HAMPTON TRAINING SCHOOL
FOR NURSES, d/b/a SENTARA
HAMPTON GENERAL HOSPITAL
June 6, 1997
Record No. 961831
JAMES J. MCDONALD
HAMPTON TRAINING SCHOOL
FOR NURSES, d/b/a SENTARA
HAMPTON GENERAL HOSPITAL
OPINION BY JUSTICE ELIZABETH B. LACY
FROM THE CIRCUIT COURT OF THE CITY OF HAMPTON
William C. Andrews, III, Judge
Present: Carrico, C.J., Compton, Stephenson, Lacy, Hassell, and
Koontz, JJ., and Whiting, Senior Justice
In this appeal in a medical malpractice case, we consider
whether the trial court properly held that, because a physician
exercised independent medical judgment in performing his duties,
he was an independent contractor as a matter of law.
The plaintiff, James J. McDonald, sued Hampton Training School
for Nurses, d/b/a Sentara Hampton General Hospital (the Hospital)
alleging that Richard F. Clark, M.D., a pathologist at the
Hospital, negligently interpreted McDonald’s pathology specimens
and failed to timely diagnose cancer. McDonald did not allege any
independent acts of negligence by the Hospital, but asserted the
Hospital was liable solely through the doctrine of respondeat
superior. The trial court entered an order granting the
Hospital’s motion to strike McDonald’s evidence and dismissing
the case finding that, as a matter of law, Clark was an
independent contractor rather than an employee of the Hospital.
Because we conclude that the evidence presented a jury question
on the issue of Clark’s employment status, we will reverse the
judgment of the trial court and remand the case.
The doctrine of respondeat superior imposes
liability on an employer for the negligent acts of its employees.
If, however, the negligent acts were performed by an independent
contractor rather than an employee, no master-servant
relationship exists between the contractor and employer, and the
employer is not liable for the negligent acts. Norfolk and
Western Ry. Co. v. Johnson, 207 Va. 980, 983, 154 S.E.2d 134,
137 (1967). The factors which are to be considered when
determining whether an individual is an employee or an
independent contractor are well established: (1) selection and
engagement; (2) payment of compensation; (3) power of dismissal;
and (4) power to control the work of the individual. The fourth
factor, the power to control, is determinative. Hadeed v.
Medic-24, Ltd., 237 Va. 277, 288, 377 S.E.2d 589, 594-95
(1989). This factor refers to control over the means and method
of performing the work. Baker v. Nussman & Cox, 152
Va. 293, 304, 147 S.E. 246, 249 (1929). It is immaterial whether
the employer exercises this control; the test is whether the
employer has the power to exercise such control. Smith v.
Grenadier, 203 Va. 740, 746, 127 S.E.2d 107, 111-12 (1962).
The trial court’s determination in this case turned upon the
Hospital’s lack of control over Dr. Clark’s exercise of his
professional judgment in carrying out his duties as a pathologist
at the Hospital. The trial court found that
there was "nothing contractually or factually" to
suggest that the Hospital controlled the way that Dr. Clark
performed his duties but that he used "his independent
professional judgment, based on his education and his training
and his experience to do that." Thus, the trial court held,
as a matter of law, that Clark was an independent contractor, not
an employee, of the Hospital.
The Hospital asserts that the trial court was correct in
relying on the Hospital’s inability to control Dr. Clark’s
exercise of his professional judgment as conclusive in the
determination of his independent contractor status. We do not
agree. The proposition adopted by the trial court and argued by
the Hospital here may have been a correct statement of the law at
one time; however, it is inconsistent with current case law in
this jurisdiction and with the methods of operation currently
utilized by health care providers.
As early as 1920, this Court held in Virginia Iron, Coal
& Coke Co. v. Odle’s Administrator, 128 Va. 280, 105 S.E.
