Charitable Immunity for Nonprofit Hospitals

Immunity From Malpractice Liability For Nonprofit Hospitals

The doctrine of charitable immunity protects charitable or nonprofit hospitals from paying judgments in medical malpractice cases. The doctrine is premised on the notion that it would be against public policy to require a nonprofit hospital to expend its resources paying judgments, thereby reducing the hospital's ability to treat patients. While the majority of jurisdictions have abolished immunity for charitable institutions, those states that still grant the immunity greatly restrict the ability of medical malpractice victims to recover for their injuries. Other states have imposed limitations on recovery from charitable hospitals by capping damages, allowing damages only to the extent of the hospital's available insurance, or allowing immunity only for claims from non-paying patients.

Following are some examples of state laws that provide limited protection to charitable hospitals. In Virginia, only hospitals that provide exclusively charitable medical services are entitled to immunity. Virginia hospitals that do not provide exclusively charitable services may have immunity with respect to a particular patient if the patient signs an agreement that all services will be provided free-of-charge. Likewise, Georgia allows paying patients to recover malpractice judgments from nonprofit hospitals. In addition, immunity does not apply where a Georgia charitable hospital is negligent in selecting or retaining incompetent employees or is negligent in supervising employees. Massachusetts law limits liability of charitable organizations to $20,000 for negligent acts performed in pursuit of the organization's charitable purposes. Massachusetts has determined that providing medical care, even for a fee, is in pursuit of a nonprofit hospital's charitable purpose. Consequently, any verdict against a charitable hospital in excess of $20,000 must be reduced to $20,000. In one case for the death of a child attributed to the negligence of a hospital, the court reduced a $20 million verdict against a charitable hospital to $20,000.

States that have abolished charitable immunity have cited the fact that many hospitals are not actually providing free service for the poor because federal programs such as Medicaid reimburse the hospitals for services for the poor. Also, states have reasoned that public policy does not favor denying compensation to negligence victims when the institution shielded may be protected by insurance. Finally, because many hospitals that were once organized for charitable purposes have developed into large, money generating organizations, many states are reluctant to provide continued immunity.