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A pro-consumer law had morphed into a shield that protects hospitals from liability Contact Now

The corporate practice of medicine doctrine and Texas medical malpractice cases

A pro-consumer law had morphed into a shield that protects hospitals from liability

Have you ever heard anyone talk about the law of unintended consequences? Basically, it’s when someone tries to do something with good motivations, but it leads to bad outcome.

That’s exactly how I look at the corporate practice of medicine doctrine.

Texas Administrative Code Rule 117.17 generally addresses the corporate practice of medicine doctrine, noting that: “The corporate practice of medicine doctrine is a legal doctrine, which generally prohibits corporations, entities or non-physicians from practicing medicine. The prohibition of the corporate practice of medicine is based on numerous provisions of the Medical Practice Act . . . . [It is] unlawful for any individual, partnership, trust, association or corporation by use of any letters, words, or terms, as an affix on stationery or advertisements or in any other manner, to indicate the individual, partnership, trust, association or corporation is entitled to practice medicine if the individual or entity is not licensed to do so.”

As that lengthy quotation suggests, the purpose of the corporate practice of medicine doctrine is to protect patients (consumers). It was originally developed as a way to combat snake oil salesman and quick-fix gimmicks that were invading the profession of medicine. One court described it colorfully, “public outrage over insipid and often harmful patent medicines and the ministrations of untrained healers became so widespread and the effects of their handiwork so egregious that the Federal and State governments were forced to act.” Garcia v. Tex. St. Board of Med. Exam., 384 F. Supp. 434 (W.D. Tex. 1974).

In other words, non-physicians shouldn’t be able to use physician or medical credentials to induce potential patients and consumers to purchase their services. Yet, fast-forward to 2020, and that’s exactly what’s done every day throughout the Lone Star State.

In metropolitan areas such as Houston, it’s impossible to drive virtually anywhere without seeing a billboard touting one hospital system or another’s excellent, highly qualified physician or surgical team. Yet, under the corporate practice of medicine doctrine, hospitals aren’t allowed to employ physicians and should not be using the images and names of physicians to advertise their services.

So, the consumer-friendly corporate practice of medicine doctrine in Texas has evolved into an anti-consumer measure. Here’s how.

When hospitals are sued for medical malpractice, they ignore their blanket advertising and vigorously argue that the corporate practice of medicine doctrine shields them from any liability for physician negligence. In the courts have largely agreed.

Understandably, this is an issue that Painter Law Firm’s potential and existing clients raise frequently. To their very reasonable thinking, they selected a hospital based on advertising about the quality physicians who work there, so how could it be that the hospital isn’t liable for the mistakes of the same physicians.

At most hospitals in Texas, physicians are not hospital employees. Instead, they are independent contractors. Under our law, the key test for employee versus independent contractors is whether the relationship with the hospital allows the doctor to exercise independent judgment to practice medicine.

Many large hospital systems are moving in a direction of having hospital-controlled physician organizations that employ and manage the doctors on their medical staffs. This is the case in the Houston Methodist system, which has its Houston Methodist Physician Organization, for example. The Ascension system that owns the Waco Providence Hospital (now called Ascension Province) has a similar arrangement.

While it’s our practice to look closely at these relationships, the current trend in Texas trial and appellate courts is been to validate a pro-hospital, anti-patient position that the corporate practice of medicine act prevents hospital liability for physician errors.

This means that hospitals are only legally responsible for their own direct liability as well as vicarious liability for employees such as nurses and techs.

If you’ve been seriously injured because of poor hospital or medical care in Texas, then contact a top-rated Houston, Texas medical malpractice attorney with significant experience in this complex area of the law.

Robert Painter is an award-winning medical malpractice attorney at Painter Law Firm PLLC, in Houston, Texas. He is a former hospital administrator who represents patients and family members in medical negligence and wrongful death lawsuits all over Texas. Contact him by calling 281-580-8800 or emailing him right now.


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