Towner v. Bernardo/Silverton Health

397

Argued and submitted March 8, 2018, reversed and remanded May 28, petitions

for review denied October 1, 2020 (367 Or 115)

Gail TOWNER,

an Oregon resident,

Plaintiff-Appellant,

v.

Peter A. BERNARDO, M.D.,

an Oregon resident,

Defendant-Respondent.

Marion County Circuit Court

12C21665

Gail TOWNER,

an Oregon resident,

Plaintiff-Appellant,

v.

SILVERTON HEALTH,

dba Silverton Hospital, an Oregon Corporation,

Defendant-Respondent,

and

Cynthia Lynn HOWARD, CRNA,

Defendant.

Marion County Circuit Court

13C17343

A161012

467 P3d 17

In this medical malpractice action, plaintiff appeals from limited judgments

dismissing her claims against defendant Silverton Hospital. Plaintiff alleged

that Dr. Peter Bernardo negligently performed surgery on her at Silverton

Hospital and that Silverton Hospital was directly and vicariously liable for its

own negligence and Bernardo’s negligence, respectively. Plaintiff assigns error

to (1) the trial court’s grant of Silverton Hospital’s motion to strike her allegation

that Silverton Hospital had a nondelegable duty to provide quality care within

its facility under ORS 441.055; (2) the court’s dismissal, under ORCP 21 A(8), of

plaintiff’s claim that Silverton Hospital was negligent in “credentialing,” hir-

ing, retaining, and supervising Bernardo by giving him privileges at Silverton

Hospital and allowing him to perform surgical procedures there; and (3) the

court’s grant of summary judgment in favor of Silverton Hospital upon conclud-

ing that Silverton Hospital was not vicariously liable for Bernardo’s negligence

because Bernardo was not the hospital’s actual or apparent agent. Held: The

Court of Appeals concluded that (1) the court did not err in striking plaintiff’s

398 Towner v. Bernardo/Silverton Health

allegation that Silverton Hospital had a nondelegable duty to ensure adequate

patient care, because ORS 441.055 does not impose such a duty; (2) the court

erred in dismissing plaintiff’s claim that Silverton Hospital was negligent in

“credentialing,” hiring, retaining, and supervising Bernardo because Silverton

Hospital did not show, on the face of the complaint, that documents and informa-

tion necessary to Silverton Hospital’s defense was protected by the peer review

privilege under ORS 41.675(3); and (3) the court erred, in part, in granting sum-

mary judgment to Silverton Hospital, because a reasonable juror could conclude

that Bernardo was Silverton Hospital’s apparent agent.

Reversed and remanded.

Dale Penn, Judge.

Brent Barton argued the cause for appellant. On the

opening brief was Travis Eiva. Also on the reply brief was

Travis Eiva.

Michael J. Estok argued the cause for respondent

Silverton Health. Also on the brief were James L. Dumas

and Lindsay Hart, LLP.

Lindsey H. Hughes, Hillary A. Taylor, and Keating

Jones Hughes, P.C., filed the brief for respondent Peter A.

Bernardo, M.D.

Before Armstrong, Presiding Judge, and Tookey, Judge,

and Shorr, Judge.

SHORR, J.

Reversed and remanded.

Cite as 304 Or App 397 (2020) 399

SHORR, J.

Plaintiff Gail Towner appeals from the limited

judgments dismissing her medical malpractice claims

against defendant Silverton Health, dba Silverton Hospital.

Plaintiff alleged that defendant Dr. Peter Bernardo negli-

gently performed laparoscopic surgery on her at Silverton

Hospital.1 Plaintiff alleged that the hospital had direct and

vicarious liability for its own negligence and Bernardo’s neg-

ligence, respectively. Plaintiff challenges the trial court’s

rulings as to Silverton Hospital, and we address three of

her four assignments of error.2

In plaintiff’s first assignment, she contends that

the trial court erred in granting defendant’s motion to

strike the allegation asserting that Silverton Hospital had a

nondelegable duty to provide quality care within its facility

under ORS 441.055 and is therefore directly and vicariously

liable for Bernardo’s negligent conduct. We conclude that the

trial court did not err as to that ruling. In plaintiff’s second

assignment, she contends that the court erred in dismissing,

under ORCP 21 A(8), her allegations that Silverton Hospital

was negligent in “credentialing,” hiring, retaining, and

supervising Bernardo by giving him privileges at Silverton

Hospital and allowing him to perform surgical procedures

there. We conclude that the court erred in dismissing that

allegation. In her third assignment, plaintiff contends that

1

The trial court consolidated plaintiff’s two cases, Case No. 12C21665 and

Case No. 13C17343, and appears to have issued identical limited judgments in

those cases. Plaintiff appeals both limited judgments. The limited judgments

dismiss only plaintiff’s claims against defendant Silverton Health. Defendant

Bernardo, although initially not a party to this appeal, filed a notice of intent

to participate as a party under ORAP 2.25(3) and then filed a brief addressing

limited issues that we do not need to reach.

2

In her final assignment of error, plaintiff challenges the denial of her motion

to compel production of medical records related to other patients that Bernardo

had “injured in similar surgeries.” Plaintiff argues that “the documents were

relevant to prove that defendant hospital was negligent in allowing Bernardo

privileges to perform surgery on patients.” As we discuss below, the trial court

dismissed the claim related to that allegation, which it referred to as a “negligent

credentialing claim,” but we reverse that ruling. The hospital contends that, even

if we reverse the trial court’s dismissal, as we do, we should “refrain from consid-

ering the merits of the motion [to compel] at this juncture.” It suggests that the

trial court can revisit any further motion to compel on remand. We agree that we

do not need to address this issue and that a future motion to compel, if any, may

be addressed on remand.

400 Towner v. Bernardo/Silverton Health

the court erred in granting summary judgment in favor of

Silverton Hospital upon concluding that, because Bernardo

was not the actual or apparent agent of the hospital, it was

not vicariously liable for Bernardo’s negligence. We con-

clude that there is evidence from which a reasonable juror

could find that Bernardo was an apparent agent of Silverton

Hospital and that, therefore, the hospital could be vicari-

ously liable for Bernardo’s alleged negligence. However, we

conclude that, on this record, Bernardo was not an actual

agent of Silverton Hospital as a matter of law and, therefore,

Silverton Hospital cannot be vicariously liable on that basis.

We reverse the limited judgments and remand to the trial

court for further proceedings consistent with this opinion.

I. VICARIOUS LIABILITY:

ACTUAL AND APPARENT AGENCY

We start by addressing plaintiff’s third assignment

of error challenging the trial court’s grant of summary judg-

ment. Plaintiff filed her complaint against Silverton Hospital

claiming that Bernardo negligently performed surgery on

her at the hospital. Plaintiff further alleged that Bernardo

was the hospital’s actual or apparent agent, and, therefore,

the hospital was vicariously liable for Bernardo’s negligence.

Silverton Hospital moved for summary judgment, contend-

ing that it could not be vicariously liable as a matter of law

under either an actual or apparent agency theory. The court

agreed with the arguments presented by the hospital and

explained that it “would grant summary judgment on the

motion on both of the [theories], actual agency and apparent

agency and enter judgment for Silverton Health based upon

that.”

We review a trial court’s grant of summary judg-

ment for legal error, and we will affirm if there are no gen-

uine issues as to any material fact and the moving party is

entitled to judgment as a matter of law. Balzer v. Moore, 293

Or App 157, 159, 427 P3d 193, rev den, 363 Or 817 (2018).

There is “[n]o genuine issue as to a material fact” when

“no objectively reasonable juror could return a verdict for

the adverse party on the matter that is the subject of the

motion for summary judgment.” ORCP 47 C. In determining

whether the court erred in granting summary judgment,

Cite as 304 Or App 397 (2020) 401

“we view the facts and all reasonable inferences that may

be drawn from them in the light most favorable to the non-

moving party—in this case, plaintiff.” Eads v. Borman, 234

Or App 324, 326, 227 P3d 826 (2010), aff’d, 351 Or 729, 277

P3d 503 (2012) (Eads I). With that standard in mind, we

state the following facts.