107 (1920), that, although a mining company could be liable for
the malpractice of a physician employed by it based on the
company’s agreement to furnish medical services to the employee,
this liability could not be based upon the doctrine of respondeat
superior. There could be no master-servant relationship
between the company and the physician, the Court explained,
because the doctor was employed "to render professional
services requiring special education and training, and involving
the exercise of skill and judgment, which could not, in the
nature of things, be controlled by the will and direction of the
company. . . . The position of the doctor was
rather that of an independent contractor." Id. at
288-89, 105 S.E. at 109. This was the prevailing rationale
throughout the country at that time. See, e.g., Schloendorff
v. Society of New York Hospital, 105 N.E. 92 (N.Y. 1914); Runyan
v. Goodrum, 228 S.W. 397 (Ark. 1921); Joel D. Cunningham, The
Hospital-Physician Relationship: Hospital Responsibility for
Malpractice of Physicians, 50 Wash. L. Rev. 385, 388-90
Weston’s Administratrix v. Hospital of St. Vincent of Paul,
131 Va. 587, 107 S.E. 785 (1921), decided a year after Virginia
Iron, reconfirmed that view in Virginia. In that case, a
patient sought to impose liability on a charitable hospital based
on the negligence of a nurse in its employ. Justice Burks,
writing for the Court, stated that hospitals were not liable for
the negligence of nurses and physicians because there can be no
master-servant relationship between a hospital and a physician or
nurse. 107 S.E. at 787.
A physician’s status as an independent contractor rather than
an employee of a hospital was again reiterated, albeit in dicta,
in Stuart Circle Hospital Corp. v. Curry, 173 Va. 136, 3
S.E.2d 153 (1939). There, a hospital was held liable to a patient
for the negligent acts of an intern and a nurse based on an
implied contract between the hospital and the patient to provide
medical services. In the course of its opinion, the Court recited
that it was "conceded" that a physician is an
independent contractor and "alone is responsible for the
exercise of professional skill and judgment, subject to no
control by the hospital in the execution thereof." Id.
at 149, 3 S.E.2d at 158.
The proposition that a physician is an independent contractor
solely because the nature of his profession prevents his employer
from acquiring the requisite ability to control his medical
activities has not been explicitly overruled in Virginia by case
or statute. Subsequent cases, however, have reached directly
In Ritholz v. Commonwealth, 184 Va. 339, 35 S.E.2d 210
(1945), the Commonwealth sought a declaratory judgment and
injunction against Ritholz and others claiming that they were
practicing optometry without a license based on the doctrine of respondeat
superior. Ritholz operated stores in
which licensed physicians examined each customer’s eyes, wrote a
prescription for eyeglasses, and collected a $2 fee. The
prescription was given to an employee in the store to be filled.
Ritholz claimed that his business was the filling of
prescriptions by producing the prescribed eyeglasses. He argued
that the physicians in his stores were independent contractors
because he neither exercised, nor attempted to exercise, any
supervision or control over the means and method used by these
physicians in eye examinations. Id. at 355-57, 35 S.E.2d
at 219. The Court held that the physicians were employees, not
independent contractors, referring specifically to the decisions
of other jurisdictions holding that physicians in identical
circumstances were employees "notwithstanding the fact that
the defendants actually exercise no control over ‘the mode,
manner or result of the examination of the eyes of the customer
and the doctor is left free to exercise his own will (and)
judgment and to use his own professional skill and methods in
making such examination.’" Id. at 358-59, 35 S.E.2d
at 219 (citations omitted).
Forty years later, this Court held that the Virginia Beach
S.P.C.A. was engaged in the illegal practice of veterinary
medicine because it operated a full-service veterinary clinic
through the services of its licensed veterinarian. Virginia
Beach S.P.C.A., Inc. v. South Hampton Roads Veterinary Ass’n,
229 Va. 349, 353, 329 S.E.2d 10, 12 (1985). The veterinarian was
an employee, not an independent contractor, the Court concluded,
because the employment contract showed that the S.P.C.A. retained
substantial control over the doctor’s performance. Id.
Finally, in Hadeed v. Medic-24, Ltd., a case involving the
negligent acts of several physicians, we concluded that the issue
whether the doctors were independent contractors or employees was
a matter for the jury to determine. 237 Va. at 288, 377 S.E.2d at
Clearly, these cases have undermined the applicability of the
principle set out in Virginia Iron, Weston’s
Administratrix, and Stuart Circle. This
jurisprudential evolution is consistent with changes adopted in
other jurisdictions. See, e.g., Beeck v. Tuscon
General Hosp., 500 P.2d 1153 (Ariz. App. 1972); Medi-Stat,
Inc. v. Kusturin, 792 S.W.2d 869 (Ark. 1990); Rice v.
