Full Transcript
Dr James:
Hey everybody, hope everybody is having an absolute smashing day. Welcome back to another episode of the Dentist who Invest podcast, and we are here today to talk about vicarious viability for principal dentists and also its ramifications for us associates as well. I have sat in front of me, legal, legal professional, professional of the law, Jonathan Jacobs. Jonathan is going to be assisting us today in our understanding of said topic. Jonathan, how are you? I’m not so bad. James, how are you? Yeah, I’m good. Thank you very much. I’ve been looking forward to this podcast for a while because vicarious viability is something that I’m loosely aware of but don’t really have much of a deep understanding on, so I’m hoping that you can help myself and also all the listeners. It would be really nice if we could have perhaps a little bit of an introduction about yourself and who you are. I know that you pop up from time to time on the group Maybe people out there listening who have yet to come across you and meet you.
Dr Jonathan:
Right, I’m Jonathan Jacobs. As James said, I’ve been, for the last 12 years plus, specialising 100% in the dental sector, and that ranges from buying and selling practices all the way through to dealing with disputes that can arise between the principal dentists and their associates, their associates themselves, dealing with NHS England and the CQC and anything else in between.
Dr James:
Cool great stuff. So vicarious liability, let’s start from the start, which seems sensible. There will be some people listening who have yet to come across the term vicarious liability, so maybe it might be nice if we could have a breakdown, from a very simple level, of what that means.
Dr Jonathan:
Right. The vicarious liability per se as a legal term, effectively means that an employee, during the course of his employment so if they’re working hours from 9 to 5, then between 9 o’clock and 5pm if they commit any tortuous acts, so, for example, cause somebody to sustain an injury as a result of an accident during work, or they fail to carry out an action which they were ordered to do by their employer which then causes somebody to suffer a loss, then, being the employer, the employer, through their insurers, would ultimately then have to pick up any claim for damages that arose as a result. Now I’ll give you an example of, say, somebody like a postman working for the postal service. If, during that postman’s round, he decided to nip home and grab a quick cup of coffee so he ultimately wasn’t delivering letters during that period and on his way back home he caused an accident, then that wouldn’t be down to the employer, because that’s not during the course of his employment. But if it was during the course of him delivering letters and an incident happened that was down to him, then the royal male, ultimately his employer, would have to pick up the pieces and be responsible for any claim that arose. And that, in essence, is what vicarious liability is about.
Dr James:
I see. So let’s, let’s hone that in on dentistry. Let’s take that concept and develop it further into the world of dentistry and what it means for us dentists. So I’m going to extrapolate and say that if the associates are in the practice, there’s some mild practice, there is an issue with, or not even necessarily, mild practice, but let’s say an issue where a dentist is fine to be culpable or not defended by their, their, their insurance payout. Then it might also be the case that the principal is is instigated in that as well. Have I understood that correctly?
Dr Jonathan:
Yes and no, I suppose, is the answer. For a long, long time, I guess only until very recently, the issue of vicarious liability and principal dentist was never on the landscape, for the reasons that you’ve mentioned, james, because, as we all know, every dentist is self-employed, every dentist is required to hold indemnity cover or an insurance policy with one of the recognised bodies. Every, every associate dentist has the opportunity to refuse to treat a patient. The principal’s job, ultimately, is to provide the equipment and the staffing and the opportunity to treat patients to their associates, but as far as the treatment’s concerned, that, then, is the responsibility of the associate dentist. Recently, there have been a number of cases that have gone all the way to court, where judges have seemed to start inferring that the relationship between an associate dentist and his or her principal is very much akin to the relationship between an employer and their employees, and the reasoning behind that is quite simple, especially if you look at an associate dentist who spends all their working week at one practice, because many associate dentists don’t. Many associates will spend, you know, some time during the week at one practice, some time during the week at another one. But if we concentrate on an associate who is five days a week at one particular practice, receiving patient referrals from the principal and doing all their dentistry at one premises or premises under the same brother of the practice, if they carry out dental treatments which then turns out to be negligence, the patient then determines that their loss has been caused by that dentist, likelihood is they will complain to the practice. That complaint if it can be kept internal and managed by way of reimbursement of fees or something like that, that’s the best outcome for the practice because the patient then walks away out big and the practice then doesn’t suffer a claim. However, if there is dental loss loss of a tooth, wrong treatment, something like that and they go off to solicitors, then it starts to become complicated. Then the solicitor’s job will be essentially to get them as much compensation as they possibly can. Those solicitors will work on a no win, no fee. So ultimately if they don’t win the case for the client, they don’t get paid. So it’s in their interest to do so and the claim will ultimately be directed against as many people as possible. So it’ll get directed towards the associate and it’ll get directed towards the principal as well. And the solicitors will work very much on a case of who is most likely to have to pick up the pieces. And it’s not the dentist per se themselves, it’s the insurers who will ultimately have to make the payouts. So in one particular case there was a lady who visited the dentist and she had treatments and her treatment was carried out by a number of the associates, so it wasn’t just one dentist