Hospital Liability for Physician Negligence In Colorado

In Rosane v. Senger and Moon v. Mercy Hospital the supreme court held that hospitals employing physicians to provide medical services cannot be held vicariously liable for the negligence of those physicians because hospitals have no legal right to control the performance of the physicians they employ, and because hospitals cannot engage in the practice of medicine. See also People v. Painless Parker Dentist, 85 Colo. 304, 275 P. 928 (1929). However, both Rosane and Moon were decided before the initial enactment of 12-36-134 in 1969. See Colo. Sess. Laws 1969, ch. 236, 2 at 825 (originally codified at 91-1-37, C.R.S. 1963). As the supreme court noted in Painless Parker, supra, the General Assembly may lawfully designate by statute those who may practice the healing arts. By its enactment of 12-36-134, it may have authorized corporations to "practice medicine," albeit in a limited and circumscribed way. Nor are we persuaded that Austin v. Litvak, 682 P.2d 41 (Colo. 1984), and Rodriquez v. City & County of Denver, 702 P.2d 1349 (Colo. App. 1984), require a different result. Section 12-36-134, C.R.S. 1999, governs the formation and operation of medical professional service corporations. It provides that physicians may form professional service corporations, provided that the articles of incorporation comply with certain requirements. Among those requirements, the corporation "shall be organized solely for the purposes of conducting the practice of medicine only through persons licensed . . . to practice medicine . . . ." Section 12-36-134(1)(b), C.R.S. 1999. Professional corporations may be vicariously liable for the negligence of both their professional and nonprofessional employees. Scholz v. Metropolitan Pathologists, P.C., 851 P.2d 901 (Colo. 1993) (there is nothing in the Health Care Availability Act which suggests the legislature sought to reduce the cost of malpractice insurance only by limiting recoveries for actions brought against licensed professionals or professional corporations and entities whose liability results solely from the conduct of those professionals); see also Continental Casualty Co. v. Empire Casualty Co., 713 P.2d 384 (Colo. App. 1985) rev'd in part on other grounds sub nom. Empire Casualty Co. v. St. Paul Fire & Marine Insurance Co., 764 P.2d 1191 (Colo. 1988) (negligent physician's personal malpractice insurance need not be exhausted before activating his professional corporation's insurance covering the same negligence under theory of respondeat superior).