileges at Biscayne in selecting him as her physician.
Insinga argued that had the hospital properly verified “LaBella’s” credentials, in keeping with prevailing national and state standards, as well as the hospital’s own bylaws, it would have discovered or should have discovered that LaBella was an imposter and not competent to provide medical services in its facility. The hospital countered that because Mildred Insinga retained the services of LaBella before she was admitted to the hospital, creating a doctor-patient relationship outside the hospital, there was no duty of care on its part regarding LaBella’s credentials.
The Court first reviewed the copious case law supporting the view that a hospital is not liable for the negligent actions of private physicians whom it privileges, because it lacks the requisite control of the physicians’ actions to be held vicariously liable.
However, the Court distinguished those cases from the present case, finding that in this scenario the theory is that the hospital’s liability is based not in vicarious liability, but in a duty of care it owes directly to patients to assure the competence of its medical staff through the credentialing process.
Thus, the Court held, a hospital can be held responsible for negligence of an independent physician if it has failed to exercise due care in the selection and retention of the physician on its staff. This concept has been recognized in subsequent Florida cases, see, e.g., Cedars Medical Center v. Ravelo (3rd Cir. 1999) and Maksad v. Kaskel et al. (4th Cir. 2002).
Case Analysis: While it may often appear burdensome to the practitioner applying for privileges, this case underscores the importance of having a vigorous credentialing process that ensures primary verification of every significant detail regarding the practitioner’s education, training, and experience (not to mention current existence!). It is unclear from the facts set forth by the Court what particular part of its process the hospital failed to follow. But, it is significant that the fact that the state had issued a license to Canton, as LaBella, was not sufficient to shield the hospital from its own failure in assuring that Canton was fully qualified. It is also noteworthy that the Court states that “a hospital can be held responsible for negligence of an independent physician if it has failed to exercise due care in the selection and retention” of a physician on its staff. This indicates that reasonable scrutiny is important not only at initial appointment, but at reappointment and in-between appointment through an ongoing peer review process to avoid hospital liability for negligent credentialing.
Florida statute now expressly codifies the “common-law” doctrine found by the Court in Insinga. F.S. §766.110 provides that”
(1) All health care facilities, including hospitals and ambulatory surgical centers…have a duty to assure…the competence of their medical staff…through careful selection and review, and are liable for a failure to exercise due care in fulfilling these duties. These duties shall include, but not be limited to:
(a) The adoption of written procedures for the selection of staff members and a periodic review of the medical care and treatment rendered to patients by each member of the medical staff….
Each such facility shall be liable for a failure to exercise due care in fulfilling one or more of these duties when such failure is a proximate cause of injury to a patient.
Risk Reduction Strategies: While we all have our concerns as to what impact Amendment 7 may or may not have on the continuing privilege granted by Florida statute to peer review activities, this case is extremely important to remind us that failure to properly carry out common-law and statutory obligations to assure that our patients receive care from competent physicians has real liability risks.
Physicians involved in credentialing should ensure that all the information required to be verified by JCAHO standards, which arguably establish the “standard of care,” have been so verified before making a recommendation to the board. In addition, it is important to scrutinize education, training, and experience to assure that the practitioner has adequately demonstrated the competence to exercise each and every specific privilege being requested.
Remember, the burden is on the applicant to provide adequate documentation to prove competency; the credentialing committee should not feel compelled to grant privileges unless the applicant has met the burden to its satisfaction.
Assuring continued competency is equally important. Physicians involved in peer review have a duty to assure that physicians on staff maintain competency. The purpose of peer review is to identify deficiencies in competency so that they can be quickly addressed – most likely by recommending education or training to bring a physician under review “back up to snuff” so that patients receive care that is at standard or above. Sometimes, though rarely, it can only be addressed by removing the physician from the staff.
Failure to do “due diligence” to ensure a practitioner’s competency at all times while on staff can lead to a finding of liability on the part of the corporation owning the hospital. While this does not have a direct financial impact on the medical staff members of the committees charged with making credentialing recommendations to the hospital board (as they are, in that capacity, acting essentially as “agents” of the hospital), it does have a practical and emotional impact, as the lawsuit is unpleasant for all involved, regardless of the ultimate financial responsibility for the liability. 
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