she was going to see each time. Something went wrong and ultimately she went off to see solicitors and made a claim. The claim was directed against all the associates who had dealt with her treatments and against the foundation dentist who, although employed by the practice, was part of the treatment course, and also against the principal. The principal dentist had not touched his patients during the whole course of her treatments and the claim was made against all the parties concerned. At first hand the court decided that all the dentists involved were responsible, and that included the principal, on the basis of vicarious liability. That decision was not particularly, didn’t particularly sit well with the principal because the principal dentist had not had any involvement in the dental procedures. Yes, the principal ran the practice. Yes, the principal was responsible for referring the particular patient to the associates. Yes, ultimately it was the principal’s practice. But because he had no daily involvement in the dental treatments, he felt aggrieved, I guess for a form of vessel word, by that decision. So it was appealed. It was appealed to the next court up. The next court up found that vicarious liability, on the basis of the fact the principal dentist hadn’t been involved in the treatment course, couldn’t attach to the principal dentist for that reason. But what they also found was that the duty of care which every dentist does towards their patients is what’s known as non-delegable, ie couldn’t be passed on from the principal dentist to the associates who treated that patient. So the principal dentist was found to be in breach of that duty, the duty of care, but he wasn’t found liable in respect of any loss that the patient had suffered as a result of the negligent treatments.
Dr James:
I understand. So there’s really kind of two things that are going on there. So you’ve got your duty of care and then the other term that you use was negligence in terms of the patient’s treatment. That’s what you said, right? So question on this one, question on this part, right? So that would obviously set a little bit of a dangerous precedent really, because really any practice in which case there’s been or there’s purported to being negligence because of course, as we know in dentistry well, it’s a little bit contentious sometimes, as the nature of the case, whether or not we should be defended sometimes, a lot of the time, dentists feel like they acted in the best interest of the patient, but that always that wasn’t always the, that always wasn’t always construed in court or the, the dentistry providers don’t always stick up for us when they should do. But that’s another point of contention in itself, which were probably a little bit of a scope beyond this podcast and probably could be another podcast in itself. But let’s say that this claim does go through and let’s say it said to be negligence, or let’s say it said to be maybe even just as small, as adequate consent wasn’t gained and I don’t know if that quite falls under the remit of negligence no.
Dr Jonathan:
I think, going back to the first point you made, I think you’re 100% right in that all these claims are making dentists very defensive in the way they practice dentistry because there is a fear factor about whether or not they are going to be sued if they do something wrong. And that’s not dangerous, necessarily, but it stops them practicing to the extent and experience that they can and it stops them acting in the patient’s best interests. For that reason, which is wrong, which is not how it should be, nobody’s going to want to go to work thinking that there is a possible claim arising on that particular day that they’re in the surgery. Dentists want to go to work and do the best they can for their patients. So litigation court runs against that. It always is going to run against that and it probably is the subject for another podcast. But what the current situation effectively says in that, in the particular case I was referring to, that’s a very specific set of circumstances. If it would have been the case the principal dentists had been involved in the treatment, then the outcome would have been very, very different. I think where the courts are trying to drive all this is probably similar in some respects to the way HMRC are trying to drive things in terms of dentistry, because the courts are now starting to say well, there is a relationship between principal and associate that is very, very similar to that if the associate was employed by the principal and not self-employed as all dentists are. And therefore, why should it be any difference in the setting of a dental surgery to, say, the postman who, outside of his working duties, creates? a situation which causes negligence, and the pushback on that is that every practitioner has to be separately ensured. Every practitioner has the right to refuse to treat a patient. Every associate is not contracted to one particular practice unless they choose to. So if you, james, were practicing and you wanted to work at three or four practices during the week, there’s nothing to stop you if you decided to work at one practice and exclusively work for that dentist. In questions, same again, because the associate’s agreement is what’s known as a contract for services. So you are effectively contracting your dental services to a particular practice and as long as you don’t work anywhere else, that is going to effectively impinge on that patient base of the other practice and is within a certain radius of the practice that you’re talking about, then you’re not reaching any covenants, you’re not doing anything wrong. So it’ll be interesting to see how things go. But I think practitioners hearing about the case that I mentioned shouldn’t necessarily think that that decision has made it a landscape where no principal dentist is going to be found vicarious, reliable in a case where he’s not treated the patients, because that isn’t the case. It was in this particular case. But every principal needs to be aware of the fact that the duty of care has to remain, because otherwise there is a breakdown of the relationship between dentist and patients. And it’s exactly the same if you walk into your doctor’s surgery, your doctor has a duty of care to look after you for exactly the same reasons, and I think if that duty was to disappear, patients would be more nervous than now in turning up to a dentist in the first place, and it’ll be interesting to see how the situation develops.