California Lutheran Hosp., 163 P.2d 860 (Cal. 1945); Moeller
v. Hauser, 54 N.W.2d 639 (Minn. 1952); Bing v. Thunig,
143 N.E.2d 3 (N.Y. 1957); John D. Hodson, Annotation, Liability
of Hospital or Sanitarium for Negligence of Physician or Surgeon,
51 A.L.R. 4th 235, 281-85 ? 9[c] (1987).
The federal courts also recognize that the exercise of
professional judgment in providing medical treatment alone cannot
be determinative of the employment relationship between a
physician and an employer for purposes of the Federal Tort Claims
Act, 28 U.S.C. ?? 1346(b),
2671-2680 (1994 & Supp. 1997). Some circuits have treated the
contract terms as critical to the determination of the
relationship, Robb v. United States, 80 F.3d 884, 891 (4th
Cir. 1996), while others look to the intent of the parties, Lilly
v. Fieldstone, 876 F.2d 857, 859 (10th Cir. 1989).
Retention of the blanket rule articulated over 70 years ago in
Virginia also does not reflect the changing circumstances
surrounding the practice of medicine. "The conception that
the hospital . . . undertakes . . . simply to
procure [doctors] to act upon their own responsibility, no longer
reflects the fact." Bing v. Thunig, 143 N.E.2d at 8.
In addition to the staff privileges granted physicians with
private practices, hospitals "regularly employ on a salary
basis a large staff of physicians, nurses and internes,
. . . and they charge patients for medical care and
treatment." Id. "To an increasing extent"
patients no longer select their physicians; they are often
supplied by the hospital or clinic. "Hospital and other
corporate institutions that provide medical care have increased
the number and the frequency of salaried arrangements for
physicians. . . . [C]ontracts with hospital-based
specialists have dramatically increased." Arthur F.
Southwick, The Law of Hospital and Health Care Administration,
546 (2d ed. 1988).
Finally, consistent application of the proposition advanced by
the Hospital here would require that virtually every professional
who is expected to exercise independent judgment in the
performance of the duties of the workplace would have to be
deemed an independent contractor, regardless of the scope of his
or her duties or the limitations on the employment.
Therefore, after reviewing our prior cases and considering the
current manner in which medical services are provided, we
conclude that, for purposes of determining employment status, the
exercise of professional judgment by a physician in the
performance of professional duties is a factor, but not the only
factor, to be considered in evaluating the employer’s power to
control the means and method utilized to perform the work. Having
resolved the nature of the test to be applied, we now consider
whether the record supports the trial court’s holding that Clark
was an independent contractor as a matter of law.
Dr. Clark is the Director of Pathology at the Hospital. He is
a licensed and board certified physician and has worked under a
contract at the Hospital for thirty-three years. As Director of
Pathology, Dr. Clark’s general responsibilities include
interpreting various specimens, performing autopsies, bone marrow
aspirations and biopsies, and, to a lesser extent, consulting
with patients who have problems related to hematology pathology,
although he did not meet or consult with McDonald, the patient in
The Hospital owns the pathology laboratory, and laboratory
personnel are employees of the Hospital. Dr. Clarks contract
provides that he "shall provide all the administrative,
professional, supervisory, quality assurance and educational
services relating to the operation of the" laboratory, but
he has no authority to hire or discharge employees of the
laboratory. Although Dr. Clark has no authority to purchase
supplies or equipment for the laboratory, he participates in the
Hospital’s annual budget process.
The Hospital pays Dr. Clark a set monthly fee for his services
and reimburses him for all of the costs of his practice,
including his business license tax, malpractice insurance, and
professional dues. The Hospital does not withhold federal,
F.I.C.A., state or local income or occupational taxes from his
salary, and his income is reported on a 1099 federal tax form,
not a W-2 form. The Hospital is not responsible for his
unemployment compensation, workers’ compensation contributions,
vacation pay, sick leave, or retirement benefits.
Dr. Clark must interpret all slides that the Hospital presents
for review, and his salary is not related to the number of slides
he evaluates. He may render services to other entities and
receive compensation for such work, but he must obtain the
Hospital’s written authorization before working elsewhere. His contract requires that he
maintain board certification, a requirement not otherwise
necessary to perform pathology services.
The Hospital has no control over Dr. Clark’s independent
medical judgment nor has it influence over his diagnostic
opinions about pathologic material. His contract provides,
however, that he must satisfy the Hospital in the performance of
his duties and that he will "comply with the bylaws, rules
and regulations, policies and directives of the Hospital and its
All laboratory reports are printed on Hospital letterhead and
are the property of the Hospital. Additionally, the Hospital sets
the fees charged patients, bills patients, and collects payments.
Dr. Clark is required to keep time records for these billing
purposes. The Hospital’s contract explicitly refers to Dr. Clark
as an independent contractor, but when asked whether he thought
he was an employee of the Hospital, Dr. Clark responded
"[w]ell, in some regards I think that might be the case,
although this [contract] states differently."