A. Factual Background

In October 2011, plaintiff began experiencing

severe abdominal pain. She consulted her primary care

physician, who tentatively diagnosed plaintiff with diver-

ticulitis and advised her to seek emergency care. Plaintiff

lived near Silverton Hospital and had brought her children

there for medical care. Silverton Hospital advertised its

services to the community, including by mailing market-

ing materials to local home addresses and posting adver-

tisements in local newspapers. It consistently advertised its

emergency and surgical services. In some advertisements,

it touted the quality of “our Specialist Centers and medical

staff” and represented that it “provides” medical services to

the community. Others informed the public that Silverton

Hospital offers a “Specialist Center” as well as “General

Surgery” services. At least one advertisement included

a photograph of Bernardo with a caption advertising

“GENERAL/VASCULAR SURGERY” and other text that

referenced “the professionals that comprise the Silverton

Hospital Network” and “[o]ur specialty medical profession-

als.” Silverton Hospital’s website also listed Bernardo on the

webpage describing the hospital’s “Surgical Services” along

with the message that “it is possible for area residents to

stay close to home” for surgical services.

When she arrived at Silverton Hospital, an emer-

gency room doctor evaluated plaintiff. That doctor admitted

plaintiff to the hospital and contacted Bernardo, who was

“on call” to evaluate possible surgical cases in the emergency

room. Bernardo was licensed to practice medicine in Oregon

and had his own private surgical practice. He had been

granted staff privileges at a number of health care facili-

ties, including Silverton Hospital. Those privileges allowed

Bernardo to practice medicine at Silverton Hospital and

402 Towner v. Bernardo/Silverton Health

subjected Bernardo to its peer review process, but Bernardo

was not a Silverton Hospital employee.

As a condition of maintaining privileges at Silverton

Hospital, Bernardo had agreed to follow the hospital’s

medical staff bylaws, which describe the nature of the

duties owed by each member of the medical staff—whether

employed by Silverton Hospital or an independent physician

with privileges. Under the bylaws, active members of the

medical staff were required to be “on call” to the Emergency

Department at Silverton Hospital. Silverton Hospital paid

“on call” doctors a flat rate for each “ call shift” to which they

responded. Apart from that flat fee, it did not pay Bernardo

a salary or otherwise contribute to or support Bernardo’s

private medical practice. Under the bylaws, the hospital did

not supervise or facilitate any doctor-patient relationship

that continued between an “on call” doctor with privileges

and his or her patient after that patient was discharged

from the hospital. Those patients were free to continue to

seek future services from the doctor in an independent

capacity.

Without plaintiff’s input, Silverton Hospital assigned

Bernardo to plaintiff’s case. Bernardo met plaintiff for the

first time in her hospital room. Bernardo explained that

he was the surgeon who would care for her. He explained

her diagnosis—diverticulitis—and advised her that he

was keeping her in the hospital overnight for observation.

Bernardo saw plaintiff again in the hospital the next day.

He explained that her condition had not improved and that

she would likely need surgery, namely, a laparoscopic col-

ectomy. Bernardo arranged with plaintiff to follow up with

him at his office across the street from Silverton Hospital.

After the hospital’s emergency room staff had

admitted plaintiff to the hospital, Bernardo was the only

doctor who discussed plaintiff’s case with her during the

three days she spent there. Nurses and other hospital staff

cared for plaintiff as well. Some of those individuals vouched

for Bernardo. One nurse told plaintiff and her husband that

Bernardo was “a great doctor.” A nurse—it is unclear if it

was the same nurse—told plaintiff’s husband that Bernardo

was “one of our best.”

Cite as 304 Or App 397 (2020) 403

On Bernardo’s recommendation, plaintiff sched-

uled an appointment with Bernardo to discuss her surgery.

She was later contacted by a member of Bernardo’s staff

and told that the visit would be at Bernardo’s Salem-area

office because he no longer maintained his office across

from Silverton Hospital. Plaintiff traveled to Salem for her

appointment. She met with Bernardo at his personal office,

where nothing indicated that Silverton Hospital managed

or was otherwise involved with Bernardo’s practice. Plaintiff

filled out paperwork at Bernardo’s office, including a patient

agreement, which similarly did not reference Silverton

Hospital.

Plaintiff decided to have Bernardo perform the

surgery at Silverton Hospital. Plaintiff chose the hospital

because it was close to her home and because she “had faith

in [Silverton]” and “had decent experiences with them.”

Prior to her surgery, plaintiff signed paperwork provided by

the hospital, which included a general clause that “some”

care providers who offer services at Silverton Hospital are

not employed by the hospital, without naming any providers.

We quote below at some length plaintiff’s deposition

transcript regarding her understanding of Bernardo’s role

at Silverton Health prior to her surgery because we conclude

that these facts are significant to our analysis. Plaintiff’s

answers are not always clear, but do provide an overall pic-

ture regarding her knowledge and reliance on Silverton

Hospital’s express and implied representations:

“Q On [the date of the surgery] when you walked into

the hospital did you believe that Dr. Bernardo was an

employee of Silverton Health?

“A I did.

“Q And why did you believe that?

“A Because I saw him there, because he treated me

there, because of the picture on the wall, very large picture

that stated Chief of Surgery led me to believe that he was

an employee of Silverton Hospital.

“Q Other than seeing him there * * * and seeing the

picture on the wall Chief of Surgery, any other factual basis

404 Towner v. Bernardo/Silverton Health

why you believe, on [the date of the surgery], Dr. Bernardo

was an employee of Silverton Health?

“A I was never told otherwise.

“Q Again, same question. I’m looking for affirmative

factual basis other than seeing him there at the hospi-

tal and his picture on the wall Chief of Surgery, can you

cite any other factual basis that led you to believe on

March 27, 2012 that Dr. Bernardo was an employee of

Silverton Health?

“A No.

“Q So I gather that any marketing materials that you

may have seen of Silverton Health before the surgery did

not lead you to believe Dr. Bernardo was an employee of

Silverton Health?

“A It did lead me to believe that he was.

“Q I’d asked you what factual basis did you believe on

[the date of the surgery] led you to think Dr. Bernardo was

an employee, you gave me two reasons; you saw him there,

picture on the wall, Chief of Surgery.

“Had you heard something or seen something from

Silverton Health before [the date of the surgery] that led

you to believe that he was an employee of Silverton Health?

“A No.

“* * * * *

“Q * * * In making the decision to go ahead with this

surgery, did you rely upon the medical advice and counsel

of anyone other than Dr. Bernardo?

“A Just nurses [who] previously told us what a great

doctor he was.

“Q And that’s perhaps why you might go with

Dr. Bernardo, because some nurse told you he was a great

doctor, fair enough.

“A They work there.”

Plaintiff then testified again that she had seen Bernardo’s

picture on the wall of Silverton Hospital “before” her sur-

gery, but she could not remember precisely when and could

not remember when she read any further details below the

Cite as 304 Or App 397 (2020) 405

picture regarding Bernardo’s education, interests, family

and surgical specialty. Plaintiff understood the term “Chief

of Surgery” to mean that Bernardo was “in charge of the

surgery staff” and the “surgical room.”

Bernardo performed plaintiff’s colectomy surgery

in an operating room at Silverton Hospital. During the oper-

ation, Bernardo entered plaintiff’s abdomen with a laparo-

scopic device. While initially placing that device, Bernardo

lacerated the right renal vein and the inferior vena cava, a

major blood vessel that carries blood from the lower body to

the heart. Bernardo attempted vascular surgery to repair

the damage and completed the colectomy. Plaintiff was then

airlifted to OHSU to address the complications that arose

during that surgery. At OHSU, surgeons discovered further

vascular injuries, including damage to plaintiff’s portal vein

that had been closed completely, affecting the flow of blood

and oxygen to plaintiff’s liver. Plaintiff suffered significant

damage to several major blood vessels and her liver, result-

ing in severe and costly physical injury.

The crux of plaintiff’s argument is that, based on

the foregoing facts, a reasonable factfinder could conclude

that Bernardo was Silverton Hospital’s actual or apparent

agent, and, therefore, that there is at least a question of fact

as to whether the hospital is vicariously liable for Bernardo’s

alleged negligence during plaintiff’s surgery.

