Reference no: EM132106713

Dr. Williams is a board-certified internist. Since 2010, when he completed his residency, he has had privileges at Midstate General Hospital (“MSG”), a 372-bed acute care general hospital located in Sanskrit, Arklazona. Dr. Williams is an office – based physician and is a participating physician in Wayland Medical Associates, an independent practice association consisting of 78 physicians in varied medical specialties. Dr. Williams, but not Wayland Medical Associates, has an agreement with Long Life Insurance Company to perform physical examinations on applicants for life insurance policies. A provision in the contract between Long Life and Dr. Williams calls for blood testing in every physical examination and, “where the physician deems it advisable in his sole discretion for the purpose of advising Long Life Insurance Company on the insurability of the applicant,” for “such x-ray studies as the physician shall deem necessary or appropriate.” Dr. Williams’s medical office is three blocks away from MSG. He has always conducted his physical examinations of applicants for policies of insurance from Long Life at his office. For the blood tests, he sends the applicants to Diagnostic Laboratory, a clinical laboratory under contract with Long Life to draw blood from, and to analyze the blood samples taken from, the applicants and to advise Long Life of the results. Diagnostic’s office is not at the MSG site. X-rays, when ordered by Dr. Williams for insurance examinations, are performed by Roentgen Associates, Inc., which is under contract with Long Life to take the x-rays, interpret them and send the results to Long Life. Roentgen’s radiologists provide radiologic services for MSG at the MSG site. In addition, Roentgen maintains, for ambulatory patients, a radiology facility away from the MSG site. All radiologic studies for insurance purposes are performed at the ambulatory site. Mr. Johnson is a good friend of Dr. Williams, but the only professional contact they have ever had is the performance by Dr. Williams of three insurance physical examinations on Mr. Johnson over a period of four years. Mr. Johnson has gone to Dr. Williams’s office for each of these physical examinations, none of which involved Long Life. On each occasion, while in the waiting room at Dr. Williams’s office, Mr. Johnson has seen a sign advising patients of Dr. Williams’s affiliation with Wayland Medical Associates, and he has read promotional leaflets prepared by Wayland Medical Associates and placed there by Dr. Williams, which describe the work of Wayland Medical Associates but do not include any references to performing physical examinations on applicants for life insurance policies. One morning, while walking from his medical office to MSG, Dr. Williams encounters Mr. Johnson. Mr. Johnson reveals that he has applied for a life insurance policy with Long Life and that he would like Dr. Williams to perform the physical examination. Because he is about to leave on an extended vacation, Mr. Johnson is anxious to have the physical performed as soon as possible. Dr. Williams decides that, as a favor to his friend, he will perform the physical immediately at MSG. Dr. Williams then asks Mr. Johnson to accompany him to MSG, which Mr. Johnson does. The two continue on to MSG, where the physical examination is conducted in an empty patient bedroom. However, Diagnostic Laboratory, because of high patient volume at the time, tells Dr. Williams in a telephone call that it would be better if Mr. Johnson stopped there in the afternoon, when things would have quieted down. Mr. Johnson says he cannot take the time to go to the laboratory in the afternoon. Mr. Johnson, when asked about his health history by Dr. Williams, relates that he thinks he is in excellent health. However, he says that has had what he regards as a severe cough for about a week. Dr. Williams, because of Mr. Johnson’s healthy history and healthy appearance, attributes the cough to a cold. At MSG, Dr. Williams convinces an MSG phlebotomist with whom he is friendly to draw blood from Mr. Johnson. Dr. Williams takes the vial of blood and, while driving home from his office that afternoon, drops off the vial of blood at Diagnostic Laboratories with the usual instruction to send the results to Long Life. At Diagnostic Laboratories it is discovered that, owing to a contaminant in the vial used by the OSG phlebotomist for Mr. Johnson’s blood, the blood cannot be adequately tested. Diagnostic Laboratories reports this fact to Long Life. The Long Life underwriter in charge of assessing Mr. Johnson’s insurability reads Dr. Williams’s physical examination report, which describes a generally healthy individual and makes no mention of the recent history of cough. The underwriter pays no attention to Diagnostic’s laboratory report and recommends that the policy be issued. Long Life issues the policy. Mr. Johnson’s health soon deteriorates, and within six weeks he dies. The cause of death is determined at autopsy to have been a lung abscess complicated by aplastic anemia. A hematologist treating Mr. Johnson writes in the hospital record, just prior to Mr. Johnson’s death, that the aplastic anemia in all likelihood had existed for about two months. The size of the lung abscess at Mr. Johnson’s death suggests that it was present and might have been detected by x-ray at the time of the physical examination conducted by Dr. Williams. Long Life, having issued the policy on Mr. Johnson’s life, correctly feels that its underwriter’s error does not excuse it from paying the policy amount. It pays that amount to Mrs. Johnson, the policy’s beneficiary. You are a lawyer. Mrs. Johnson consults you about bringing a lawsuit to recover damages for her late husband’s death. You assign a lawyer in your office to investigate the case, and that lawyer uncovers all of the above – related facts. Before you confer with Mrs. Johnson, you analyze these facts. Question 1A. What do these facts tell you about the potential liability of each of Dr. Williams, Diagnostic Laboratory, MSG, and the MSG phlebotomist? Question 1B. Having analyzed these facts, you ask Mrs. Johnson to come in for a conference. What do you tell her and why?