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Docket No. 85726-Agenda 14-May 1999.

WILLIAM PETROVICH, Adm'r of the Estate of Inga Petrovich, et al., Appellees, v. SHARE HEALTH PLAN OFILLINOIS, INC., Appellant.

Opinion filed September 30, 1999.

JUSTICE BILANDIC delivered the opinion of the court:

The plaintiff brought this medical malpractice action against a physician and others for their alleged negligence in failing todiagnose her oral cancer in a timely manner. The plaintiff also named her health maintenance organization (HMO) as adefendant. The central issue here is whether the plaintiff's HMO may be held vicariously liable for the negligence of itsindependent-contractor physicians under agency law. The plaintiff contends that the HMO is vicariously liable under boththe doctrines of apparent authority and implied authority.

The circuit court of Cook County awarded summary judgment in favor of the HMO, Share Health Plan of Illinois, Inc.(Share), and against the plaintiff, Inga Petrovich, as well as her husband and coplaintiff, Vukasin Petrovich. The circuitcourt held that Share cannot be held vicariously liable for the negligence of its physicians who are independent contractors.The plaintiffs appealed to the appellate court pursuant to Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)). The appellatecourt reversed and remanded for further proceedings. 296 Ill. App. 3d 849. We allowed Share's petition for leave to appeal(177 Ill. 2d R. 315) and now affirm the judgment of the appellate court. We hold that the plaintiff has presented sufficientevidence to entitle her to a trial on whether Share is vicariously liable under the doctrines of apparent and implied authority.

Four amicus curiae briefs were filed with the permission of this court. See 155 Ill. 2d R. 345. The Illinois Association ofHealth Maintenance Organizations filed a brief in support of Share. The Illinois Hospital & Healthsystems Association andthe Metropolitan Chicago Healthcare Council filed a joint brief in support of Share. The Illinois Trial Lawyers Associationfiled a brief in support of the plaintiff. The Illinois State Medical Society, a physicians group, also filed a brief in support ofthe plaintiff.

The plaintiff died during the pendency of this appeal. Substituted in her place as appellee is William Petrovich, theadministrator of her estate. For ease of discussion, we refer to both the plaintiff and appellee as "plaintiff."

FACTS

In 1989, plaintiff's employer, the Chicago Federation of Musicians, provided health care coverage to all of its employees byselecting Share and enrolling its employees therein. Share is an HMO and pays only for medical care that is obtained withinits network of physicians. In order to qualify for benefits, a Share member must select from the network a primary carephysician who will provide that member's overall care and authorize referrals when necessary. Share gives its members alist of participating physicians from which to choose. Share has about 500 primary care physicians covering Share's servicearea, which includes the counties of Cook, Du Page, Lake, McHenry and Will. Plaintiff selected Dr. Marie Kowalski fromShare's list, and began seeing Dr. Kowalski as her primary care physician in August of 1989. Dr. Kowalski was employedat a satellite facility of Illinois Masonic Medical Center (Illinois Masonic), which had a contract with Share to providemedical services to Share members.

In September of 1990, plaintiff saw Dr. Kowalski because she was experiencing persistent pain in the right sides of hermouth, tongue, throat and face. Plaintiff also complained of a foul mucus in her mouth. Dr. Kowalski referred plaintiff totwo other physicians who had contracts with Share: Dr. Slavick, a neurologist, and Dr. Friedman, an ear, nose and throatspecialist.

Plaintiff informed Dr. Friedman of her pain. Dr. Friedman observed redness or marked erythema alongside plaintiff's gumson the right side of her mouth. He recommended that plaintiff have a magnetic resonance imaging (MRI) test or a computedtomography (CT) scan performed on the base of her skull. According to plaintiff's testimony at her evidence deposition, Dr.Kowalski informed her that Share would not allow new tests as recommended by Dr. Friedman. Plaintiff did not consultwith Share about the test refusals because she was not aware of Share's grievance procedure. Dr. Kowalski gave Dr.Friedman a copy of an old MRI test result at that time. The record offers no further information about this old MRI test.

Nonetheless, Dr. Kowalski later ordered an updated MRI of plaintiff's brain, which was performed on October 31, 1990.Inconsistent with Dr. Friedman's directions, however, this MRI failed to image the right base of the tongue area whereredness existed. Plaintiff and Dr. Kowalski discussed the results of this MRI test on November 19, 1990, during a follow-upvisit. Plaintiff testified that Dr. Kowalski told her that the MRI revealed no abnormality.

Plaintiff's pain persisted. In April or May of 1991, Dr. Kowalski again referred plaintiff to Dr. Friedman. This wasplaintiff's third visit to Dr. Friedman. Dr. Friedman examined plaintiff and observed that plaintiff's tongue was tender.Also, plaintiff reported that she had a foul odor in her mouth and was experiencing discomfort. On June 7, 1991, Dr.Friedman performed multiple biopsies on the right side of the base of plaintiff's tongue and surrounding tissues. The biopsyresults revealed squamous cell carcinoma, a cancer, in the base of plaintiff's tongue and the surrounding tissues of thepharynx. Later that month, Dr. Friedman operated on plaintiff to remove the cancer. He removed part of the base ofplaintiff's tongue, and portions of her palate, pharynx and jaw bone. After the surgery, plaintiff underwent radiationtreatments and rehabilitation.

Plaintiff subsequently brought this medical malpractice action against Share, Dr. Kowalski and others. Dr. Friedman wasnot named a party defendant. Plaintiff's complaint, though, alleges that both Drs. Kowalski and Friedman were negligent infailing to diagnose plaintiff's cancer in a timely manner, and that Share is vicariously liable for their negligence underagency principles. Share filed a motion for summary judgment, arguing that it cannot be held liable for the negligence ofDrs. Kowalski or Friedman because they were acting as independent contractors in their treatment of plaintiff, not asShare's agents. Plaintiff countered that Share is not entitled to summary judgment because Drs. Kowalski and Friedmanwere Share's agents. The parties submitted various depositions, affidavits and exhibits in support of their respectivepositions.

Share is a for-profit corporation. At all relevant times, Share was organized as an "independent practice association-model"HMO under the Illinois Health Maintenance Organization Act (Ill. Rev. Stat. 1991, ch. 111