Create an enforceable contract in any departmen
Create an enforceable contract in any department of a health care organization. How can a contract be legally valid? When is a contract voidable? What happens when one of the parties cannot perform the obligations written in the contract?
Economic Motivations
The long-term care industry implements a great deal of ethical applications, that are derived from state and federal regulations. For-profit organizations incorporate “care bylaws” into policies and procedures and any changes are generally related to the workforce via addendums within the organizational personnel employee handbook. Interestingly, regarding the long-term care industry, specific laws governing the ethical care of residents becomes enacted through federal and state mandates, such laws, applications to improve both principles, beneficence and nonmaleficence are to a vast degree enforced by federal and state agencies and must be followed by the individual long-term care facilities; furthermore, long-term care organizations cannot change such laws, policies, and procedures. Yet, the federal and state agencies can and do change these laws according to statistical incidence such as falls rates, medication errors, and reluctance to comply pertaining to yearly facility inspections. Another poignant and specific difference relates to appointment vs. election. Miller (2006) cites, “health care entities ultimate responsibility centers on establishing ethical goals and moral polices, select the chief executive, and appoint medical staff members” (p.30). With this said, regarding the long-term care industry, a specific and mandatory reason for an organization to be interesting in ethical applications of care would center on state and federal compliance. This in itself would fall under an economic reason; along with this, the bottom line for the organization to operate would be to institute such ethical policies in order to become and maintain eligibility for Medicare and Medicaid funding.
Moral Motivations
Beauchamp and Childress (2009) suggest that health care organizations and their quality of life perceptions are intertwined within ever changing and emerging platforms of ethical applications that are based on moral motivation. Therefore, long-term care organizations are constantly evaluating and revaluating quality of life principles that are based on moral motivation. The morals intertwined within caring for individuals, specifically the elderly have taken on a distinct set of relationships that are emergent upon nonmaleficence and the principles of respect for individual autonomy and justice. Long term care organizations are interested in being ethical in terms of their commitment to caring for the elderly, their disease progressions, and end of life aspects because the definition of care centers on the moral staple, not to inflict harm. The opposite would be negligence and is classified as the absence of care, a departure from professional standards that determine specific and due care (Beauchamp & Childress, 2009). It is important to note that malpractice law suits include one common entity called “duty,” meaning caregivers have a duty to take care of their patients in two specific areas, quality of care and quality of life aspects. Both of these areas must be proven to be deficient, yet the deficiency does not always need to be intentional, thus a lack of intent to harm does not relieve the caregiver from their duty to care for their patients.
Reference
Beauchamp, T. & Childress, J. (2009). Principles of biomedical ethics. (6th ed.). New York: Oxford University Press.
Miller, R. D. (2006). Problems in health care law. Sudbury, MA: Jones and Bartlett Publishers.
7.1 WHAT IS A CONTRACT?
A contract is a special kind of voluntary agreement, either written or oral, that involves legally binding obligations between two or more parties. A contract serves to provide one or more of the parties with a legal remedy if another of the parties does not perform his or her obligations pursuant to the terms of the contract. The major purpose of a contract is to specify, limit, and define the agreements that are legally enforceable. A contract forces the participants to be specific in their understandings and expectations of each other. Contracts, particularly those in writing, serve to minimize misunderstandings and offer a means for the parties of a contract to resolve any disputes that may arise.
7.2 TYPES OF CONTRACTS
The following is a general description of the various types of contracts and a brief definition of each. Healthcare professionals should be knowledgeable with each type of contract because they are commonly used in the healthcare setting.
Express Contracts
An express contract is one in which the parties have an oral or written agreement. Both written and oral contracts are generally recognized and are equally legal and binding.
Oral Contract. A court will not consider oral negotiations and agreements made before or at the same time a written contract is signed if the parties intended the document to be their complete and final agreement. Both written and oral contracts are generally recognized and are equally legal and binding.
Written Contract. It is preferable to reduce important and complex contracts to writing. In certain instances, the courts will enforce only written contracts.
