Agency Relationship. Evan Smith experienced a heart attack in the emergency room of Baptist Memorial Hospital after being given a dose of penicillin for a sore throat. Smith sued the attending physician as well as the hospital. The hospital called

Question

itself a full-service hospital with emergency room facilities. Baptist Memorial did not consider the doctors to be its agents. For tax and accounting purposes the doctors were not treated as employees of the hospital. Based on this information, discuss whether the doctors who treated patients in the emergency room were agents of the hospital.

Answer 1

Agency relationship
The hospital was held liable because the hospital's acts, including providing emergency-room treatment, implied that the doctors were the hospital's agents. Thus, a relationship of principal-agent was found to exist despite the hospital's internal treatment of the doctors as nonemployees for tax and accounting purposes.