Release of tort claim against solvent agent ends vicarious liability of principal

By Nicholas L. Jenkins

The release of a solvent agent as a result of a settlement extinguishes the principal’s vicarious liability, the Washington Court of Appeals has held.

In Hogan v. Sacred Heart Med. Ctr., No. 21691-8-III (Feb. 2004), Nancy Hogan underwent shoulder surgery at Sacred Heart Medical Center. An anesthesiologist, who worked at Sacred Heart as an independent contractor, mistakenly placed a needle into Hogan’s spinal cord, which caused injuries that later required amputation of her right arm. Hogan later settled with and released the anesthesiologist for his $2 million insurance limit.

Hogan’s condition worsened so much that she was at risk of quadriplegia. She sued Sacred Heart. At trial, she alleged both negligence and vicarious liability of the hospital. The jury found the anesthesiologist was 60 percent, and Sacred Heart 40 percent, at fault for $7.3 million in damages and that the anesthesiologist was the hospital’s apparent agent.

The Hogan court extensively reviewed the financial condition of the anesthesiologist and his group and concluded that they were sufficiently solvent to pay their 60 percent share of the verdict. Hogan settled before determining those finances and had failed to pursue the anesthesia group’s additional $1 million in liability insurance.

Thus, the release of the anesthesiologist released both of his principals – the anesthesiology group and Sacred Heart. The hospital was liable only for its own share of fault.