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Dental Practice Owners And Vicarious Liability

This article aims to explain in simple terms, the legal principle of Vicarious Liability, whether it has an impact on the relationships that exist between a Principal Dentist and their Associates, the impact of recent case law and the future in terms of the impact that changes in the insurance industry might have, the views being taken by HMRC and what steps practice owners can take to minimise their exposure in the future.

The legal principle of Vicarious Liability

The law of vicarious liability is many years old and up till very recently has only been applicable in the relationship between an employer and the employee. It has “grown up” as a result of case law and decisions made by the Courts.

In essence, an employer is liable for the acts or omissions of an employee that are committed during the course of employment and which result in loss being sustained by a third party, as long as in the process of commissioning such acts or omissions, the employee was not on a “frolic of their own”.

Breaking this down into bitesize chunks, “acts or omissions” encompasses tasks that are undertaken by the employee as well as tasks that should have been performed but which the employee has failed to complete.

“During the course of employment” is a reference to the period of time during which the employee is working at their employed task, undertaking duties as defined within their contract of employment and which are controlled by the employer. Any tasks which fall outside the scope of their allotted duties and which have not been requested to be undertaken by the employee may be deemed to be outside the course of employment.

For example, a delivery man employed by DPD to deliver a specific parcel to a specific address carries out that delivery in the course of employment. If they are responsible for a road traffic accident during the course of making that delivery, responsibility would fall on DPD.

However, if having made the delivery the DPD driver was to go home for lunch between work and an accident occurred on their way home , it could be argued that the journey was outside the scope of employment and DPD may be able to avoid liability.

Such a journey could be classed as “ a frolic of it’s own”.

The non-delegable duty –trust and confidence

Assuming that the acts or omissions were undertaken during the employees contracted hours and whilst they were performing the work for which they were paid, the employer has a duty of care which extends to the consequences of any negligence perpetrated by the employee against a third party.

In order to establish negligence, the claimant in any action that ensues, has to prove: –

  1. That a duty of care existed between the employer and claimant
  2. That there has been a breach of that duty constituting negligence
  3. As a result of such negligence there has been loss sustained

The duty of care that an employer has in relation to a claimant is “non-delegable” IE the responsibility cannot be passed on to another party and endures for the period of the employee’s employment. As long as the act/omission occurred whilst the employee was carrying out their contracted duties, the employer could be found liable.

There is a relationship of trust and confidence between an employer and their employee. Such a relationship is the foundation of all contracts of employment and without it, the working relationship would inevitably break down. It is a result of the trust and confidence that exists, that the principle of vicarious liability remains entrenched in law to this date.

Historically, the principle of trust and confidence has not been enshrined in a self-employed relationship. A self-employed contractor, contracts with a company, to provide services to that company, for which they will received an agreed fee. The fee maybe based on the time taken to carry out the work or a rate may be agreed.

The employer does not control the manner in which the task is performed nor are they responsible for payment of income tax and national insurance as they are in an employment situation.

The contractor is “engaged” not “employed”.

Dentists have been and remain self employed contractors once they have completed their vocational training. All are required to have their own indemnity policy or insurance. All associates rely on the Principals to supply them with facilities to work from and patients to work on, for which they pay the Principal a “licence fee”.  Laboratory costs may (or may not) be met by the practice.

Some Associates will spend the working week at one practice, some may work at a few practices. They are self-employed and this is entirely permissible.

Whilst there have been some cases in recent times which have found the Judges considering the Principal-Associate relationship and finding that it might be “akin” to an employment contract, the basic ingredients required in a contract of employment do not yet appear in an Associate Agreement.

The case of Breakingbury -v- Croad and its effect for practice owners

Dr Croad, a retired dentist was found to be liable for damages and costs more than 20 years after retiring from practice. The Judge at a preliminary hearing ruled that Dr Croad owed a non-delegable duty of care towards Mrs Breakingbury regardless of whether he had personally treated her.

Although the judgement was a first instance decision and as yet it is not known if there will be an appeal, it could have far-reaching implications for the dental profession as a whole. It turns on its head the status quo that a Principal cannot be held responsible for the acts of an Associate.

It is also clear evidence that the courts are now more willing to extend the doctrine of vicarious liability to ensure that victims of dental negligence are able to recover compensation from Defendants who may be more financially able to pay.

Breakingbury also referred to the “overarching obligation to ensure that dental services were safe and met the expected standard set by the Local Health Board and that associates made clinical decisions on behalf of the practice. This places responsibility squarely on the shoulders of the Principal…to consider how they ensure that such standards are met by their associates and other clinical staff.”

The impact on indemnity/insurance

If it does prove to be the case that the law develops to the point where the relationship between principal and associate falls square with the contracts that exist between employer and employee, this will have major implications from an insurance perspective.

At present, there is no legal requirement for practice owners to hold vicarious liability insurance cover, albeit some are already obtaining policies of this nature. The Breakingbury case does not alter the landscape but has resulted in unnecessary concerns.

If it proves to be the case that there is a shift and it became a requirement for all practice owners to hold vicarious liability cover, that would have a devastating effect. Treatment costs would rise, pay to Associates would fall, the status of associates would have to be converted from self-employed to worker and the principals would become liable for tax and NI payments.

The view taken by HMRC

The Breakingbury decision is potentially good news for HMRC. For some time, the fact that associate dentists have been self employed has been a concern for HMRC and we are aware that questionnaires have been sent out for completion. There is no mandatory requirement to do so. Further, IR35 is still in the background and whilst it is yet to be triggered, it remains firmly on the agenda.

Protection for practice owners within their associate contracts

What can Principals do to protect themselves?

The current situation is developing and it is clear that the direction of change is towards the Associate in terms of being protected against claims.

If the insurance requirements change to the point where it becomes compulsory for all practice owners to take out vicarious liability insurance, in order to protect themselves against the wrongdoings of their clinical staff and associates remain self-employed, it may become necessary for associate contracts going forward to have additional “indemnity clauses” contained therein which would operate in the event of a claim being made and require the Associate to indemnify the practice owner to the value of any claims made against them.

This is just one aspect and contract reform is a topic which requires a separate discussion.

Jonathan Jacobs is the Lead Healthcare Solicitor at Nexa Law. We deal with practice sales and acquisitions and current issues in the dental profession.

If you wish to discuss any of the points raised in this article or have any other questions relating to dentistry in general, please contact us.


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