Generally, an agency relationship “results from the

manifestation of consent by one person to another that the

other shall act on behalf [of] and subject to his control, and

consent by the other so to act.” Eads v. Borman, 351 Or 729,

735, 277 P3d 503 (2012) (Eads II).3 An agency relationship

can arise based on “actual consent (express or implied) or

from the appearance of such consent.” Id. at 736. Whether

actual or apparent, “the principal is bound by or otherwise

3

In Eads I, we decided the defendant landlord’s vicarious liability on a the-

ory of both actual and apparent agency. 234 Or App at 329, 332. The plaintiffs in

that case abandoned their actual agency theory before the Supreme Court, and

the court decided only the apparent agency theory. Eads II, 351 Or at 736 n 3. As

discussed below, however, the Supreme Court did address some general princi-

ples of agency that apply when an agent causes physical injury. In our discussion,

we generally rely on Eads I for our discussion of plaintiff’s actual agency theory

and Eads II for plaintiff’s apparent agency theory.

406 Towner v. Bernardo/Silverton Health

responsible for the actual or apparent agent’s acts” if “the

acts are within the scope of what the agent is actually or

apparently authorized to do.” Id. Unless the evidence allows

only one inference, whether a person is the actual or appar-

ent agent of a putative principal is a question of fact for the

jury. See Shepard v. Sisters of Providence, 89 Or App 579,

585-89, 750 P2d 500 (1988) (explaining the jury’s role in

determining issues of actual and apparent agency when the

evidence supports competing inferences).

B. Actual Agency

We begin with the elements of actual agency. For a

party to establish actual agency, that party must show that

“the principal ha[s] a right to control the acts of its agent”

and “both parties must also agree that the agent will act on

the principal’s behalf.” Eads I, 234 Or App at 329. For phy-

sicians to be the actual agents of a hospital or other health

care provider, the latter “need not have a level of control that

would cause the physicians to abrogate their independent

professional judgment.” Id. at 331 (internal quotation marks

and brackets omitted). But there still must be some evi-

dence that the physician and the putative principal mutu-

ally agreed that the former will act on the principal’s behalf,

and the principal must have a right of control over the phy-

sician’s acts that caused the injury. Id. at 332.

When the agent’s conduct causes physical injury,

there are additional principles that come into play. Eads II,

351 Or at 738. In Eads II, the Supreme Court made clear

that, in cases involving “physically injurious conduct,”

whether based on actual or apparent agency, a second set of

legal principles arise. Id.

“[T]o impose vicarious liability for a nonemployee agent’s

physical conduct, the principal must have—or appear to

have—a right to control how the act is performed—that is,

the physical details of the manner of performance—that is

characteristic of an employee-employer relationship.”

Id. at 739-40 (internal quotation marks and emphasis omit-

ted). The right of control or apparent right of control must be

“over the agent’s injury-causing actions.” Id. at 739.

Cite as 304 Or App 397 (2020) 407

Two of our cases illustrate the foregoing principles.

In Bridge v. Carver, 148 Or App 503, 509-10, 941 P2d 1039,

rev den, 326 Or 57 (1997), we concluded that the evidence

supported a finding that a county-run health care program

had actual authority over a physician. Although the phy-

sician was not a county employee, a written agreement

between the parties evidenced their mutual consent to an

agency relationship. Id. at 506. The county controlled the

patients that the physician saw, when he saw them, and the

general scope of his treatment within the county program.

Id. at 509. By contrast, we concluded in Eads I that the puta-

tive principal did not have actual authority over a nonem-

ployee physician. 234 Or App at 332. In that case, “there

[was] no indication that anyone agreed that [the physician]

would act as an agent for defendant,” and there was no evi-

dence that anyone other than the physician “controlled what

patients he saw, when he saw them, and the scope of treat-

ment he provided to them.” Id.

We turn to an application of those principles to

the minimal record we have regarding Silverton Hospital’s

control over Bernardo. Silverton Hospital had granted

Bernardo privileges to treat patients and perform surger-

ies at the hospital. In order to obtain privileges, Bernardo

had agreed to the medical staff bylaws. Neither the bylaws

nor any other agreement in the summary judgment record

indicated that Bernardo was an employee or agent of

Silverton Hospital. Under the bylaws—and in contrast to

the agreement between Silverton Hospital and its employee-

physicians—the hospital paid Bernardo a fee for respond-

ing to calls from the hospital emergency room while he was

“on call,” but it did not pay Bernardo’s regular salary, offer

Bernardo benefits or liability insurance, supply overhead,

facilitate patient billing, restrict where Bernardo could seek

and obtain privileges, or directly supervise Bernardo’s day-

to-day practice of medicine. Nor is there any other evidence

to suggest that anyone other than Bernardo controlled what

patients he saw in his private practice or when, where, and

how he saw and treated his patients.

Based on the available evidence, it does not appear

that the hospital dictated or otherwise controlled Bernardo

408 Towner v. Bernardo/Silverton Health

in his surgical practice, notwithstanding the fact that

Silverton Hospital was the site of plaintiff’s surgery and the

hospital staff assisted to some extent in the surgery. In light

of the lack of evidence in the summary judgment record

of Silverton Health’s right to control Bernardo’s surgical

practice, we conclude that a reasonable factfinder could not

conclude that Bernardo was an actual agent of Silverton

Hospital in performing plaintiff’s surgery.

In arguing to the contrary, plaintiff relies heavily

on our decision in Themins v. Emanuel Lutheran, 54 Or App

901, 637 P2d 155 (1981), rev den, 292 Or 568 (1982). Themins

and our related case law address the principal-agent rela-

tionship between hospitals and doctors. We have stated that

“physicians who are nominally ‘independent contractors’

may be treated as actual or ostensible hospital agents, for

purposes of vicarious liability, when they perform profes-

sional services which are integral to hospital operations and

which hospitals hold themselves out to the public to provide.”

Shepard, 89 Or App at 587.

In Themins, we considered whether a resident

doctor who was doing his residency at the University of

Oregon Health Sciences Center, but on rotation at Emanuel

Hospital, could be an agent of the latter hospital when he

injured a patient there while on rotation. 54 Or App at

903-04. We concluded that there was an issue of fact pre-

cluding summary judgment because the resident “was argu-

ably acting as an agent in performing an inherent function

of the hospital, a function without which the hospital could

not properly achieve its purpose.” Id. at 908 (internal quota-

tion marks omitted). Plaintiff acknowledges in her briefing

that she must show “some degree of control” by Silverton

Hospital over Bernardo to meet the requirements of actual

agency, but argues that, when a physician is performing an

integral service of the hospital, “then a reasonable juror can

infer that the physician is the hospital’s actual agent.”

We note that it is unclear whether Themins applies

only in the context of apparent agency or also to actual

agency. See id. (stating that a jury could have found the doc-

tor an “ ‘ostensible,’ if not actual, agent of Emanuel”). In Eads,

both our court and the Supreme Court treated Themins and

Cite as 304 Or App 397 (2020) 409

its progeny as apparent agency cases. See Eads II, 351 Or at

745 n 13 (referring to Themins and related Court of Appeals

cases as apparent agency cases); Eads I, 234 Or App at 335

n 7 (characterizing Themins, Shepard, and other cases as

applying the “doctrine of apparent agency”). We discuss this

issue further below when we address apparent agency.

Regardless, proof that a doctor is providing an inte-

gral or inherent service of the hospital is not, at least on its

own, sufficient to demonstrate that the hospital is exercis-

ing actual control over “how the act is performed—that is,

the physical details of the manner of performance—that is

characteristic of an employee-employer relationship” or to

show that the hospital controls the doctor’s “injury-causing

actions.” Eads II, 351 Or at 739 (internal quotation marks

omitted). “The fact that a nonemployee is actually or appar-

ently authorized in some general way to act on a principal’s

behalf is not a sufficient basis to impose vicarious liability

on the principal for the actual or apparent agent’s tortious

conduct.” Id. In addition, plaintiff did not present any evi-

dence that there was an agreement that Bernardo would

act on Silverton Hospital’s behalf in performing surgeries.

Consequently, the trial court did not err when it granted

Silverton Hospital summary judgment because plaintiff

failed to raise an issue of fact that Bernardo was the hospi-

tal’s actual agent when performing plaintiff’s surgery.

C. Apparent Agency

We turn to address the trial court’s grant of sum-

mary judgment to Silverton Hospital on the basis that

Bernardo could not be an apparent agent of the hospital on

this record as a matter of law. “[A]pparent authority to do

any particular act can be created only by some conduct of

the principal which, when reasonably interpreted, causes a

third party to believe that the principal consents to have

the apparent agent act for him on that matter.” Id. at 736.