Implied Contract
An implied contract is one that is inferred by law. It is based on the conduct of the parties, such as a handshake or similar conduct. Much of the litigation concerning excesses of corporate authority involves questions of whether a corporation has the implied authority—incidental to its express authority—to perform a questioned act. In Hungerford Hosp. v. Mulvey, for example, even though its certificate of incorporation did not authorize such an act specifically, a hospital was permitted to construct a medical office building on land that had been donated for maintaining and operating the hospital. The court, in recognizing a trend to encourage charitable hospitals to provide private offices for rental to staff members, held that such an act was within the implied powers of the hospital and that such offices aid in the work of a general hospital even though it went beyond the hospital corporation’s express powers.2
Voidable Contract
A voidable contract is one in which one party, but not the other, has the right to escape from its legal obligations under the contract. It is considered to be a voidable contract at the option of that party. For example, a minor, not having the capacity to enter into a contract, can void the contract. However, the competent party to the contract may not void the contract.
Executed Contract
An executed contract is one in which all of the obligations of the parties have been fully performed.
Enforceable Contract
An enforceable contract is one that is a valid, legally binding agreement. If one party breaches it, the other will have an appropriate legal remedy.
Unenforceable Contract
An unenforceable contract is one in which, because of some defect, no legal remedy is available if breached by one of the parties to the contract.
Contracts for Realty, Goods, or Services
There are also contracts for realty (real estate or interests in real estate), goods (movable objects, with the exception of money and securities), and services (human energy).
Offer/Communication
An offer is a promise by one party to do (or not to do) something if the other party agrees to do (or not do) something. Preliminary negotiations are not offers. An offer must be communicated to the other party so that it can be accepted or rejected.
Consideration
Consideration requires that each party to a contract give up something of value in exchange for something of value. No side can have a free way out or the ability to obtain something of value without providing something in exchange. Only when legal consideration has been given will a court treat the agreement as a contract. The adequacy or inadequacy of consideration, or the price paid, will not normally affect the formation of a contract.
7.3 ELEMENTS OF A CONTRACT
Whether contracts are executed in writing or agreed to orally, they must contain the following elements to be enforceable: (1) offer/communication, (2) consideration, and (3) acceptance.
The law will enforce contracts only when they are executed between persons who are competent—that is, those with the legal and mental capacity to contract. Certain classes of persons, such as minors, people with mental illness, and prisoners, traditionally have been considered unable to understand the consequences of their actions and have been deemed incompetent, or lacking in legal capacity, to make a binding contract.
Offer/Communication
An offer is a promise by one party to do (or not to do) something if the other party agrees to do (or not do) something. Preliminary negotiations are not offers. An offer must be communicated to the other party so that it can be accepted or rejected.
Consideration
Consideration requires that each party to a contract give up something of value in exchange for something of value. No side can have a free way out or the ability to obtain something of value without providing something in exchange. Only when legal consideration has been given will a court treat the agreement as a contract. The adequacy or inadequacy of consideration, or the price paid, will not normally affect the formation of a contract.
Acceptance
Upon proper acceptance of an offer, a contract is formed. A valid acceptance requires the following:
1. Meeting of the Minds. Acceptance requires a meeting of the minds (mutual assent); in other words, the parties must understand and agree on the terms of the contract. This means that each side must be clear as to the details, rights, and obligations of the contract.
2. Definite and Complete. Acceptance requires mutual assent to be found between the parties. The terms must be so complete that both parties understand and agree to what has been proposed.
3. Duration. Generally, the offeror (the one who makes the offer) may revoke an offer at any time prior to a valid acceptance. When the offeror does revoke the proposal, the revocation is not effective until the offeree (the person to whom the offer is made) receives it. Once the offeree has accepted the offer, any attempt to revoke the agreement is too late and is invalid.
4. Complete and Conforming. The acceptance must be a mirror image of the offer. In other words, the acceptance must comply with all the terms of the offer and not change or add any terms.
