In a significant win for patients and their families, the Michigan Supreme Court recently reversed a lower court ruling and reaffirmed a longstanding legal principle in medical malpractice cases: hospitals can be held liable for the negligence of doctors who appear to be acting on the hospital’s behalf—even if they are technically employed by another entity. The Court’s July 2025 decision reinforces the legal doctrine of ostensible agency, also known as agency by estoppel, which protects patients who reasonably believe they are being treated by hospital staff.
What Happened
At the center of the case was a woman who sought care in the emergency department at Beaumont Hospital. She was treated by Dr. Lonappan, a physician she had never seen before and with whom she had no prior relationship. Like many patients who enter a hospital through the ER, she expected that the doctors providing her care were agents or employees of the hospital. But when her treatment allegedly fell below the accepted standard of care, she encountered a legal hurdle: Beaumont argued it couldn’t be held responsible because Dr. Lonappan was employed by Hospital Consultants, a separate physician group.
The Michigan Court of Appeals initially sided with Beaumont, reasoning that the plaintiff hadn’t shown sufficient evidence of reliance on the hospital for care, largely based on a contract between her primary care doctor and the physician group. But the Michigan Supreme Court disagreed. In a strongly worded order, the Court clarified that Michigan law does not distinguish between the terms ostensible agency and agency by estoppel—and that both fall under the framework established in the landmark case Grewe v Mt. Clemens General Hospital.
Under Grewe, a patient can hold a hospital liable for a doctor’s negligence if the patient sought treatment at the hospital and reasonably believed the doctor was acting on the hospital’s behalf. The Court reaffirmed that the key question is not whether the patient knew about contractual arrangements between the hospital and a physician group—but whether the patient looked to the hospital for care and had no prior relationship with the treating doctor. That’s precisely what happened in this case.
In rejecting Beaumont’s arguments, the Court noted that there was no evidence the hospital ever informed the plaintiff that Dr. Lonappan was not its agent. And while a dissenting justice argued that patients should not be allowed to assume agency based solely on seeking care at a hospital, the majority recognized that this is precisely how emergency medical care operates for most people. When you go to a hospital ER, you reasonably expect that the doctors treating you are hospital doctors.
What it Means
This ruling is an important reaffirmation of accountability in Michigan’s healthcare system. It sends a clear message: hospitals cannot shield themselves from liability by hiding behind corporate structures or third-party contracts when a patient reasonably believes they are receiving care from hospital staff. At Olsman MacKenzie Peacock, we believe that when hospitals profit from creating the appearance of seamless, coordinated care, they must also bear responsibility when that care falls short.
If you or a loved one has been harmed by negligent medical care, our experienced team is here to help you navigate your legal options and fight for justice.