Our Supreme Court has followed the weight of authority

from other jurisdictions to conclude that, “in a proper case,

a hospital or other entity can be held vicariously liable for

a physician’s negligence on an apparent authority theory.”

Id. at 745.

410 Towner v. Bernardo/Silverton Health

Whether this is a proper case turns on the follow-

ing elements: “(1) whether the putative principal held itself

out, expressly or implicitly, as a direct provider of medical

care so as to lead a reasonable person to conclude that the

negligent actor who delivered the care was the principal’s

employee or agent in doing so”; and “(2) whether the plaintiff

relied on those representations by looking to the putative

principal, rather than to a specific physician, as the provider

of the care, and not just as a situs in which a physician of the

plaintiff’s choosing provided the care.” Id. at 746. As noted

above, because this is a case arising out of physical inju-

ries, there is an additional requirement for plaintiff to show

that the principal appears to have a right to control how the

agent performs the injury-causing act in a manner that is

characteristic of an employee-employer relationship. Id. at

739-40.

1. Holding itself out as a direct provider

With respect to the first element—whether the

hospital “held itself out * * * as a direct provider of medical

care”—the Supreme Court in Eads II explained that, increas-

ingly, “modern-day hospitals are engaged in directly provid-

ing medical care and services, rather than merely providing

a situs where medical professionals do so in furtherance of

their individual medical practices.” Id. at 743. As a result of

that shift, “hospitals are now run like businesses and pro-

mote themselves based on the superior quality of the health

care they offer.” Id. Even apart from commercial advertising,

“hospitals cultivate high visibility in their communities to

present themselves as vital to community health rather than

as mere facilities in which private physicians practice their

professions.” Id. (internal quotation marks omitted). By that

“holding out,” a hospital “cultivates an image that causes the

public to assume, correctly or not, that the hospital exerts

some measure of control over the medical activities inte-

gral to the hospital setting.” Id. (internal quotation marks

omitted); see also Jennison v. Providence St. Vincent Medical

Center, 174 Or App 219, 231-32, 25 P3d 358 (2001) (stating

that, “if the hospital undertakes to provide certain services to

the public and there is no evidence indicating that the patient

was aware of the physician’s nonemployee status, then the

‘holding out’ requirement of the doctrine is satisfied”).

Cite as 304 Or App 397 (2020) 411

A related question is whether the services that the

hospital allegedly held itself out as the direct provider of

are “integral to the hospital setting.” Eads II, 351 Or at

743; see also Shepard, 89 Or App at 587 (explaining that

a nonemployee physician may be the “ostensible agent” of

a hospital if they “perform professional services which are

integral to hospital operations”). A putative agent provides

an “integral” service by “performing an inherent function

of the hospital, a function without which the hospital could

not properly achieve its purpose.” Shepard, 89 Or App at

584 (internal quotation marks omitted). We have previously

discussed examples of “integral” services that, depending

on the facts in each case, may include emergency, radiol-

ogy, and pathology services. Id. at 586; cf. Jones v. Salem

Hospital, 93 Or App 252, 267, 762 P2d 303 (1988), rev den,

307 Or 514 (1989) (concluding that pediatric services are not

“integral to hospital operations”).4 But we have neither pur-

ported to provide an exhaustive list of “integral” services

that exist as a matter of law nor have we concluded that

surgical services cannot be integral to the hospital setting.

Rather, whether a medical service is integral to the hospital

setting is a fact-intensive inquiry best resolved by the jury

unless the evidence at summary judgment allows but one

reasonable inference.

2. Reasonable reliance

With respect to the second element of apparent

agency—reasonable reliance—that inquiry turns on whether

the plaintiff “looked to and relied on the hospital as the

4

In Jones, a 1988 case, we concluded that pediatric services were not “inte-

gral to hospital operations,” because they are “among the general run of pro-

fessional specialties which private practitioners, with privileges on a hospital’s

medical staff, perform on hospital facilities.” 93 Or App at 267. Without deciding

the issue, we note that our reasoning in Jones for rejecting the possibility that

pediatric services could be “integral to hospital operations” may be called into

question by the Supreme Court’s subsequent opinion in Eads II and could be

belied by current hospital practices. As discussed, Eads II highlighted a mod-

ern trend in hospital operations, whereby hospitals are increasingly “engaged

in directly providing medical care and services, rather than merely providing a

situs where medical professions do so in furtherance of their individual medical

practice.” 351 Or at 743. Modern hospitals, in other words, are now more likely to

promote and integrate a wide range of specialized services into the core of hospi-

tal operations, which may, depending on the facts, allow for a broader spectrum

of services to be deemed “integral.”

412 Towner v. Bernardo/Silverton Health

direct provider of the medical services rendered.” Eads II,

351 Or at 744. In some circumstances, “if a patient seeks

medical services from a physician who has staff privileges

at a hospital and who uses the hospital merely as the situs

for the physician’s own medical practice, the necessary reli-

ance on the hospital as a direct provider of care is lacking.”

Id. However, if the patient reasonably relies on the reputa-

tion of the hospital itself as a care provider and does not

knowingly choose to receive care from a nonemployee phy-

sician who will merely use the hospital as the situs of care,

a jury may reasonably conclude that the second element of

apparent agency has been met. Id.

3. Bernardo as apparent agent of Silverton Hospital

With that background in mind, we consider whether,

in light of the summary judgment record and drawing all

inferences from the facts therein in plaintiff’s favor, a rea-

sonable factfinder could find that an apparent agency rela-

tionship existed between Silverton Hospital and Bernardo.

As to the first element, the record provides a basis from

which a reasonable factfinder could conclude that Silverton

Hospital held itself out as the direct provider of surgical

services, such that it was the hospital that was ultimately

providing plaintiff’s care. For example, Silverton Hospital

held itself out to the public through advertisements and

promotional materials as a provider of general medical ser-

vices, as well as emergency vascular care and general sur-

gical services of the sort plaintiff received from Bernardo.

To that end, it directly promoted its surgical services to the

community. From those facts, a reasonable factfinder could

conclude that Silverton Hospital held itself out as a care pro-

vider, not merely as a situs where independent care provid-

ers could offer their services.

A reasonable factfinder could also conclude that

Silverton Hospital specifically held Bernardo out as its

agent who would perform the surgical services that were

ultimately provided and controlled by the hospital. Bernardo

was featured in advertisements touting Silverton Hospital’s

surgical program. Bernardo was also held out to the pub-

lic as Silverton Hospital’s “chief of surgery.” Not only did he

hold that position, Bernardo’s photograph hung on a wall in

Cite as 304 Or App 397 (2020) 413

Silverton Hospital with a plaque giving his title. The hospi-

tal emergency room staff called Bernardo in to treat plain-

tiff and initiated the relationship between plaintiff and

Bernardo. Bernardo treated plaintiff in Silverton Hospital

for multiple days. During that time, Silverton Hospital staff

members vouched for Bernardo, even referring to him as

one of “our” best. Based on the summary judgment record,

neither Silverton Hospital’s staff or administration nor

Bernardo himself informed plaintiff that Bernardo was not

a Silverton Hospital employee.

Silverton Hospital argues that “chief of surgery”

is solely an administrative position that is not indicative of

control or authority by the hospital over the individual who

holds that position. We see no reason on this record why an

ordinary hospital patient would be aware of that distinction,

especially when the hospital advertises the chief of surgery

to patients and other hospital visitors. More importantly,

we see no reason why a reasonable factfinder would have to

draw the conclusion that “chief of surgery” is solely a title

for administrative purposes and not related to the hierar-

chy of the hospital’s surgery team for providing surgical ser-

vices on behalf of the hospital. As we explained in Jennison,

“[t]he public, in looking to the hospital to provide * * * care,

is unaware of and unconcerned with the technical complex-

ities and nuances surrounding the contractual and employ-

ment arrangements between the hospital and the various

medical personnel operating therein.” 174 Or App at 236.