Dr James:
Yeah, I suppose where I was that was partly what I was saying yes, 100%, and then where I was going to go with that was. My question in essence was is it the case that the severity of the supposed infringement or case against the dentist would also? The more severe it is, the more likely it is that the principal is going to be fined to be in breach of their duty of care, or really is this for any case, no matter how minor, theoretically that could be instigated?
Dr Jonathan:
I think what you’re talking about is quantification of damage effectively. So if a dentist pulls out the wrong tooth, is that worse than a dentist’s misdiagnosing caries, for example? Yeah, or is it the case that if a dentist is negligence, it doesn’t matter what the subject treatment was? It matters what the extent of the pain and suffering was. It matters what the extent of loss of amenity was. It matters about the patient’s reactions to the negligence act or acts. So, in short, the answer to your question is does the extent of negligence alter those duties? No, it can’t, Right, If it did, then that would have a massive impact on how the legal system operates. The area of law that we’re talking about has set principles in place and it doesn’t talk about the dentist will only be negligence if the amount of losses X All I can relate it to is in terms of value. Then in order to make a claim for damages for personal injury, the value of those injuries has to be above a certain level, and it used to be just £1,000. It has risen. Any claims that are below that sort of level you can still claim. You can still claim the negligence. But as far as solicitors are concerned and legal costs, they’re not recoverable, but the principle of negligence hasn’t been altered by all of this. What’s altered is the responsibilities, if you like, of each individual player, because it does turn every case turns on its facts, and what this case doesn’t do is send out a message to the principles. You need to be worried about this in every single case, but equally, it doesn’t send out a message that this is how every single case is going to be decided in the future. This particular case was different in the respect of the number of associates that treated the patients, different in the respect that the principle had nothing to do with the patients at all, other than welcome to my practice and I’m the owner and I think it’s impossible at this stage to say how the case law develops. Case law is determined by its facts and it’s the way the courts interpret the relationship between the parties that determines the decision. The actual negligence principles and the principles in law that deal with negligence haven’t been fettered by this decision.
Dr James:
Right, I’m with you now. So you mentioned the fact that there was quite a number of associates involved in this one patient’s treatment. You feel like that was a factor that predicated the indictment of the principle, because it might be argued that, reasonably speaking, that let’s say you had one associate who was deemed to be negligent, then that would be a lot more hard to control. But if you’d employed every person in that practice and they were all deemed to be negligent, that you’re somehow incriminated, is that what? I might have got the wrong end of the stick there? I thought that that might have been what you were suggesting.
Dr Jonathan:
No, I think if there were a number of dentists involved in the course of treatment of a particular patient, then there’s going to be a number of potential defendants that the patient can go after when it comes to making a claim for damages, whereas if there’s only one dentist who’s dealt with all the treatment whether that dentist is an associate or a principal then there’s no argument really as to who’s going to be responsible if something’s gone wrong. What tends to happen? Where one associate has done all the treatments and it tends to be the case in the majority of cases that it’s only one dentist that the patient will see If that patient then determines that they’ve got a claim, they want to make a claim, and they go off and see a solicitor by the way, I don’t sue dentists, it’s not what I do. I represent them, I look after them Then the claim will be ultimately directed against the associate, but it will also be directed against the principal, because the solicitors will work on the basis that there are two separate but parallel duties. So there’s the duty of care, which effectively is owed by the principal to the patients, and then there’s the vicarious liability angle, which is ultimately down to the clinician who’s treated the patients.
Dr James:
I see how recently was this case, or is that the level of the issue?
