Medical negligence: liability of investors and promoters

By Uday Walia and Palash Ranjan Gupta, S&R Associates
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With investment in the health care sector now automatically routed to 100%, foreign investors are increasing their investment in the medical care business in India. Consequently, standards for legal liability of doctors, hospitals and promoters in medical negligence cases become important for investors looking to purchase a stake in a chain of hospitals with pending medical negligence claims.

While Indian courts have adjudicated on medical negligence cases for over 30 years, it is only recently that some clarity on standards of conduct and liability for medical negligence cases has emerged.

The Supreme Court ruling in Spring Meadows Hospital and Anr v Harjol Ahluwalia in 1998 held that patients were “consumers” under the Consumer Protection Act, 1986, thereby allowing plaintiffs to seek the remedies and protections available under the act.

Adopting a cautious approach

Indian courts have adopted a cautious approach to medical negligence complaints and will only act on a complaint after (i) a competent doctor, or committee of doctors, specializing in the field related to the alleged negligence analyses the complaint and reports that a prima facie case has been made out; and (ii) an investigating officer obtains independent advice from a doctor in government service or a qualified physician in the relevant branch confirming that the complainant had made out a prima facie case.

Uday Walia Partner S&R Associates
Uday Walia
Partner
S&R Associates

Medical negligence standards

Indian courts adopt the English law standard for civil medical negligence outlined in Boland v Friern Hospital Management Committee, which held that a doctor who “…[f]ails to exercise the skill that would have been used by another medical professional in the same or similar circumstances” is negligent.

Subsequently, in 2009, the Supreme Court in Martin F D’souza v Moh’d Ishfaq, established a supplementary test for civil medical negligence: a complainant must also show that (i) there exists a normal course of medical practice to handle a specific case; (ii) the defendant did not adopt the procedure; and (iii) the course adopted is one that no professional man of ordinary skill would have taken had he acted with ordinary care.

Criminal medical negligence complaints require a higher threshold of negligence. In Minor Margesh K Parikh v Dr Mayur Mehta the Supreme Court held that a doctor will be criminally liable only if he acts with mens rea or intent or if the act was one of gross negligence. This requires the complainant to prove there was an “… utter lack of advertence to the bare requisites of precaution observed while discharging duty”.

Civil and criminal liability

Civil medical negligence claims result in damages and costs and in some cases the courts have even awarded exemplary damages against doctors and hospitals. Rajasthan High Court in Sobhag Mal Jain v State of Rajathan & Ors held “… [a]n award of exemplary damages can serve a useful purpose in vindicating the strength of law”. Similarly, Delhi High Court in Ganga Ram Hospital v DP Bhandari & Ors held exemplary damages could be awarded where a patient has suffered “mental distress and agony”.

Criminal medical negligence claims are made under numerous sections of the Indian Penal Code. These include sections 304A (criminal negligence), 336 (endangering the life and safety of others), 337 (causing hurt by endangering the life and personal safety of others) and 338 (causing grievous hurt by endangering life). A person convicted of such negligence could be fined or imprisoned for up to two years, or both. However, very few complaints of medical negligence against doctors have resulted in a criminal conviction.

Palash Gupta Associate S&R Associates
Palash Gupta
Associate
S&R Associates

Ethics regulations

The Medical Ethics Regulations, 2002, framed by the Medical Council of India (MCI), require doctors to treat patients with due care. Under rule 7, violations of the regulations can be investigated by the Medical Board and are punishable with permanent or temporary suspension of the offending physician.

Investor liability

We are unaware of any Indian cases that have held the governing body, individual directors or promoters of a hospital liable for a doctor’s negligence.

Delhi High Court ruling recently in Indraprastha Medical Corp Ltd v State NCT of Delhi and Ors, held that a hospital, the members of a hospital board, investors and promoters cannot be liable for criminal negligence as they would not have had the intent or mens rea required. However, English courts, whose judgments have significant persuasive value in India, following Roe v Minister of Health, have held that hospital authorities, including the governing body, are vicariously liable for negligent doctors.

Finally, details of current MCI enquiries are not publicly available and investors should request potential hospital targets to provide a list of MCI enquiries currently pending against their doctors.

Uday Walia is a partner and Palash Ranjan Gupta is an associate at S&R Associates. They can be contacted at [email protected] and [email protected] respectively.

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