Because the contract physical therapist does not have the status of an employee, the concept of a contract individual is often looked upon as a means of limiting one’s liability exposure for any alleged negligence of the physical therapist.

But hiring a contract employee to limit liability is not quite as simple as it might seem. Here are three things you should carefully consider:

1. Apparent agent status. While laws vary from state to state, an individual doctor or organization can be liable for the acts or omissions of a contract physical therapist under the legal theory of apparent agency.

Apparent agency is created when:

• A doctor or organization acts in such a manner that would lead a reasonable patient to conclude that the contract physical therapist is an employee or agent of the doctor or organization;

• The doctor or organization is aware of the acts of the agent and acquiesces in them, and

• The patient acts in reliance upon the conduct of the doctor or organization and the alleged agent.

Although the facts in a particular case must be assessed to determine if a contract individual is an apparent agent, certain facts generally support the application of the apparent agency theory. A judge or jury may conclude that a contract individual is an apparent agent and you will be liable even though that individual is not technically an employee, if:

• You hold out a physical therapist as an employee by having the physical therapist perform services in your office;

2. Stark laws. You may also incur a liability for issues relating to the Stark self-referral laws for hiring an independent contractor. This can happen if you receive fees from referrals to the physical therapist.

Physical therapy services are “designated health services” that are subject to the Stark self-referral laws when a doctor has a financial relationship with a physical therapy provider.

3. Scope-of-practice limitations. In a contract physical therapist arrangement, you must also abide by your state’s scope-of-practice laws.

HOW TO LIMIT YOUR LIABILITY

To avoid the pitfalls and gain the benefits of having a contract PT:

• Consult with a practice-management consultant and have an attorney licensed in your state review the arrangement;

• Require the PT to have insurance. This insurance can reduce your liability exposure;

• Make sure your policy covers liability claims arising out of acts of an independent contractor. This will not prevent claims from being brought against a doctor or organization, but will avoid the situation in which you are the only defendant with insurance;

• Consult with your insurance broker. Make certain that you have proper coverage.

John J. Lynch, a partner in the law firm Figliulo & Silverman, PC, provides legal counsel to the OUM Chiropractor Program, www.oumchiropractor.com. He can be reached at jlynch@fslegal.com.

DISCLAIMER: This column is provided for educational purposes only. The accuracy or timeliness of the information presented is not warranted. The information presented is not presented as legal advice with respect to any matter and no attorney-client relationship is established.