In addition, a reasonable factfinder could find that

the surgical services offered and performed by Bernardo for

plaintiff at Silverton Hospital are, at least under the facts

of this case, of the sort that are “integral” to the hospital’s

operations. Silverton Hospital engaged in pervasive and

sophisticated advertising in order to present itself to the

community as a provider of vital medical services, including

a variety of surgical services. More than that, in a physi-

cian employment agreement created by Silverton Hospital,

the company proclaims that its “goal” is to provide “compre-

hensive health care services”—including care from “General

Surgeon physicians”—because of the “need” for such ser-

vices in the community. To that end, the Silverton Hospital

chief executive officer explained in his deposition in this

414 Towner v. Bernardo/Silverton Health

case that general surgery was among the “core” services

provided by the hospital to the community. Although we do

not decide whether nonemergency surgery is categorically

integral to every hospital, there was sufficient evidence at

summary judgment to support an inference that it is inte-

gral to Silverton Hospital’s operations.

A reasonable factfinder could also find that plain-

tiff has established the second element of apparent agency,

reasonable reliance. As we summarized, Silverton Hospital

held itself out as a provider of both general and specialized

medical services, including various surgical specialties. The

emergency room staff called Bernardo in to examine plain-

tiff in the emergency room while she was there for diagno-

sis and treatment of a serious medical condition. Bernardo

introduced himself to plaintiff as the doctor who would be

caring for her during her stay, and Bernardo’s skills were

vouched for by Silverton Hospital staff members. Bernardo

continued to visit and treat plaintiff in Silverton Hospital

over the course of three days. Plaintiff was never advised

during that time or at any time before her surgery that

Bernardo was not an employee of Silverton Hospital, and

there is no evidence that plaintiff had actual knowledge of

Bernardo’s employment status.

Most significantly, Silverton Hospital advertised

Bernardo to hospital visitors as the “chief of surgery.” Plain-

tiff testified that she understood from Silverton Hospital

having placed Bernardo’s picture on the hospital wall with

the title “chief of surgery” that he was, in fact, the chief of

surgery for the hospital. Plaintiff understood that to mean

that Bernardo was in charge of the surgery staff and “sur-

gical room” for the hospital. A reasonable factfinder could

certainly credit plaintiff’s reasonable belief that Bernardo

was acting as head of surgery for Silverton Hospital and

not merely, as the hospital contends, in an administrative

function that was not representative of Bernardo’s surgical

work on behalf of the hospital. Of course, a factfinder could

find otherwise, but the record does not support only one rea-

sonable inference.

Silverton Hospital contends that the hospital was

merely the situs of plaintiff’s surgery and not a place that

Cite as 304 Or App 397 (2020) 415

plaintiff intended to directly provide and be responsible for

her medical care. In support of that argument, Silverton

Hospital points to the fact that, before her surgery, plaintiff

visited Bernardo several times at his Salem office, which

was not connected with the hospital. It also points to other

evidence in the record regarding, among other things, plain-

tiff’s choice of the hospital over other possible locations for

her surgery.

We acknowledge those facts and they support one

reasonable inference, but that is not the only inference a rea-

sonable factfinder could draw. Taken together, the facts at

least support an inference that plaintiff reasonably believed

that Bernardo was providing medical care on behalf of

Silverton Hospital and that she relied on that belief when

making decisions regarding her treatment. A reasonable

factfinder could conclude that a person in plaintiff’s posi-

tion would not have known that Bernardo, a surgeon whom

plaintiff first encountered in the hospital emergency room

in a patient-doctor capacity, was not employed and directly

supervised by Silverton Hospital. As explained in Jennison,

“[t]he public, in looking to the hospital to provide * * * care,

is unaware of and unconcerned with the technical complex-

ities and nuances surrounding the contractual and employ-

ment arrangements between the hospital and the various

medical personnel operating therein. * * * Public policy dic-

tates that the public has every right to assume and expect

that the hospital is the medical provider it purports to be.”

174 Or App at 236.

Further, on this summary judgment record, plain-

tiff at least created an issue of fact that Silverton Hospital

appeared to have a right to control Bernardo as the hospi-

tal’s designated chief of surgery in the conduct of his surger-

ies, including his surgery on plaintiff, that was similar to

the control existing in an employer-employee relationship.

Eads II, 351 Or at 739-40. A reasonable factfinder could find

that a chief of surgery of a hospital is acting as an employee

or engaging in employee-like duties when performing sur-

gery for that hospital and is not an independent contractor

or visitor over whom the hospital does not appear to have

any right to control.

416 Towner v. Bernardo/Silverton Health

In sum, a reasonable factfinder could find that

Silverton Hospital held itself out as the direct provider of

plaintiff’s care and that plaintiff relied on that manifesta-

tion when she elected to have Bernardo perform her sur-

gery at the hospital. A reasonable factfinder could also find

that Silverton Hospital appeared to have a right to control

Bernardo in his surgery on plaintiff. We therefore conclude

that the trial court erred in granting summary judgment in

Silverton Hospital’s favor with respect to plaintiff’s appar-

ent agency theory of vicarious liability.

II. PLAINTIFF’S CHALLENGE TO THE TRIAL

COURT’S GRANT OF SILVERTON HOSPITAL’S

MOTION TO DISMISS

Plaintiff also contends that the trial court erred

when it dismissed her claim against Silverton Hospital for

negligently hiring, retaining, and supervising Bernardo.

The hospital, which refers to this claim as a “negligent cre-

dentialing claim,” moved to dismiss the allegations that

could give rise to such a claim, namely paragraphs 18(a)

and 18(c) through 18(i) of plaintiff’s complaint. The hospi-

tal’s arguments in the trial court, broadly speaking, fit into

two categories: one, that there is no claim for “negligent

credentialing” under common law or by statute, and, two,

that even if there were such a claim, that claim has either

been abrogated by or effectively precluded by a hospital’s

peer review privilege under ORS 41.675. After a hearing,

the court concluded that it was “persuaded by defendant’s

arguments,” separately noting that it did not believe that

there was either an express or implied cause of action.

We review the trial court’s grant of a motion to dis-

miss under ORCP 21 A(8) for legal error, accepting as true all

well-pleaded allegations in the complaint and giving plain-

tiff the benefit of all favorable inferences that may be drawn

from the facts alleged. Deep Photonics Corp. v. LaChapelle,

282 Or App 533, 548, 385 P3d 1126 (2016), rev den, 361 Or

524 (2017) (citing Granewich v. Harding, 329 Or 47, 51, 985

P2d 788 (1999)). A court may not grant an ORCP 21 A(8)

motion to dismiss on the basis of anything other than the

body of the pleadings themselves. Deep Photonics Corp., 282

Or App at 548. Thus, where a defendant’s ORCP 21 A(8)

Cite as 304 Or App 397 (2020) 417

challenge is based on a defense to otherwise well-pleaded

claims, that defense is available only if it arises from the

face of the complaint. Id.

Here, Silverton Hospital successfully moved to dis-

miss paragraph 18, subparagraphs (a) and (c) to (i), of plain-

tiff’s complaint. In those subparagraphs, plaintiff alleged

the following:

“[18.] Defendant Silverton Hospital was negligent in

one or more of the following ways, which caused injury to

the plaintiff:

“a. In allowing defendant Dr. Bernardo to continue to

perform surgery on plaintiff Gail Towner after it became

apparent that he had injured her major blood vessels and

was not qualified to repair them;

“* * * * *

“c. In granting privileges to defendant Dr. Bernardo to

perform surgery;

“d. In granting privileges to defendant Dr. Bernardo

to perform laparoscopic procedures using the Visiport sys-

tem, without verifying or confirming that he had the requi-

site training and experience to use the system;

“e. In failing to restrict or terminate Dr. Bernardo’s

surgical privileges, including privileges to perform lap-

aroscopic procedures using the Visiport system, prior to

March 27, 2012, when defendant Hospital knew or should

have known that Dr. Bernardo had performed other laparo-

scopic surgeries on patients at defendant Hospital, who sus-

tained injuries following such surgeries by Dr. Bernardo;

“f. In failing to proctor or monitor Dr. Bernardo’s sur-

gical practice at defendant Hospital prior to March 27,

2012, when defendant Hospital knew or should have known

that such proctoring or monitoring was necessary because

of results of prior surgical cases of Dr. Bernardo’s;

“g. In failing to have properly-trained and objec-

tive surgeons systematically reviewing and scrutinizing

Dr. Bernardo’s surgeries performed at defendant Hospital

between October, 2006 and March 27, 2012;

“h. In failing to have in place proper, effective and

consistent peer review processes and procedures that were

418 Towner v. Bernardo/Silverton Health

unbiased and based upon reviews by physicians trained in

peer review, as required by law; and

“i. In failing to recognize that Dr. Bernardo’s rate

of accidental injuries during surgeries performed by him

between October, 2006 and March 27, 2012, was excessive

and placed patients, including plaintiff Gail Towner, at

increased risk for sustaining a permanent and serious sur-

gical injury.”