7.4 BREACH OF CONTRACT
A breach of contract occurs when there is a violation of one or more of the terms of the contract. The basic elements that a plaintiff must establish in order to be successful in a breach of contract lawsuit include the following: (1) A valid contract was executed; (2) The plaintiff performed as specified in the contract; (3) The defendant failed to perform as specified in the contract; and (4) The plaintiff suffered an economic loss as a result of the defendant’s breach of contract.
7.5 CORPORATE CONTRACTS
The ability of a corporation to enter into a contract is limited by its powers as contained in or inferred from its articles of incorporation (sometimes called a charter) or conferred upon it by general corporation law. Whenever a contract of any consequence is made with a corporation, appropriate corporate approval and authorization must be obtained. In the event that a contract is entered into with a corporation without the appropriate authority, the contract nevertheless may be ratified and made binding on the corporation by subsequent conduct or statements made on its behalf by its representatives.
When the chief executive officer (CEO) of an organization exceeds the limits of his or her authority, the question of whether the organization will be responsible for the CEO’s acts may arise. If the actions of the governing body give rise to a third party’s reasonable belief that the CEO acts with the authority of the organization, and such belief causes the third party to enter into an agreement with the CEO, expecting that the organization will be obligated under the contract, then the organization generally is responsible under the concept of apparent authority (the appearance of being the agent of another [employer or principal] with the power to act for the principal). However, if a third party deals with the CEO in the absence of indications of the CEO’s authority created by the governing body and thereby unreasonably assumes that the CEO possesses the authority to bind the organization to a contract, then such third party deals with the CEO in an individual capacity and not as an agent of the organization.
Although there can be times when a CEO makes a decision that exceeds his or her authority, the governing body may subsequently approve such actions through ratification by accepting any resulting responsibility as though it had been authorized previously. Conversely, if the governing body, for example, has set a limitation on the amount of money a CEO is authorized to expend on a capital budget item and the CEO exceeds that authorization, he could be held liable to the supplier for that purchase, if so made without prior approval of the governing body.
7.6 PARTNERSHIPS
A partnership comprises two or more persons who agree to carry on a business for profit and to share profits and losses in some proportions. A partnership, unlike a corporation, can be created by the parties’ actions without a written or oral agreement.
Agent
An agent is one who has the power to contract for and bind another person, the principal, to a contract. Corporations can act only through agents (e.g., their officers).
Apparent Agent or Ostensible Agent
An apparent or ostensible agent is one who a third person believes is acting on behalf of the principal. If a hospital undertakes to provide physician services to a community, and the community reasonably believes that a physician is employed by the hospital to deliver services, then the hospital would generally be liable for the physician’s negligent acts. For example, in Jennison v. Providence St. Vincent Med. Ctr.,3 Jennison, having severe abdominal pain, was taken to the hospital emergency department. Unsure of the cause of Jennison’s medical problems, Cook, Jennison’s assigned physician, recommended surgery. Prior to surgery Cook asked Nunez, a member of an independent anesthesiology group at the hospital, to place a central venous catheter in Jennison.
An X-ray had been taken to confirm the correct placement of the central line. The X-ray showed that the tip of the central line had gone into the pericardial sac of Jennison’s heart. A procedure had not been established to notify the treating physicians in a timely manner that the central line had been dangerously misplaced.
Upon the eventual discovery that the central line had been misplaced, it was pulled back to its proper position. Unfortunately, fluids had already infused through the central line and into the space between Jennison’s heart and pericardial sac. The pressure of the fluid against her heart kept it from filling adequately. Jennison’s blood pressure dropped, and she went into cardiac arrest. The doctors attempted to remove the excess fluid. During the procedure, Jennison suffered a second cardiac arrest. The doctors were again able to resuscitate her. However, due to the lack of oxygen to her brain, Jennison suffered a severe brain injury.
