The Tshela Health Care Case: Challenging the Notion of Immunity for Principals in Medical Malpractice Cases

Published Date: June 12, 2023

It is trite law that a principal cannot be held civilly liable for the wrongs committed by an independent contractor unless the principal is personally at fault.

The legal position is less clear when the independence of an alleged independent contractor is called into question, as is often the case with medical malpractice cases involving locums. Are the ostensible principals of locums – be it medical practices or hospitals – vicariously liable for the negligent actions of their locums?

The answer to the question hinges on the facts of each case. Put differently, it all depends on how the locum concerned is perceived in the eyes of the law – either as a truly independent contractor, in which case the principal is not liable or as an employee, in which case the principal may be vicariously liable.

CASE STUDY

The CCMA award in Dr Miller v Tshela Health Care (2022 NC51/22) serves as a stark reminder that locums may be regarded as employees notwithstanding the contract they have entered into.

Background to dispute

Tshela Health Care (“Respondent”) is a healthcare company, rendering health services to the mining industry. The Respondent entered into a Service Agreement with Dr Miller (“Applicant”), requiring him to perform occupational surveillance on the employees employed by the mines. The Applicant referred an unfair dismissal dispute to the CCMA. The Respondent, in turn, raised a jurisdictional point, denying that any employment relationship existed between the Respondent and the Applicant.

Issue to be decided

The CCMA Commissioner was required to decide whether an employment relationship existed between the Applicant and the Respondent in order to determine if the CCMA had jurisdiction to arbitrate the dispute.

Legal position

Section 213 of the Labour Relations Act 66 of 1985, as amended, defines an employee as:

  1. Any person, excluding an independent contractor, who works for another person or for the State and who received, or is entitled to receive, any remuneration; and
  2. Any other person who, in any manner, assists in carrying on or conducting the business of an employer and “employed” and “employment” have similar meanings.

Over the years, several tests have been developed by our courts to determine the existence or not of an employment relationship. These include the control test, organizational test, economic dependence test, etc. No single test is favored by our courts, although the control or supervision tests do seem to be the most utilized. The Code of Good Practice, issued by NEDLAC in terms of the Labour Relations Act, introduces – while not expressly stated – a new comprehensive test, considering the “real relationship” between parties notwithstanding the contract they have entered into.

Commissioner’s finding

The Commissioner found that the Applicant rendered personal services to the Respondent, who, in turn, controlled the manner in which the Applicant worked, setting clear standards and performance requirements. The Applicant testified under oath that he was economically dependent on the Respondent as his only source of income, which was not contested by the Respondent. The Applicant further testified that the Respondent provided him with the necessary tools to perform his job according to the standards set by the Respondent. The Commissioner found that these factors were indicative that the Applicant was not truly independent or able to run his own practice. The Commissioner also noted that upon the death of the Applicant his contract with the Respondent would immediately terminate. Contrastingly, this would not necessarily be the case with a truly independent contractor. Resultantly, the Commissioner ruled that, in applying the Code of Good Practice, there was sufficient reasons for finding that the Applicant was an employee of the Respondent.

CONCLUSION

In conclusion, principals, particularly those in the medical industry, often hold onto a mistaken belief that they are immune to vicarious liability for the actions of their locums. This false sense of security leads them to insist that their locums have professional indemnity insurance, assuming that it is solely the locums who would face legal action in the event of medical malpractice. However, the Tshela Health Care case has unequivocally revealed the fallacy in this line of thinking. Therefore, it is crucial for principals to carefully examine the true nature of the relationship between themselves and their locums. By doing so, they can better protect themselves and make informed decisions regarding their liability and the necessary measures to mitigate potential risks.

Jean-Paul Rudd
Partner | Attorney

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