When is a practice owner liable for the acts of its associates?
On 19th April 2021 Cardiff county court handed down its decision in Breakingbury v Croad. The dental community was naturally concerned about how this case would affect them, and in particular whether it would affect the employment status of associates.
This case has not changed the legal parameters in which you work in any way. However, the recent Uber decision might have.
In this article we look at both cases and give some practical pointers to help you mitigate risks in your practice.
You can find a copy of the judgment here. In essence, the facts of the case are, the practice owner had stopped practising as a dentist in 2000. He still maintained an NHS contract and engaged associates to undertake the UDAs. He sold the practice in January 2012. The patient entered into a contract with the practice owner for NHS dental treatment. She was a patient between 2007 and 2017 (after the practice was sold) and was seen by various associates during that time. One associate in particular had carried out negligent work on the patient. The negligent treatment occurred when the defendant owned the practice.
The patient was arguing that, as a result of signing a contract with the practice owner, the practice owner owed a non-delegable duty of care to the patient.
What is a non-delegable duty?
The test for determining whether there is a non-delegable duty of care is as follows:
- The claimant must be a patient or child or for some other reason if vulnerable or dependent on the protection of the defendant. Other examples include prisoner or care home resident.
The claimant in this case, and in any dental setting, is clearly a patient.
- There is an antecedent relationship between the claimant and the defendant (dental practice) which places the claimant in the actual custody, charge or care of the defendant and from which it is possible to impute to the defendant the assumption of a positive duty to protect the claimant from harm.
The patient enters into a contract with the dental practice for the provision of dental treatment. The patient does not enter into a contract with the associate. Once the contract is entered into the practice is assuming that responsibility to protect the patient from harm.
- The claimant has no control over how the defendant (dental practice) chooses to perform those obligations, i.e. personally or through employees or third parties.
The patient does not have any control over this. They may be able to choose their associate but they cannot insist on this. If the associate leaves the practices retains the goodwill in that patient, which is a common feature in associate contracts.
- The defendant (dental practice) has delegated to a third party (associate) some function which is an integral part of the positive duty which he has assumed towards the claimant (patient) and the third party is exercising, for the purpose of the function thus delegated to him, the defendant’s care of the claimant and the element of control that goes with it.
The practice subcontracts the provision of dental services to the associate. This is an integral part of the positive duty he has toward the patient.
- The third party has been negligent in the performance of the very function assumed by the defendant
This will depend on the facts of the case.
Please note that a non-delegable duty of care is not the same as being vicarious labile for someone else’s actions. Non-delegable duties arise when a party A enters into a relationship with party B, for example a contract to provide dental services. Vicarious liability arises when a tortious act occurs and a third party is liable for that act because the act was committed by one of its agents.
The court did not consider vicarious liability in any great detail in this case as it was not relevant, having found the practice owner had a non-delegable duty of care.
Further, the case is not concerned with employee or worker status. It is a claim between a patient and a practice owner. In many vicarious liability cases, the court will refer to relationships ‘akin to employment’ to determine if a third party is liable for the acts of its agents. However, the legal test for vicarious liability is different to the one for employment status; whilst there are some similarities you should avoid getting caught up in them.
This case is not a change of position in the law. It has always been the case that if the practice signs a contract with a patient, then the practice owes a non-delegable duty of care. The facts of this case all pointed to a non-delegable duty of care owed by the practice owner as highlighted above.
However, this did not mean that the Associate was not, or could not, be liable to the practice owner for their negligent work. It was open to the practice owner to join the associate to the proceedings. It is unclear why this was not done in the above case. At paragraph 48 of the judgment, the judge did comment that the practice may well be entitled to an indemnity from the associate.
Always ensure that the associate has appropriate indemnity cover in place. This is a regulatory requirement, and it will assist you if you want to join them to any claim later down the line (see below).
If you receive a letter before action, direct the patient to the associate and make the associate aware of the claim. Ask them to contact their indemnity insurers.
If the patient insists on pursuing the practice, which they are entitled to do, ask the court to join the associate to the proceedings as a second defendant. If the associate has been negligent the indemnity insurer may settle the claim on everyone’s behalf.
Ensure you have good indemnity clauses in your associate contracts in respect of insurance cover and indemnifying the practice if a claim is issued against it. This should include indemnification for the practice’s legal costs in defending any claim.
Why should dental practices be more concerned with the recent Supreme Court decision in Uber?
For many years the employment tribunals have looked at the reality of any relationship when determining worker status. This means the tribunal can look beyond any labels given in a contract to determine worker status. Therefore, simply because a contract expresses itself to be a self-employed contract, does not mean the tribunal will accept this label.
We have been raising this issue for a number of years now. The spate of cases being heard on this matter reflects the courts desire to stamp out sham self-employment. The Uber case is not necessarily new law, but it does highlight the need to ensure your contracts reflect the reality of any relationship.
When determining if an associate is a worker the tribunal will ask;
- Does the associate personally perform the services or can they send a substitute?
- Is the associate in business in their own right?
- What control does the practice have over the associate?
The Uber decision confirmed that the question on worker status was a statutory question not a contractual question, and inferred the contract will have little weight in determining this question.
Most dental contracts we see contain a locum clause. However, are those locum clauses actually used by the associate or enforced by the practice?
We have acted for many dentists and dental practices over the years on the issue of worker status. In our experience if a practice can show a locum clause has been used, even if not by the claimant but by another associate, the claimant is likely to be found to be genuinely self-employed. Conversely, if there is a locum clause but the reality is associates must work together to meet UDA targets and cover for each other, the claimant is likely to be deemed to be a worker.
If your contract contains no locum clause at all, you are in an extremely risky position as regards your associates being found to be workers.
Ensure your associate contracts contain well drafted locum clauses. If an associate has sickness absences or wants to take an extended break, insist they engage a locum to cover those periods. If an associate asks to engage a locum, agree to this.
If you need a review of your associate contracts, contact us on 0207 388 1658 or email firstname.lastname@example.org and one of our lawyers would be happy to help.
Laura Pearce, Senior Solicitor