Are you liable for the actions of other chiropractors?

As most chiropractors who own a practice know, if one of your employees negligently causes injury while performing a manipulation, you will be legally responsible pursuant to the legal doctrine of vicarious liability.  However, what if the chiropractor in question was not one of your employees but an independent contractor operating his or her own business from your premises? Who would then bear the liability – you or the contractor?

Vicarious Liability:  a brief history

Traditionally, vicarious liability was couched in terms of the Roman law concept of master and servant and the medieval notion of headship of a household.

At its heart, the concept of vicarious liability is concerned with the control of the “servant” by the “master” giving rise to a responsibility for the conduct of the “servant”. If services performed will benefit the master’s interests and the master is in a position to control the services performed by the servant (including the manner in which they are performed) then vicarious liability can be attributed the master. Independence, or non independence, is a determining factor. Whether or not payment is made for the services may be relevant but is not critical.

Distinction between employees and contractors

The issue of vicarious liability arises where one person has engaged another (for whose conduct the first is said to be vicariously liable) to do something that is of advantage to, and for the purpose of, that first person – such as an employer. However, the mere fact that the second person’s actions were to the benefit of the first, does not of itself establish that the first is vicariously liable for the conduct of the second. It is for this reason that the Courts often draw a distinction between employees (for whom an employer may be vicariously liable) and independent contractors (for whom a principal will generally not be vicariously liable).

Who is liable?

What follows is a non-exhaustive list of factors that will be relevant in determining whether an individual chiropractor is an employee or an independent contractor and, accordingly, whether the principal of the business will be vicariously liable for that individual’s conduct.  These factors are likely to have a cumulative effect rather than any one of them being determinative:

1. Has the individual entered into a contract of employment or been appointed a director or officer of your business or corporate vehicle?
2. Does the individual pay you a fee, such as rent, to cover the use of a treatment room, equipment and administrative staff?
3. Do patients pay consultation fees directly into the bank account of the individual or to a joint account operated on behalf of the practice?
4. Does the individual have his or her own Medicare Provider Number separate to that of the practice?
5. Is the individual obliged to conduct his own tax affairs, including GST?
6. Is the individual obliged to make his or her own professional indemnity insurance arrangements?
7. Is the individual obliged to work specific hours or comply with any practice guidelines or protocols?
8. Is the individual obliged to wear any uniform item or clothing bearing the name of the practice?
9. Does the individual maintain his or her own separate patient treatment records or are treatment records shared amongst those operating at the practice?
10. Is the individual solely responsible for his or her own professional development and continuing education?

High Court rulings

In the case of Hollis v Vabu Pty Limited [2001] HCA 44 (9 August 2001), the High Court of Australia considered whether a courier company was vicariously liable for the conduct of an unidentified bicycle courier who had collided with an individual causing significant injury.  Despite the fact that the bicycle courier had not entered into a formal contract of employment with the courier company, the Court found that the courier company was vicariously liable.  In doing so, the Court identified seven important considerations:

1. The couriers retained by the courier company were not providing skilled labour or labour which required special qualifications and could not be said to be running their own enterprises;
2. The couriers had little control over the manner of performing their work, which was dictated to them by the courier company;
3. The couriers were seen as representing the courier company because they wore the courier company’s logo and uniform.  Furthermore, their clothing and appearance requirements were specified by the courier company;
4. Given that the courier company knew of the dangers to pedestrians presented by the couriers and its failure to adopt effective means for personal identification of those couriers by the public, the Court considered that there was a public policy justification for deterrence (that is by sheeting home liability to the company);
5. The courier company superintended the couriers’ finances;
6. Apart from providing bicycles and being responsible for the cost of repairs, the couriers were required to bear the cost of replacing or repairing any equipment of the courier company that was lost or damaged, including radios and uniforms;
7. The courier company exercised true control of the activities of the couriers.

In contrast, in Sweeney v Boylan Nominees Pty Limited [2006] HCA 19 (16 May 2006), the High Court determined that the owner/operator of a service station and convenience store was not vicariously liable for the conduct of a mechanic who negligently repaired a refrigerator door which subsequently came off and struck a lady on the head.  In determining whether or not the mechanic in question was an employee or an independent contractor, the Court considered a number of issues, including that the mechanic conducted his own business; supplied his own tools and equipment; and was not presented to the public as a representative of the service station. It was found that the mechanic was an independent contractor in the true sense of the phrase.

Conclusion

Depending on the responses to the list of ten questions above, as the owner or principal of a chiropractic practice you may find yourself liable for more than what was expected when you set up the practice. In any event, a careful review of practice arrangements from time to time should have significant risk management benefits.

This article was written by David Short Solicitor Director of Guild Legal on behalf of Guild Insurance Limited. AFSL No. 233791. This article contains information of a general nature only and is not intended to constitute the provision of advice.