## Facts

- Inga Petrovich enrolled in an HMO plan offered through her employer and selected Dr. Marie Kowalski as her primary-care physician from the HMO’s participating-physician list.
- The plan required members to obtain primary care from listed physicians and to use those physicians as gatekeepers for specialist referrals and covered diagnostic services.
- The HMO contracted with physicians through independent medical groups, paid participating physicians by capitation, and used utilization review and quality-assurance processes.
- Member-facing materials described doctors as “Share physicians,” “your Share physician,” and “our staff,” without disclosing independent-contractor status; a separate certificate stated physicians were independent contractors, but Petrovich did not recall receiving it.
- From 1990 forward, Petrovich complained of mouth, tongue, throat, and facial pain; after referrals to other participating physicians, an ENT recommended CT or MRI imaging.
- Petrovich testified her primary-care physician told her the HMO would not allow additional scans; cancer was not timely diagnosed.
- Petrovich sued individual physicians for malpractice and sued the HMO seeking vicarious liability under apparent and implied agency theories; she died during litigation, and her estate continued the case.

## Issues

1. Whether an HMO may be vicariously liable for medical negligence of contracted physicians under the doctrine of apparent authority.
2. Whether an HMO may be vicariously liable under implied authority based on its retained or exercised right of control over the provision of medical services.

## Decision

- The Illinois Supreme Court affirmed the appellate court’s reversal of summary judgment for the HMO and remanded for further proceedings.
- The court held the plaintiff presented sufficient evidence to create a triable issue of fact on apparent agency based on the HMO’s representations and the enrollee’s reasonable reliance.
- The court held the plaintiff also presented sufficient evidence to create a triable issue of fact on implied agency based on the HMO’s structure and mechanisms that could influence treatment decisions.
- Summary judgment was improper because agency determinations, on this record, were for the factfinder.

## Legal Principles

- As a general rule, a principal is not vicariously liable for acts of independent contractors, but liability may be imposed when an agency relationship is established through apparent authority or implied authority.
- Apparent authority depends on the principal’s manifestations to the patient and the patient’s reasonable reliance on the appearance that the provider acts for the principal; it is commonly a question of fact.
- Independent-contractor labels in plan documents are not dispositive where other communications and conduct could lead a reasonable patient to believe the physicians are the HMO’s agents, and where disclaimers may not have been effectively conveyed.
- Implied authority may arise when the alleged principal retains or exercises a right of control over significant aspects of how services are delivered, including through financial incentives (such as capitation) and referral/utilization structures that can affect access to care.
- Traditional agency principles apply to HMOs; they are not categorically insulated from vicarious liability solely by contracting arrangements.

## Conclusion

The court held that evidence of the HMO’s member communications, mandatory gatekeeper/referral model, and care-management and payment structure was sufficient to require a trial on whether the treating physicians acted as the HMO’s agents under apparent or implied authority, making summary judgment inappropriate.


Petrovich v. Share Health Plan of Ill., Inc., 188 Ill. 2d 17, 719 N.E.2d 756 (Ill. 1999)