The jury returned a verdict in favor of the plaintiffs, finding the hospital 100% negligent, and the hospital appealed. The Court of Appeals of Oregon affirmed the findings of the trial court. The hospital presented itself as providing radiology services to the public. The public, looking to the hospital to provide such care, is unaware of and unconcerned with the technical complexities and nuances surrounding the contractual and employment arrangements between the hospital and the various medical personnel operating therein. Public policy dictates that the public has every right to assume and expect that the hospital is the medical provider it purports to be.
7.7 INDEPENDENT CONTRACTOR
An independent contractor is an individual who agrees to undertake work without being under the direct control or direction of another. Independent contractors are personally liable for their own negligent acts. Whether a physician is an employee or an independent contractor is of primary importance in determining liability for damages. Generally, a healthcare organization is not liable for injuries resulting from negligent acts or omissions of independent physicians. There is no liability on the theory of respondeat superior, whereby a physician is an independent contractor as long as the physician is not an employee of the organization, is not compensated by the organization, maintains a private practice, and is chosen directly by his or her patients. The mere existence of an independent contractual relationship, however, is not sufficient to remove an organization from liability for the acts of certain of its professional personnel if the independent contractor status is not readily known to the injured party.
Hospital Liable for Physician’s Negligence
A hospital can be liable for a physician’s negligence, even if the physician is under contract to provide services to the hospital. The appellate division of the New York State Supreme Court in Mduba v. Benedictine Hospital 4 held that the hospital was liable for the emergency department physician’s negligence whether the physician was an independent contractor or, even if under contract, the physician was considered to be an independent contractor. The court held that the patient had no way of knowing of the existence of a contract and relied on the relationship between the hospital and the physician in seeking treatment in the emergency department.
Agency Liable for Negligent Hiring
The employer, Patient Support Services, Inc. (PSS), in Maristany v. Patient Support Services, Inc.,5 was found not liable for negligent hiring for injuries received by a patient under the care of one of its independent contractors. By contract dated January 29, 1994, the plaintiff retained the services of PSS to furnish an independent nurse, Terry, to care for her husband, Santiago, a postoperative brain surgery patient at defendant Presbyterian Hospital.
At approximately 10:00 PM, Terry assisted a hospital nurse in placing Santiago into a Posey-restraining vest. At approximately 3:30 AM, Terry returned from a break to find Santiago extremely agitated. Terry sought assistance and tried to restrain the patient physically, but the patient escaped from the vest, climbed over the rails, and fell to the floor, sustaining serious injury.
The plaintiffs did not contest that Terry’s status was that of an independent contractor, not an employee. Although an employer is generally not liable for the torts or negligent acts of an independent contractor under the doctrine of respondeat superior, the employer had a right to rely on the supposed qualifications and good character of the contractor and is not bound to anticipate misconduct on the contractor’s part. The employer is not liable on the ground of its having employed an incompetent or otherwise unsuitable contractor unless it also appears that the employer either knew or, in the exercise of reasonable care, should have ascertained that the contractor was not properly qualified to undertake the work.
There was no competent proof that PSS had any reason to question Terry’s qualifications. At the time of the incident, Terry had had her qualifying certificate for more than 10 years. She had received training in the use of Posey restraints and had previously cared for patients whose condition required these restraints. Because Terry had previously worked for PSS and had not given any indication of incompetence, there was no viability to the claim that PSS was negligent in assigning her to the care of Santiago.
7.8 LEGALITY OF OBJECT
To be a valid contract, the purpose or object of the contract must not violate state or federal policy and must not violate any statute, rule, or regulation. If the subject or purpose of the contract becomes illegal by some statute, rule, or regulation before actual formation of the contract, the parties no longer can form the contract.
7.9 CONDITIONS
A condition precedent is an act or event that must happen or be performed by one party before the other party has any responsibility to perform under the contract. An express condition is formally written into the contract in specific terms. An implied condition is one in which, although the parties may not have specifically mentioned the condition, it can reasonably be assumed that the parties intended the condition to be enforced.
7.10 PERFORMANCE
Performance is the act of doing what is required by a contract. Each party to a contract is bound to perform the promises acc
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