The allegations can be largely grouped into three separate,

albeit related, parts. First, plaintiff alleges that Silverton

Hospital either should not have initially granted or should

have later revoked Bernardo’s general or specific surgical

privileges at the hospital. See, e.g., allegations 18(c), (d), (e).

Second, plaintiff alleges that the hospital failed to super-

vise Bernardo’s surgical practices as to individual patients,

including plaintiff. See, e.g., allegations 18(a), (f). Third, and

somewhat related, plaintiff alleges that there was not a suf-

ficient peer review process that reviewed Bernardo’s surger-

ies and outcomes more generally. See, e.g., allegations 18(g),

(h), (i).

Silverton Hospital’s arguments before us mirror

those made to the trial court—namely, that either there is

no negligent credentialing claim under law or, if there is,

that claim is barred because plaintiff, here, alleged ultimate

facts that are “inherently and absolutely privileged and

could never be discovered or offered into evidence” by either

party under ORS 41.675. Addressing the first argument,

we reject Silverton Hospital’s attempt to recast plaintiff’s

claim so narrowly as solely one for “negligent credentialing.”

At the time of dismissal, plaintiff alleged that Silverton

Hospital was negligent, based on the hospital’s vicarious lia-

bility for Bernardo’s alleged negligence, which we addressed

above, and the hospital’s direct liability, which we address

now. In alleging Silverton Hospital’s direct liability, plain-

tiff alleged claims that are readily understood as claims for

the hospital’s negligent hiring of Bernardo as an agent and

its subsequent negligent supervision of Bernardo. Claims

against a principal alleging direct liability for the princi-

pal’s negligent hiring and supervision of an agent are well

established theories of negligence under the common law.

Vaughn v. First Transit, Inc., 346 Or 128, 138 n 7, 206 P3d

Cite as 304 Or App 397 (2020) 419

181 (2009) (citing Restatement (Second) of Agency § 213 (1958)

for the proposition that a principal may be directly liable “if

the principal itself was negligent in hiring, instructing, or

supervising the agent”); Eads II, 351 Or at 739 n 6 (acknowl-

edging the possibility of the same in the context of a medical

malpractice claim). Therefore, we reject Silverton Hospital’s

argument that plaintiff’s claims for direct liability are not

viable under law.5

The hospital’s contention that plaintiff’s direct-

liability negligence claim is barred because it alleges ulti-

mate facts that are all absolutely privileged under ORS

41.675 presents a closer issue. To address it, we discuss ORS

41.675 and the peer-review privilege.

A hospital’s governing body is responsible for ensur-

ing that physicians admitted to practice at the hospital are

“granted privileges consistent with their individual training,

experience and other qualifications,” that procedures are in

place for “granting, restricting and terminating privileges,”

and that the medical staff is organized “in such a manner as

to effectively review the professional practices of the facility

for the purposes of reducing morbidity and mortality and for

the improvement of patient care.” ORS 441.055(1). A “peer

review body” includes a hospital’s

“governing bodies or committees * * * or any other medical

group or provider of medical services in connection with

bona fide medical research, quality assurance, utilization

review, credentialing, education, training, supervision or

discipline of physicians * * * or in connection with the grant,

denial, restriction or termination of clinical privileges at a

health care facility.”

ORS 41.675(1).

The peer review process is protected by an exten-

sive privilege. Under ORS 41.675(3), “data” provided to or

created by a hospital’s “peer review body” is privileged and,

5

The dismissal of a claim is a question of law based on allegations and not,

as in summary judgment, a question of whether the plaintiff presented facts to

support the claim. Further, there are discovery issues associated with this claim.

These issues are not affected by our previous conclusion that plaintiff failed to

raise an issue of fact concerning whether Bernardo was an actual agent of the

hospital as part of the vicarious liability claim.

420 Towner v. Bernardo/Silverton Health

with a limited exception for “records dealing with a patient’s

care and treatment,” “shall not be admissible in evidence in

any judicial, administrative, arbitration or mediation pro-

ceeding.” See also ORS 441.055(7) (“All findings and con-

clusions, interviews, reports, studies, communications and

statements procured by or furnished to the peer review com-

mittee in connection with a peer review are confidential pur-

suant to [the public records and meetings laws] and all data

is privileged.”). “Data” includes “all oral communications

or written reports to a peer review body, and all notes or

records created by or at the direction of a peer review body,”

ORS 41.675(2), including those data created “in connection

with * * * credentialing” and “the grant, denial, restriction

or termination of clinical privileges at a health care facil-

ity,” ORS 41.675(1).6 Further, persons serving on or commu-

nicating information to a peer review body or conducting

certain peer review investigations “shall not be examined

as to any communication to or from, or the findings of, that

peer review body or person.” ORS 41.675(4).

We have previously recognized that the privilege

applies broadly and is not overcome when certain evidence

is highly probative, or even essential, to a particular claim.

See Stumpf v. Continental Casualty Co., 102 Or App 302, 306,

794 P2d 1228 (1990) (“By its terms, the privilege afforded

by [ORS 41.675] applies ‘in any judicial proceeding’ regard-

less of the relevance of the evidence.”). Thus, data provided

to or from a hospital peer review committee relating to the

granting of privileges, supervision of doctors, or revocation

of privileges is “privileged and shall not be admissible in

evidence in any judicial proceeding.”

The issue before us is what effect the privilege and

lack of admissibility in court has when the allegations of

the complaint, as they do in this case, allege negligence by

the hospital in connection with the granting and revoca-

tion of privileges, the supervision of a doctor, and the peer

review process of a doctor involved in an allegedly negligent

6

ORS 41.675(6) provides an exception, not at issue here, for “proceedings in

which a health care practitioner contests the denial, restriction or termination

of clinical privileges by a health care facility,” but “any data disclosed in those

proceedings” remains inadmissible “in any other judicial, administrative, arbi-

tration or mediation proceeding.”

Cite as 304 Or App 397 (2020) 421

surgical procedure, but do not necessarily require the use of

confidential peer review materials as a matter of proof.

This is not an issue of absolute immunity as the

hospital itself is not immune from negligence lawsuits.7 It

is also not an issue where it is impossible for a plaintiff,

because a plaintiff can rely on documents other than a hos-

pital’s records, to seek to prove negligence by the hospital.

That is, it is at least plausible that a plaintiff could obtain

proof from third parties, public records, or other sources

to try to demonstrate that a hospital should have provided

greater oversight to a surgeon who, for instance, had a his-

tory of prior negligence in particular surgeries. Further, we

note that plaintiff’s assignment of error challenges the trial

court’s grant of a motion to dismiss and there is no factual

record on these issues. Any such factual record, however,

would be circumscribed by the restrictions of ORS 41.675(3).

Silverton Hospital argues that it would be severely limited,

if not prevented entirely, from effectively defending itself

based on the confidentiality of its peer review records and,

therefore, ORS 41.675 “functionally abrogated” any claims

based on allegations that relate to the granting or revoca-

tion of privileges or the supervision of doctors through the

peer review process.

We have not addressed this issue before but have

some guidance from somewhat similar circumstances. For

instance, there is an “absolute privilege accorded a party in

a judicial proceeding when the communications are in the

institution of or during the course and as a part of a judicial

proceeding in which he participates, if the matter has some

relation thereto.” Franson v. Radich, 84 Or App 715, 719, 735

P2d 632 (1987) (internal quotation marks omitted). We noted

that, although absolute privilege is an affirmative defense

that must be raised by answer, “it may be raised by motion

to dismiss if the * * * complaint alleges facts which, if true,

establish the privilege.” Id. at 718. Thus, where the allega-

tions in a complaint for intentional infliction of emotional

7

ORS 41.675(5) provides immunity to certain persons serving on or commu-

nicating information to a peer review body. It does not immunize the hospital

generally, but, as we discuss, the issue in this case is whether certain allegations

of negligence that unquestionably relate to the peer review process can form the

basis for a negligence claim.

