LITIGATION, LEGISLATION, AND ETHICS

A duck is a duckLaurance Jerrold, DDS, JDMassapequa Park, NY

It’s a common scenario for an orthodontic graduate,upon completing his training, to work in 1 ofseveral different venues until he either takes the

plunge and opens his own office or waits until the rightpractice comes along to buy. Until 1 of those eventshappens, the young doctor often works as an associatein someone else’s practice. Is this doctor an employeeor an independent contractor? Does it make a differ-ence?George v. Fadiani, 772 A2d 1064 (Sup Ct RI2001), gives us an answer.

The plaintiff had sought dental treatment at Oak-lawn Family Dental, Inc, for several years. Her dentistrecommended orthodontic care, referring her to thedefendant, an orthodontist who worked in the Oaklawnfacility. The defendant examined the plaintiff and toldher that treatment would take approximately 18months. Four years later, the plaintiff’s treatment wasstill not completed nor the problem corrected. Theplaintiff filed suit against both the defendant andOaklawn. This appeal dealt only with the complaintagainst Oaklawn for negligently hiring the defendantand failing to warn the plaintiff of the defendant’sincompetence.

Oaklawn filed a motion for summary judgment,claiming that it could not be liable for the defendant’sactions because he was an independent contractor overwhom Oaklawn exercised no control. In support of thismotion, Oaklawn contended that the plaintiff wascollaterally estopped from litigating the employer/em-ployee relationship because that issue had already beendecided in another state court. Previously, the RhodeIsland Department of Employment had instituted suit todetermine whether the defendant was an independentcontractor or Oaklawn’s employee for tax liabilitypurposes. In that case, the defendant was determinednot to be an employee. The trial court, based on thisprevious decision, sided with Oaklawn, granting themotion for summary judgment on its behalf; this appealensued.

Addressing first the issue of collateral estoppel, the

court noted that the purpose of this legal doctrine is toprevent relitigation of “an issue of ultimate fact that hasbeen actually litigated and determined . . . between thesame parties.” In other words, once a legal issuebetween 2 parties has been fully and fairly litigated anddecided by a court of competent jurisdiction, it cannotbe revisited. For collateral estoppel to be applied, thesecriteria must be met:

1. The issues being litigated must be identical.2. The prior proceding must have resulted in a final

judgment on the merits.3. The party against whom collateral estoppel is sought

must be the same or have been in privity with theparty in the prior preceding.

It should be fairly obvious that the issues aredifferent. In the first case, the issue was whether thedefendant was an employee or an independent contac-tor for payroll tax liability. The present case concernedvicarious liability in the context of professional negli-gence.

There was also no unity of interest or privity of theparties between the 2 cases. The plaintiff had absolutelynothing to do with the first case; it was the state againstthe defendants, and therefore she had no opportunity tofully litigate her grievances. Because of these findings,the appellate court chose not to stop the plaintiff frompursuing her current claim.

The plaintiff’s second argument in opposing themotion for summary judgment was based on the doc-trine of apparent authority. To establish medical mal-practice on the part of a medical corporation based onapparent authority, the plaintiff must prove 3 distinctelements:

1. That the professional medical corporation, or itsagents, acted in a manner that would lead a reason-able person to believe that the defendant was thecorporation’s employee or agent.

2. That the patient actually believed that the defendantwas the corporation’s agent or servant.

3. That the plaintiff relied to his detriment upon thecare and skill of the allegedly negligent defendant.

In other words, the court said that this is a fact-intensive inquiry about how the parties held themselves

Program Director, Postgraduate Orthodontics, New York University College ofDentistry.Am J Orthod Dentofacial Orthop 2002;121:326-7Copyright © 2002 by the American Association of Orthodontists.0889-5406/2002/$35.00� 0 8/8/123414doi:10.1067/mod.2002.123414

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out to the public. It doesn’ t matter what the contractualarrangements were between the party defendants. Whatmatters is how the public perceives the relationshipbetween the parties when one is determining the exis-tence of apparent authority.

In the first place, the plaintiff asserted that Oaklawnheld itself out to the public at large as a provider ofdental services. Her dentist at Oaklawn referred her tothe orthodontist at the same facility. The receptionistfor the facility set up the appointment. All billing forthe orthodontic treatment was done on Oaklawn statio-nery, and all payments were made to Oaklawn at itsfront desk. On the other hand, it was also adduced thatOaklawn compensated its medical professionals basedon a percentage of fees collected and that, if the feesremained uncollected, the practitioner who rendered theprofessional services would not be compensated. Over-all, these facts could easily persuade a reasonable factfinder to conclude the existence of an employee rela-tionship, not an independent contractor relationship.Because the issue required resolution through a fact-intensive inquiry, it was not amenable for determina-tion based on a motion for summary judgment. Thecase was remanded back to the trial court for furtheradjudication.

COMMENTARY

What does this case teach us? At first blush, thelesson seems to be that an associate is an employeeinstead of an independent contractor regardless of whatwe say in our associateship contract. What it really saysis how the parties portray their relationship to the public

is in good part how the relationship will be assessed.How does the sign on the door read? Does it readDental Associates, PC, or does it list the names of thedoctors? Does the associate have his own stationery andbusiness cards, or is the corporation’s indicia used?Whose name is the billing done in—the name of thedoctor who rendered the service or the name of thecompany, firm, or partnership? Who sets the schedule?Who controls all the stuff that comes before thetreatment actually starts?

Past columns have dealt with this issue from adifferent perspective. Who determined the treatmentplan, who checked the progress of the case, whodetermined the fees, who controlled the armamentar-ium to be used? The bottom line in dealing with issuesof this ilk, whether pretreatment, diagnostically, mech-anotherapeutically, or posttreatment, is all the same:who has the ability to control whether exercised andhow is this fact perceived by the reasonable dentalconsumer? Once we get into the real nitty-gritty of thisissue, we are forced to focus on the real meaning ofwhether junior is an employee or an independentcontractor.

Back to the original question, does any of thismatter? Not so much to junior, but it may mean anawful lot to senior, particularly if junior’s negligence isimparted to him. No, the language of your contractwon’ t protect you—a duck is a duck. If it walks like aduck, talks like a duck, and acts like a duck, you cancall it a chicken, but, oh well, I’m sure you all get therisk management message.

Information pertaining to litigation, legislation, and ethics will be reported under this section of the AmericanJournal of Orthodontics and Dentofacial Orthopedics. Manuscripts for publication, reader’s comments, andreprint requests may be submitted to Laurance Jerrold, DDS, JD, 82 Laurel Dr, Massapequa Park, NY 11762.

American Journal of Orthodontics and Dentofacial OrthopedicsVolume 121, Number 3

Litigation, legislation, and ethics 327