David, J.
In Sword v. NKC Hospitals, Inc., our Court adopted the Restatement (Second) of Torts section 429 and held that a hospital may be held vicariously liable for the tortious conduct of an independent contractor through apparent or ostensible agency. 714 N.E.2d 142, 152–53 (Ind. 1999).
Here, Anonymous Defendant 1—a physician group—argues that Sword does not extend its vicarious liability to a physical therapist with whom it had no contractual relationship. And we agree the rule articulated in Sword appears inapplicable on these facts. [Footnote omitted.] However, today we also consider the Restatement (Second) of Agency section 267 and hold as a matter of first impression that under Section 267, a medical provider may be held liable for the acts of an apparent agent based on the provider’s manifestations of an agency relationship with the apparent agent, which causes a third party to rely on such a relationship.
Accordingly, because there exist disputed issues of fact as to whether Anonymous Defendant 1 held out Darci Wilson’s physical therapist as its apparent agent, we reverse the trial court’s grant of summary judgment in Anonymous Defendant 1’s favor and remand for further proceedings consistent with this opinion.
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At issue is whether Lingle was acting as an apparent or ostensible agent of Anonymous when he treated Wilson. Specifically, the parties dispute whether the rule articulated in Sword—that a hospital may be vicariously liable, as a principal, for its contractor’s tortious conduct—applies when there is no record evidence of a legal relationship between Lingle and Anonymous. 714 N.E.2d at 152–53.
We first consider the scope of Sword and its requirement that a legal relationship exist between the principal and the alleged apparent agent. Next, we consider the Restatement (Second) of Agency section 267 and adopt its application specifically in the context of both hospitals and nonhospital medical facilities. Finally, we apply Section 267 to the facts before us and conclude that summary judgment in Anonymous’s favor is unsupported.
I. Sword and the Restatement (Second) of Torts section 429 require a legal relationship between the alleged principal and the alleged apparent agent.
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Under Section 429, the trier of fact must consider both the hospital’s manifestations to a patient and the patient’s reliance on these manifestations when deciding whether to hold a hospital liable for its contractor’s acts. Id. Central to both factors is “whether the hospital provided notice to the patient that the treating physician was an independent contractor and not an employee of the hospital.” Id. at 152.
Wilson argues that the Section 429 apparent agency rule articulated in Sword applies here, and thus, Anonymous may be held liable for Lingle’s alleged negligence. [Footnote omitted.] Anonymous responds that Sword is inapplicable because it requires a legal relationship between the alleged principal and the alleged apparent agent. That is, because the record does not reflect an employment, contractual, or any other defined legal relationship between Anonymous and Lingle, Anonymous argues it cannot be held vicariously liable under Sword and Section 429 of the Restatement. We agree with Anonymous.
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II. The Restatement (Second) of Agency section 267 applies to medical care facilities.
Though we do not find Sword’s Section 429 analysis applicable here, we consider the Restatement (Second) of Agency section 267 and its application to both hospitals and non-hospital medical entities.
Section 267 provides that:
One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.
Restatement (Second) of Agency § 267 (1958).
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We believe our adoption of Section 267 in the medical care context is fair and consistent with a national trend seeking to limit the ability of health care providers to evade potential vicarious liability based on arrangements—whether contractual or informal—that are not readily apparent to the average health care consumer. See Arrendale v. American Imaging & MRI, LLC, — N.E.3d — (Ind. 2022); Webster, 917 F.3d at 577.
III. Issues of material fact exist as to whether Lingle was Anonymous’s apparent agent under Section 267.
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In any event, the relevant question under Section 267 is not whether Anonymous employed Lingle or maintained his malpractice insurance. Instead, the court must consider whether Anonymous engaged in “some form of communication, direct or indirect,” that “instill[ed] a reasonable belief” in Wilson’s mind that Lingle was an agent of Anonymous—and whether this belief led Wilson to seek treatment from Lingle. Pepkowski, 535 N.E.2d at 1167. At the summary judgment stage, Wilson has shown disputed issues of material fact as to both the representation and reliance elements of Section 267.
Conclusion
We find genuine issues of material fact as to whether Lingle was an apparent agent of Anonymous under Section 267 of the Second Restatement of Agency. Accordingly, we reverse the trial court’s grant of summary judgment in favor of Anonymous and remand for further proceedings consistent with this opinion.
Rush, C.J., and Massa and Goff, JJ., concur.
Slaughter, J., concurs in the judgment with separate opinion
Slaughter, J., concurring in judgment with separate opinion.
More than twenty years ago, this Court addressed which standard to adopt for applying principles of apparent agency. Sword v. NKC Hospitals, Inc., 714 N.E.2d 142 (Ind. 1999). After considering both section 267 of the Restatement (Second) of Agency and section 429 of the Restatement (Second) of Torts, we adopted section 429. Id. at 148-49, 152. Yet today, in companion cases, the Court embraces both standards. In Arrendale v. American Imaging & MRI, LLC, ___ N.E.3d ___ , No. 21S-CT-370 (Ind. Mar. 24, 2022), we apply our existing standard under section 429. But here in Wilson, the Court adopts and applies a new standard under section 267. The Court notes that the difference between the two standards is that section 429 requires a legal relationship between the principal and apparent agent, while section 267 does not. Ante, at 9. But if this is the only difference, then it is not clear whether a case will ever present a factual scenario in which section 429 applies but section 267 does not. Thus, in adopting section 267, the Court appears to render section 429 redundant. Because we can resolve Wilson under section 429, I see no reason to adopt a new standard – especially one that jettisons our prevailing standard in favor of one the parties did not ask us to adopt.
Instead, I would apply section 429 here and deny Anonymous’s motion for summary judgment….