422 Towner v. Bernardo/Silverton Health

distress allege statements in a judicial proceeding that are

protected by the absolute privilege, the trial court does not

err in dismissing the allegations. Id. at 719. In Franson,

however, the allegations necessary to prove the claim were

themselves based entirely on absolutely privileged state-

ments made in judicial proceedings. Id. at 718-19. Here, the

proof of the negligent hiring and supervision allegations

does not necessarily require plaintiff to use confidential

peer review materials, although those documents may be

the most obvious source for the claim, and the defense also

does not necessarily require them for a defense, although it

may be significantly hampered by its inability to use such

documents.

More recently, we concluded that, assuming a defen-

dant could raise attorney-client privileged communications

to support a motion to dismiss for failure to state a claim, “a

defendant must show that the [privilege] applies to all of the

allegations in the complaint such that it prevents the defen-

dant from mounting an effective defense.” Deep Photonics

Corp., 282 Or at 551; see also Alfieri v. Solomon, 358 Or 383,

392, 365 P3d 99 (2015) (accepting the parties’ agreement

that a trial court may strike allegations in a complaint to

the extent that those allegations are based on confidential

mediation communications and affirming the trial court’s

striking some of the plaintiff’s allegations).

In Deep Photonics Corp., we explained the process

for resolving a motion to dismiss when a privilege applies

to all of the allegations in a complaint in such a way as to

prevent an effective defense:

“That requires a defendant to show that it is apparent

on the face of the complaint that * * * protected communi-

cations exist that are necessary to the defense of the com-

plaint and that the client has not waived the privilege * * *

with respect to those communications. In turn, a plaintiff

thus may defeat that showing on a motion to dismiss if the

allegations in the complaint support a reasonable inference

[that the privilege does not apply or an exception to the

privilege exists].”

282 Or App at 551. We note that plaintiff does not appear

to contend that any peer review records relating to

Cite as 304 Or App 397 (2020) 423

Bernardo—to the extent that the hospital has any—are

subject to an exception to privilege, would not be privileged,

or that such a privilege has been or could be waived.

From these cases addressing somewhat similar cir-

cumstances, we glean that where a party alleges a claim

asserting ultimate facts that are themselves necessarily

privileged or confidential communications and form the sole

basis for the claim, that claim is subject to dismissal for fail-

ure to state a claim. Franson, 84 Or App at 719. This is not

such a case because, as noted above, it is at least plausi-

ble that plaintiff could seek to prove her allegations based

on facts that are not found within Silverton Hospital’s peer

review records.

Rather, the issue is whether defendant has shown

that “it is apparent on the face of the complaint that * * *

protected communications exist that are necessary to the

defense of the complaint.” Deep Photonics Corp., 282 Or App

at 551. As noted above, the allegations relate to Silverton

Hospital’s decision to credential Bernardo with hospital

privileges, its supervision of Bernardo, and its peer review

process relating to Bernardo’s work. To the extent that

Silverton Hospital has such documents and information in

its peer review files, the allegations do implicate peer review

documents and information that are protected under ORS

41.675(3) that at least would appear necessary to Silverton

Hospital’s defense. However, that assumes that the hospi-

tal has such relevant documents. It is at least possible that

the hospital conducted no process in deciding to credential

Bernardo, supervise him, or undertake a peer review of his

surgical outcomes. As plaintiff contends, to permit the hos-

pital to succeed on a motion to dismiss by raising the peer

review privilege would allow it to “tak[e] advantage of the

veil cloaking the peer-review process and asks this court

to assume it contains” relevant and privileged evidence. We

cannot make that assumption on a motion to dismiss.

We conclude that the trial court erred in dismissing

the claims arising out of allegations in paragraph 18, sub-

paragraphs (a) and (c), relating to Silverton Hospital’s grant-

ing or revocation of Bernardo’s general or specific surgical

privileges, its supervision of Bernardo’s surgical practices,

424 Towner v. Bernardo/Silverton Health

and its peer review process that reviewed Bernardo’s sur-

geries and outcomes. We do not reach the issue of whether

plaintiff might still be foreclosed in pursuing those claims

following a more developed factual record on summary

judgment and based on the standards set forth above. As

we discussed, peer review data under ORS 41.675(3) is priv-

ileged. Further, peer review data “shall not be admissible

in evidence in any judicial * * * proceeding.” ORS 41.675(3).

The statute, however, does not prohibit a trial court from

reviewing documents in camera to determine if there is

peer review information relevant to the hospital’s defense

or considering declarations submitted by the hospital that

may address how it is prevented from mounting an effective

defense without the use of its peer review records. As neces-

sary here, we hold only that the allegations here do not pre-

vent plaintiff from proceeding on her complaint and leave

any further proceedings on these claims to the trial court.

III. PLAINTIFF’S CHALLENGE TO THE TRIAL

COURT’S GRANT OF SILVERTON HOSPITAL’S

MOTION TO STRIKE

Plaintiff next argues that the trial court erred by

granting the hospital’s motion to strike the following allega-

tion from plaintiff’s first amended complaint: “[D]efendant

hospital was responsible for and had a non-delegable duty to

provide quality care within its facility under ORS 441.055,

and is therefore directly and vicariously liable for the neg-

ligent conduct of defendant Dr. Bernardo.” The trial court

granted Silverton Hospital’s motion, concluding that, “at

this time in Oregon[,] there is no non-delegable duty in this

situation.”

A court may strike “any sham, frivolous, irrelevant,

or redundant matter inserted in a pleading.” ORCP 21 E(2).

If an allegation in a complaint is legally insufficient, the

court may strike it as either frivolous or irrelevant. Davis

v. Tyee Industries, Inc., 295 Or 467, 482 n 14, 668 P2d 1186

(1983). Generally, we review orders to strike for abuse of dis-

cretion. Alfieri, 358 Or at 391. However, if a court’s exercise

of discretion is dependent on a legal question, such as the

meaning of a statute or the existence of a claim as a matter

of law, we review that determination for legal error. Id.

Cite as 304 Or App 397 (2020) 425

The ruling on the motion to strike in this case

turns on whether, as a matter of law, an Oregon hospital

has an absolute, nondelegable duty to ensure that all non-

emergency, nonemployee physicians provide “quality care”

while treating patients in the hospital facility.8 We review

for legal error to determine whether the trial court correctly

concluded that no such duty exists under Oregon law.

As a general rule, an entity that hires an indepen-

dent contractor is not liable for the contractor’s negligence.

Boothby v. D.R. Johnson Lumber Co., 341 Or 35, 46, 137 P3d

699 (2006). There are some instances, however, where the

entity is subject to a duty that cannot be delegated, such

that it is liable for the negligence of its independent con-

tractors for harms encompassed by that duty regardless of

whether the entity itself was negligent. Nondelegable duties

“arise in situations in which the law deems a particular

duty so important and so peremptory that it will be treated

as nondelegable.” Johnson v. Salem Title Co., 246 Or 409,

413, 425 P2d 519 (1967) (internal quotation marks omitted).

The legislature is capable of imposing a nondelegable duty

by statute. As the Supreme Court has explained,

“[o]ne who by statute * * * is under a duty to provide spe-

cific safeguards or precautions for the safety of others is

subject to liability to the others for whose protection the

duty is imposed for harm caused by the failure of a con-

tractor employed by him to provide such safeguards or

precautions.”

Id. at 414 (citing Restatement (Second) of Torts § 424 (1965)).

Whether a statute imposes a nondelegable duty that renders

a defendant liable for the conduct of a third party is a ques-

tion of law. Id. at 417.

As noted, plaintiff alleged in her complaint that the

legislature imposed a nondelegable duty on Oregon hospi-

tals to ensure that all physicians—whether employed by

the hospital or not—provided “quality care” when treating

8

Silverton Hospital also contends for the first time on appeal that plaintiff’s

allegation that Silverton Hospital had a nondelegable duty of care improperly

alleged a conclusion of law. Silverton Hospital did not raise this argument before

the trial court and we do not reach it. We assume, without deciding, that plaintiff

properly alleged an ultimate fact.