Whether a person is an employee or an independent contractor
is generally a question of fact for the jury. Hadeed, 237
Va. at 288, 377 S.E.2d at 594. Where the evidence admits of only
one conclusion, the question is a matter of law. Stagg v.
Taylor’s Adm’r, 119 Va. 266, 270, 89 S.E. 237, 238 (1916).
Taking these facts and the inferences they raise in the light
most favorable to McDonald, as we must do when reviewing a motion
to strike, Hadeed, 237 Va. at 280-81, 377 S.E.2d at 590,
the facts do not lead to a single conclusion, and the issue
should have been left to the jury for determination.
Accordingly, we will reverse the judgment of the trial court
and remand the case for further proceedings.
Reversed and remanded.
The trial court also relied on its interpretation of Messina
v. Burden, 228 Va. 301, 321 S.E.2d 657 (1984), in concluding
that Dr. Clark was an independent contractor. The trial court
referred to the language in Messina stating that the James
doctors "were essentially independent contractors as far as
their relationship with their patients was concerned," id.
at 312-13, 321 S.E.2d at 663, as the Messina court’s
explanation that the doctors in James were denied
sovereign immunity because they were independent contractors.
Noting the similarity between Dr. Clark’s situation and that of
the doctors in James, the trial court concluded that Dr.
Clark must also be an independent contractor. This is an
incorrect application of the language in Messina. Neither James
nor Messina involved the status of an individual for
purposes of respondeat superior. The issues in
these sovereign immunity cases were governed by the test for
determining whether a governmental employee is entitled to
sovereign immunity. This test involves four factors, one of which
is the control exercised by the governmental employer; however,
all four factors must be considered, and the control factor is
not determinative of the result. Compare James v. Jane,
221 Va. at 53, 282 S.E.2d at 869, with Hadeed, 237
Va. at 288, 377 S.E.2d at 594-95.
 This portion of the opinion
does not appear in the Virginia Reports; however, the
version of the opinion which includes this discussion is
the version on file in our Clerk’s office and remains the
official copy of the opinion.
 In contrast, by statute,
hospitals are deemed not to be engaged in the unlicensed practice
of medicine when they provide medical services. Stuart Circle,
173 Va. at 146, 3 S.E.2d at 156.
 The contract provided that the
doctor receive an annual salary, a percentage of the gross
receipts, and a portion of the charges for spaying and neutering.
The contract also provided that the doctor "accepted his
employment ‘subject to the general supervision and pursuant to
the orders, advice and direction of’ the S.P.C.A., and that he
would perform his duties ‘to the reasonable satisfaction of’ the
S.P.C.A." Id. at 351, 329 S.E.2d at 11.
 Other cases, although not
addressing the independent contractor issue directly, are not
consistent with the principle as originally stated in Virginia
Iron. For example, in P.M. Palumbo, Jr., M.D., Inc. v.
Bennett, 242 Va. 248, 251, 409 S.E.2d 152, 153 (1991), we
held that physicians cannot be independent contractors but must
be employees or officers of professional corporations providing
health care services. In Lohr v. Larsen, 246 Va. 81, 88,
431 S.E.2d 642, 646 (1993), a case involving a physician working
for the state, we noted that "when a government employee is
specially trained to make discretionary decisions, the
government’s control must necessarily be limited in order to make
maximum use of the employee’s special training and subsequent
experience." Earlier this year, in Schwartz v. Brownlee,
253 Va. 159, 163-64, 482 S.E.2d 827, 829 (1997), we held that a
physician was an agent of a corporate non-health care provider
when providing post-operative treatment to a patient.
 Jurisdictions retaining the
prohibition against the existence of a master-servant
relationship generally subscribe to the view that if a such a
relationship exists between a hospital and a physician, the
hospital would be illegally practicing medicine without a
license, a view rejected in this jurisdiction. Stuart Circle
Hospital Corp. v. Curry, 173 Va. at 146, 3 S.E.2d at 156.
 During his tenure with the
Hospital, Dr. Clark has performed services and has been
compensated as a consultant at Kecoughtan Veteran’s Hospital and
McDonald Army Hospital and has served as Director of the
Laboratory at Langley Air Force Base and the Director of
Pathology at Mary Immaculate Hospital. Dr. Clark currently
performs services for the state medical examiner’s office.
Although he has never been refused permission to work for another
entity, the Hospital did require him to choose between working
for it or Mary Immaculate Hospital.