                      IN THE COURT OF APPEALS OF TENNESSEE
                                   AT JACKSON



TONYA DAVIS,                          )
                                      )
       Plaintiff/Appellant,           )      Shelby Circuit No. 90481-7 T.D.
                                      )
v.                                    )
                                      )      Appeal No. 02A01-9812-CV-00346
UNIVERSITY PHYSICIANS
FOUNDATION, INC., d/b/a
UNIVERSITY OF TENNESSEE
                                      )
                                      )
                                      )
                                                                        FILED
MEDICAL GROUP, INC.,                  )                                  August 24, 1999
                                      )
       Defendants/Appellees.          )                                Cecil Crowson, Jr.
                                                                      Appellate Court Clerk
              APPEAL FROM THE CIRCUIT COURT OF SHELBY COUNTY
                           AT MEMPHIS, TENNESSEE


                      THE HONORABLE ROBERT A. LANIER, JUDGE



For the Plaintiff/Appellant:          For the Defendants/Appellees:

Walter Buford                         Michael G. McLaren
Memphis, Tennessee                    Andrea N. Malkin
                                      Memphis, Tennessee


                                      AFFIRMED IN PART, REVERSED IN
                                      PART AND REMANDED



                                      HOLLY KIRBY LILLARD, J.


CONCUR:

ALAN E. HIGHERS, J.

DAVID R. FARMER, J.
                                             OPINION

       This is a medical malpractice case. The plaintiff filed this lawsuit against two resident

physicians and a non-profit physicians’ group for negligence in performing a tubal ligation. The trial

court granted the physicians’ group partial summary judgment, holding that the individual

physicians were not apparent agents of the physicians’ group. We affirm in part, reverse in part, and

remand.

       On October 2, 1997, Plaintiff/Appellant Tonya Davis (“Davis”) filed a complaint against

Defendants/Appellees Elizabeth McKinney, M.D. (“Dr. McKinney”), Sandra Elfering, M.D. (“Dr.

Elfering”) and the University Physicians Foundation, Inc., d/b/a University of Tennessee Medical

Group, Inc. (“UT Medical Group”), alleging medical malpractice in the performance of tubal ligation

surgery. The complaint asserted that Drs. McKinney and Elfering were employees or agents of UT

Medical Group, and were acting within the scope of their employment at the time of the alleged

negligence.

       Dr. Elfering was employed as a resident physician by the department of obstetrics and

gynecology (“the Department”) at the University of Tennessee College of Medicine.                 The

Department assigned her to work at the Regional Medical Center. Dr. McKinney was a physician

on active duty with the United States Navy and an employee of the United States government.

Under an agreement among the University of Tennessee, UT Medical Group, and the United States

Navy, Dr. McKinney was to receive training in obstetrics and gynecology maternal-fetal medicine

at the University of Tennessee. The agreement provided that Dr. McKinney “remains an employee

of the United States and perform[s] duties within the course and scope of [her] federal employment

. . . .” The agreement described UT Medical Group as “an affiliated organization through which the

training institution faculty conducts clinical practice . . . .” The agreement provided that UT Medical

Group would bill patients for services rendered by Dr. McKinney.

       On January 2, 1998, Dr. Elfering filed a motion to dismiss for lack of subject matter

jurisdiction and failure to state a claim upon which relief can be granted. Affidavits in support of

the motion were submitted by Dr. Elfering and Dr. James Gibb Johnson, associate dean of the

University of Tennessee College of Medicine. Both affidavits stated that Dr. Elfering was employed

by the University of Tennessee as a resident physician. Dr. Elfering’s motion to dismiss asserted

that Dr. Elfering was entitled to absolute immunity pursuant to Tennessee Code Annotated § 9-8-

307(h) because she was a state employee. Dr. Elfering’s motion also contended that the trial court
lacked subject matter jurisdiction under Tennessee Code Annotated § 9-8-307(a)(1)(D), which states

that the Claims Commission has exclusive jurisdiction to determine montary claims against state

employees for medical malpractice. Tenn. Code Ann. § 9-8-307(a)(1)(D) (Supp. 1998). On March

5, 1998, the trial court entered a consent order dismissing Dr. Elfering for the reasons set forth in her

motion to dismiss. On May 1, 1998, the trial court also entered a consent order dismissing Dr.