426 Towner v. Bernardo/Silverton Health

patients in a hospital’s facilities under ORS 441.055, which

describes requirements for a health care facility’s medical

staff and bylaws. Our courts have not expressly considered

whether ORS 441.055 imposes a nondelegable duty on hos-

pitals to ensure “quality” patient care. But see G.L. v. Kaiser

Foundation Hospitals, Inc., 306 Or 54, 67-68, 757 P2d 1347

(1988) (stating in dicta in a case involving the attempted

rape of a patient by a physician in a hospital that “[t]he stan-

dards of care provided under the authority of ORS 441.055

do not establish any duties for patient safety,” and that “the

legislature could, if it chose, impose much greater responsi-

bilities on hospitals [than it did through ORS 441.055]”). We

therefore must interpret the statute to determine whether

the legislature intended to impose such a duty. To discern

the legislature’s intention, we examine the text in context

and consider any useful legislative history provided by the

parties. State v. Gaines, 346 Or 160, 171-72, 206 P3d 1042

(2009). Text and context are given primary weight in the

analysis, while legislative history receives “whatever weight

the court deems appropriate.” City of Corvallis v. Pi Kappa

Phi, 293 Or App 319, 336, 428 P3d 905 (2018) (citing Gaines,

346 Or at 166, 171).

We begin with the text. ORS 441.055 imposes a

number of affirmative obligations on the “governing body”

of a hospital:

“(1) The governing body of each health care facility

shall be responsible for the operation of the facility, the

selection of the medical staff and the quality of care ren-

dered in the facility. The governing body shall:

“(a) Ensure that all health care personnel for whom

state licenses, registrations or certificates are required are

currently licensed, registered or certified;

“(b) Ensure that physicians admitted to practice in the

facility are granted privileges consistent with their indi-

vidual training, experience and other qualifications;

“(c) Ensure that procedures for granting, restricting

and terminating privileges exist and that such procedures

are regularly reviewed to ensure their conformity to appli-

cable law;

Cite as 304 Or App 397 (2020) 427

“(d) Ensure that physicians admitted to practice in the

facility are organized into a medical staff in such a man-

ner as to effectively review the professional practices of the

facility for the purposes of reducing morbidity and mortal-

ity and for the improvement of patient care; and

“(e) Ensure that a physician is not denied medical staff

membership or privileges at the facility solely on the basis

that the physician holds medical staff membership or priv-

ileges at another health care facility.”

The statute goes on to require the medical staff to adopt

bylaws, which must include “[p]rocedures” to ensure that

the hospital adheres to the responsibilities enumerated in

ORS 441.055(1). ORS 441.055(2).

Based on the statutory text, the legislature did not

expressly impose a nondelegable duty to provide quality

patient care on the hospital or its governing body. The text

does not establish any “specific safeguards or precautions

for the safety of others” as to how any particular medical

procedures are to be performed, or even how admissions

and peer review must be conducted. Cf. Johnson, 246 Or

at 414-15 (holding that an architect had a nondelegable

duty to meet the minimum safety standards of the build-

ing code). Instead, it establishes that the governing body

of a hospital is responsible for ensuring that the hospital

has a particular organizational structure and procedures

to effectively admit new staff and conduct peer review of

physicians who provide care within the hospital as a pre-

requisite to obtaining and maintaining a license from the

state. Although the text provides that the governing body

is “responsible” for the “quality of care rendered in the facil-

ity” and references the reduction of “morbidity and mor-

tality” and the “improvement of patient care” as goals, it

does so in a narrow context; rather than making the hos-

pital’s governing body responsible for achieving a particu-

lar standard of care and reducing morbidity or mortality

in an abstract or even quantifiable way, the text requires

the governing body only to ensure that the appropriate

procedures and organizational structures are in place that

the legislature has deemed necessary to provide quality

care.

428 Towner v. Bernardo/Silverton Health

Turning to the statutory context, the legislature

codified ORS 441.055 along with other laws describing the

“licensing and supervision” of health care facilities and

organizations by the state. ORS 441.015 - 441.192. In those

statutes, the legislature evinced its concern of ensuring that

health care facilities and organizations meet certain thresh-

old requirements and maintain certain standards—many of

them structural or procedural—before the state will issue

them a license to offer their services to the public. There

is little to suggest from the obligations imposed throughout

those statutes that the legislature simultaneously imposed

a nondelegable duty on hospitals to provide specific safe-

guards to their patients. Seen in that light, the obligations

imposed by ORS 441.055(1) are properly read as licensing

requirements that do not further establish a health care

organization’s affirmative duties to its patients. The statu-

tory context suggests that a hospital’s governing body must

implement procedures and protocols for admitting only

qualified doctors to practice medicine and must create an

organizational structure in which the medical staff con-

ducts peer review of its members’ activities for the purpose

of improving patient care only as prerequisites to receiving

and maintaining a license from the state.

Finally, we note that the legislative history of ORS

441.055 does not convince us that, notwithstanding the lack

of an express signal from the text and context, the legisla-

ture intended to impose a nondelegable duty on hospitals to

ensure that nonemployee physicians provide “quality care”

to the patients they treat within the hospital. The history—

which plaintiff cites extensively, with a focus on comments

from nonlegislators—instead suggests that the legislature

more narrowly intended to ensure that hospitals adhered to

procedural and organizational standards that would in turn

improve patient care.

Plaintiff’s more general argument for the existence

of a nondelegable duty is also undermined by the Supreme

Court’s decision in Eads II, in which the court addressed

and rejected the possibility that hospitals are absolutely lia-

ble for negligent care provided by nonemployee physicians.

351 Or at 744. Although it did not address ORS 441.055,

Eads II explained that “the mere fact that medical services

Cite as 304 Or App 397 (2020) 429

are provided on a hospital’s premises is not enough to cre-

ate vicarious liability” because the requisite reliance on the

hospital by the patient is lacking. Id. Put differently, the

Supreme Court was not persuaded—at least on the argu-

ments presented in Eads II—that hospitals are absolutely

liable for negligent patient care provided within the hospital

facility. Indeed, the court went on to explain that a hospital

could be liable for the negligence of a nonemployee physician

in “a proper case,” but would not be presumptively liable.

Id. at 745-46. That concept of situationally dependent liabil-

ity is inconsistent with the liability that would arise from

the kind of nondelegable duty that plaintiff argues for in

this case. See also G.L., 306 Or at 67 (“We recognize that

hospitals have taken on special responsibilities by admitting

and providing care for those who may not be able to take full

care of themselves. We do not, however, believe that such an

act of admission makes the hospital absolutely responsible

for a patient’s safety.”).

In sum, the trial court did not err when it struck from

plaintiff’s complaint the allegation that Silverton Hospital

breached a nondelegable duty to ensure adequate patient

care by any and all nonemployee physicians. Plaintiff’s alle-

gation was legally insufficient because ORS 441.055 does

not impose such a duty. It may be that hospitals have a non-

delegable duty to make credentialing decisions and conduct

peer review and therefore cannot outsource those facets of

hospital operations to a third party to avoid liability related

to those activities. But it does not follow from the text or

context of ORS 441.055 that those structural and organi-

zational requirements contain a latent policy decision by

the legislature that hospitals will themselves be liable in

all instances when nonemployee physicians fail to provide

“quality care” while treating patients in the hospital facility.

IV. CONCLUSION

The trial court erred, in part, when it granted

defendant Silverton Hospital’s motion for summary judg-

ment, because a reasonable juror could find, based on the

summary judgment record, that Bernardo was an apparent

agent of Silverton Hospital in performing plaintiff’s sur-

gery. The trial court also erred when it granted Silverton

430 Towner v. Bernardo/Silverton Health

Hospital’s motion to dismiss plaintiff’s allegations that the

hospital was negligent in “credentialing,” hiring, retain-

ing, and supervising Bernardo by giving him privileges at

Silverton Hospital and allowing him to perform surgical

procedures there. The trial court did not err when it granted

Silverton Hospital’s motion to strike plaintiff’s allegation

that the hospital had a nondelegable duty to ensure qual-

ity care under ORS 441.055 and, as a result, was liable for

Bernardo’s conduct. Finally, we do not reach plaintiff’s chal-

lenge to the trial court’s denial of plaintiff’s motion to com-

pel, which motion may or may not arise again on remand.

Reversed and remanded.