McKinney, finding that the court lacked subject matter jurisdiction under the Federal Torts Claims

Act1 because, at the time of the incident, Dr. McKinney was a United States naval officer and was

employed by the United States Navy.

        On January 20, 1998, UT Medical Group filed a motion to dismiss, or in the alternative, a

motion for summary judgment. In support of the motion, UT Medical Group filed a statement of

undisputed facts, alleging that no genuine issue of material fact exists as to UT Medical Group’s

vicarious liability. On July 24, 1998, Davis filed an amendment to the original complaint alleging

that “[t]he University of Tennessee Medical Group, INC. [sic] was negligent in assigning two (2)

trainee surgeons to operate on Complainant without supervision from a staff surgeon of said Medical

Group.” Davis also filed a response to UT Medical Group’s motion, asserting that UT Medical

Group was vicariously liable for the actions of Dr. Elfering and Dr. McKinney because UT Medical

Group billed for Dr. McKinney’s services.

        On October 8, 1998, the trial court granted partial summary judgment in favor of UT Medical

Group as to all of the allegations in original complaint. UT Medical Group’s motion was denied as

to the allegations in the amended complaint. Thus, the trial court implicitly found a factual issue as

to the allegations of negligent supervision against UT Medical Group.

        On October 22, 1998, Davis filed a motion to reconsider the grant of partial summary

judgment citing White v. Methodist Hospital South, 844 S.W.2d 642 (Tenn. App. 1992). Based on

White, Davis renewed her argument that an agency relationship existed between the physicians and

UT Medical Group because UT Medical Group “billed” for Dr. McKinney’s services. In the

alternative, Davis sought an interlocutory appeal pursuant to Rule 9 of the Rules of Appellate

Procedure. The trial court denied Davis’ motion to reconsider:




        1
       The Federal Tort Claims Act provides that the federal courts have exclusive jurisdiction
over monetary claims involving federal employees acting within the scope of their employment.
28 U.S.C. § 1346(b) (1988).

                                                   2
        The surgery in question was performed by Drs. Elfering and McKinney. Dr.
Elfering was employed by the University of Tennessee and Dr. McKinney was on
active duty with the United States Navy and an employee of the United States
Government. Pursuant to orders of the U.S. Navy, Dr. McKinney was assigned to
the University of Tennessee for the purpose of receiving medical training in
obstetrics and gynecology maternal-fetal medicine. She continued to receive
compensation from the U.S[.] Navy and was prohibited from receiving
compensation, in any form, from any other source. Following the surgery, UTMG
forwarded a bill for services to the plaintiff, as Dr. McKinney was forbidden to do
so by her employment by the government.
        It is the plaintiff’s position that Dr. McKinney was either an actual or
ostensible servant of UTMG at the time of the surgery by virtue of the fact that
UTMG sent a bill for her services. Plaintiff now cites and relies upon the case of
White v. Methodist Hospital 844 SW2d 642 [sic] (Tenn. App. 1992), in which the
court found all of the elements necessary to estop the hospital where the surgery in
question occurred from denying that the anesthesiologist was its “agent” (apparently
meaning “servant”). [Footnote omitted] After discussing the fact that an estoppel
requires actions by the principal creating the appearance of a master-servant
relationship, and reasonable reliance thereupon by the plaintiff to his detriment, the
court of appeals adopted a new rule in which evidence of reliance by the plaintiff
may be inferred “in the hospital setting.” The court made the following statements:

               An increasing number of jurisdictions have held that in
       situations where a hospital offers a service, such as the care of an
       anesthesiologist, and the patient has no part in choosing the
       individual who will perform the service, a court may infer that the
       patient reasonably relied upon the health care provider's apparent
       authority to act for the hospital. . . .
               [U]nless there is some reason for a patient to believe that the
       treating physician in a hospital is an independent contractor, it is
       natural for the patient to assume reliance on the reputation of the
       hospital as opposed to any specific doctor. . . . A hospital should be
       vicariously liable for doctors in emergency or operating room settings
       not withstanding [sic] the existence of a private contract with secret
       limitations between hospital and doctor. . . contrary to the hospital's
       apparent representation. Patients often seek care and treatment from
       hospitals rather than from particular physicians. . . . It seems only
       reasonable that the hospital should be vicariously responsible for the
       neglect of its staff members. . . .
               . . . in light of the increasing tendency of courts in other
       jurisdictions to infer reliance in the hospital setting, we believe that
       under the proof [that an anesthesiologist had a permanent office in the
       hospital for which he paid no rent and which gave no notice that he
       was anything other than part of the hospital] that plaintiff has
       presented enough evidence to create a genuine issue of material fact
       as to whether [the anesthesiologist and the nurse] were the apparent
       agents of [the hospital]. [italics supplied]

        The court of appeals quoted with approval the decision of a Georgia court
which refused to restrict application of this theory to emergency rooms.
        From the foregoing, it will be seen that the doctrine invented by the court of
appeals is restricted to hospitals and would not logically apply to a group of
physicians. This is especially true as there is apparently no reason to think that
Plaintiff was aware of their identities or relationship to the operating physician.
        The result is that the plaintiff’s action against Dr. McKinney remains based
entirely upon the fact that UTMG sent a bill for her services. Whether that was
proper or not, the court has not been cited any authority by which that would make
Dr. McKinney UTMG’s servant. For that reason, the court respectfully denies
Plaintiff[’]s motion to set aside the summary judgment heretofore granted to UTMG.


                                          3
The trial court granted Davis’ motion for interlocutory appeal pursuant to Rule 9 of the Tennessee

Rules of Appellate Procedure.

       On appeal, Davis argues that UT Medical Group is vicariously liable for the actions of the

resident physicians, maintaining that they were agents or apparent agents of UT Medical Group

because UT Medical Group billed for Dr. McKinney’s services.

       In the trial court below, Davis argued inter alia that the physicians were the apparent agents

of UT Medical Group, citing White v. Methodist Hospital South, 844 S.W.2d 642 (Tenn. App.

1992). In White, this Court held that there was a genuine issue of material fact as to whether an

anesthesiologist and an operating room nurse were the apparent agents of the hospital. White, 844

S.W.2d at 646. The Court noted that where a hospital offers a service, such as the services of an

anesthesiologist, and the patient does not choose the person who will perform the service, the court

may infer that the patient relied on the reputation of the hospital. Id. at 647. The White Court found

that even in the absence of proof of actual reliance, the court could find that “the patient reasonably

relied on the health care provider’s apparent authority to act for the hospital.” Id. Thus, the Court

found a factual issue as to vicarious liability based on the doctrine of apparent authority.

       The trial court found that the reasoning used in White, while applicable in a hospital setting,

“would not logically apply to a group of physicians.” The trial court noted that there was no reason

to think that Davis was aware of the identity of UT Medical Group or its “relationship to the

operating physician.” We agree with the trial court’s analysis of White, and affirm the grant of

partial summary judgment insofar as Davis’ claim relies on the doctrine of apparent authority.

       The trial court denied the motion of UT Medical Group as to the allegations of negligent

supervision, implicitly finding that the evidence presented created a genuine issue of fact on this

question. This issue is not raised on appeal, and the trial court’s ruling on this issue appears correct

as well.

       However, the issue of UT Medical Group’s responsibility for supervision of the operating

physicians may create a factual issue as to whether Dr. McKinney was an actual agent of UT

Medical Group, particularly when coupled with the fact that UT Medical Group billed patients for

Dr. McKinney’s services. The issue of UT Medical Group’s control and supervision of Dr.




                                                   4
McKinney is pertinent to more than one theory under Tennessee law under which UT Medical Group

could be held vicariously liable.

       An agency relationship is created by the acts of the principal rather than the acts of the agent.

See Harben v. Hutton, 739 S.W.2d 602, 606 (Tenn. App. 1987). In establishing whether an agency

relationship exists, the conduct and relationship of the parties is examined. V.L. Nicholson Co. v.

Transcon Inv. and Fin., Inc., 595 S.W.2d 474, 483 (Tenn. 1980). See also Harben, 739 S.W.2d

at 606. The “right to control” the agent is the essential factor in determining whether an agency

relationship exists. Jack Daniel Distillery, Lem Motlow, Prop. v. Jackson, 740 S.W.2d 413, 416

(Tenn. 1987) (citing John J. Heirigs Const. Co., Inc. v. Exide, 709 S.W.2d 604, 608 (Tenn. App.

1986); Sloan v. Hall, 673 S.W.2d 548 (Tenn. App. 1984)).

       Likewise, whether a master/servant relationship exists depends upon the amount of control

by the principal over the “means and method” of the work of the servant. McDonald v. Dunn

Constr. Co., 185 S.W.2d 517, 520 (Tenn. 1945). See also Youngblood v. Wall, 815 S.W.2d 512,

517 (Tenn. App. 1991).

       In addition, Tennessee recognizes the “loaned servant” doctrine, under which “[a]n employee

of one employer may become the servant of another and shift the liability for his negligent acts to

the second employer.” Parker v. Vanderbilt Univ., 767 S.W.2d 412, 416 (Tenn. App. 1988) (citing

Richardson v. Russom Crane Rental Co., 543 S.W.2d 590 (Tenn. App. 1975)).

               Since the question of liability is always raised because of some specific act
       done, the important question is not whether or not he remains the servant of the
       general employer as to matters generally, but whether or not, as to the act in question,
       he is acting in the business of and under the direction of one or the other. It is not
       conclusive that in practice he would be likely to obey the directions of the general
       employer in case of conflict of orders. The question is as to whether it is understood
       between him and his employers that he is to remain in the allegiance of the first as
       to a specific act, or is to be employed in the business of and subject to the direction
       of the temporary employer as to the details of such act. This is a question of fact in
       each case.

Parker, 767 S.W.2d at 412 (citing Gaston v. Sharpe, 168 S.W.2d 784 (Tenn. 1943)). Thus, the issue

of UT Medical Group’s responsibility for directing and supervising Dr. McKinney’s work is

pertinent to UT Medical Group’s vicarious liability for her acts.




                                                  5
       In this case, Dr. McKinney was a physician employed by the United States government.

There was an agreement executed among the University of Tennessee, UT Medical Group, and the

United States Navy whereby Dr. McKinney would receive training in obstetrics and gynecology

maternal-fetal medicine and “clinical experience . . . necessary to complete the training program”

from the University of Tennessee. The agreement further provided:

       The parties acknowledge and agree to the following: . . .

       11. The trainee affected by this agreement, assigned to the Training Institution
       [University of Tennessee], under orders issued by the U.S. Navy, remains an
       employee of the United States and perform[s] duties within the course and scope of
       [her] federal employment. Consequently, the provisions of the Federal Tort Claims
       Act . . . including its defenses and immunities, will apply to allegations of negligence
       or wrongful acts or omissions of the trainee while acting within the scope of [her]
       duties pursuant to this agreement.

                                                  ***

       While training at the [University of Tennessee], the trainee will be under the
       supervision of facility officials for training purposes and will be subject to and be
       required to abide by, all facility rules and applicable regulations, except where
       compliance would be inconsistent with Federal statute, regulation or any other law
       binding members of the U.S. Navy.

Dr. McKinney received compensation from the United States Navy. Under the agreement, UT

Medical Group billed for the services of Dr. McKinney. The record includes the deposition of

Steven Burkett (“Burkett”), the president and chief executive officer of UT Medical Group. Burkett

testified that, under, the agreement, the University of Tennessee was responsible for training Dr.

McKinney. Burkett also testified generally that UT Medical Group functioned as “the clinical arm

that carries out the delivery of patient care.”

        Based on the trial court’s implicit finding that a factual issue exists on the issue of negligent

supervision, as well as the record discussed above, we must conclude that a factual issue exists as

to whether Dr. McKinney would be deemed an actual agent or loaned servant of UT Medical Group.

Therefore, the trial court’s grant of summary judgment on this issue must be reversed.




                                                   6
       The decision of the trial court is affirmed in part, reversed in part and remanded for further

proceedings consistent with this Opinion. Costs are taxed equally to Appellant and Appellees, for

which execution may issue.




                                      HOLLY KIRBY LILLARD, J.

CONCUR:



ALAN E. HIGHERS, J.



DAVID R. FARMER, J.




                                                 7