Dr Jonathan:
It’s in the near past, so it’s quite recent.
Dr James:
Because of course that doesn’t ping upon case law, doesn’t it? How recent it was.
Dr Jonathan:
Yeah.
Dr James:
Yeah, yeah, yeah. So we’re wary of it, but we’re yet to understand its full ramifications and manifestations.
Dr Jonathan:
Yeah, so it’s what’s known in law as a first instance decision and it’s not binding. So because it’s not binding, it’s not going to be used as a case that everybody is going to rely upon in cases of their own to say, well, if that was the decision in this particular case, then that has to be the decision in this case. It’s a strange set of circumstances, particular to the individual case, but it doesn’t make it a hard and fast decision that’s going to apply across the board. And I think that’s what a number of dentists were thinking. That was what was going to be the outcome of this case. The personalities involved made them think that way, but from a legal perspective, from a lawyer’s point of view, that’s not the impact of the decision.
Dr James:
That’s interesting. I didn’t know that about case law. I thought as soon as they make a decision, basically they reviewed all the facts and then going forward. For consistency, Every similar case has to be adjudicated in a similar way. But that’s not the case in the first decision Case law is what’s known as persuasive authority.
Dr Jonathan:
So you can use previous cases in the case of your own to persuade the judge that a decision took place in very similar sets of circumstances to. Therefore we ought to be able to rely on that. But unless a case gets all the way to the highest court in the land, which is the Supreme Court, it may not be considered as what’s known as binding. And the further up the court ladder a case goes, the more credibility and strength the decision gets. What also tends to happen if you’re talking about, but again on the size of the organization, the bigger the organizations are. So if you’re looking at the organizations that we all know that are at the top of the corporate tree, they tend to shy away from court because it’s not good news being in court, it’s not good for publicity, it’s not good for reputation, it’s not good financially and also from the court’s point of view the court’s view litigation at the last resort. So if a dispute can be mediated formally or informally and it can be kept out of the court system, then the judges are happy because they only want to hear the cases. That absolutely cannot be reconciled between the parties. And one of the very first questions that court will ask of both parties is have you made efforts to sit around the table and sort your differences? And if the answer to that question is no, then it won’t affect the court’s decision. But when it comes to the court adjudicating costs and litigation runs on the basis that the loser pays the winner then it will have an impact upon the costs. If the parties have tried to mediate in advance, whether that’s using the British Dental Association or using the professional mediator, then they’ve tried. They’ve tried to keep it away from court and have failed. If they fail, there is only one option to go, and that’s to go to court.
Dr James:
Right, got you Interesting stuff. Let’s change gears slightly and talk about IR35, because I believe that it is relevant to what we just said.
Dr Jonathan:
Yeah, yeah. Ir35 is a pain in most people’s backsides and I would say that’s for everybody, not just for dentists. James, what’s happened in dentistry is that the implementation of IR35 was delayed till April 2023. What happened a few years back Associate dentist you may have had one was sent out questionnaires by from HMRC, and HMRC were in the process of collecting data, and they were collecting data from the associates to find out about their employment status, effectively, ultimately wanting to know what their relationship was with their bosses, with the people they contracted with, and did that amount to an employer-employee type relationship or did that amount to a self-employed contract or services situation? Good and short of the short of HMRC determining that they were going to have a blanket approach to every single associate dentist come next April, where, where we are with that is that it’s going to be treated on a case by case basis. So every single dentist is going to have to justify to HMRC that they are self employed. And if they’re self employed, then they won’t be taxed at source. They’ll get paid gross and they will be responsible for their own tax. There might be some associate dentist who don’t fulfill the criteria that HMRC are looking for and HMRC may try and tax them on an employed basis but their status insurance wise won’t change. They’ll still have to be insured with one of the regulated insurers or indemnity bodies and they will still ultimately hold that self employed status. So it’s going to be interesting to see what happens come April. It’s not going to be a case of the principal telling HMRC I’ve got such and such a dentist working for me and he is employed, she is employed. Hmrc will arrive at the conclusion that they are employed. It’ll be down to the associates to challenge that decision and say well, actually I’m not, because I’m working here and I’m working there and I control my day to day diary. And it will be a different set of circumstances for each dentist because no two dentists are the same. No two dentists have the same working patterns.
Dr James:
And this was something interesting that popped up in the conversation I was having with someone else recently the onus has shifted. What’s changed is how the onus has shift, and the burden of proof is on the associate dentist. The employee inverted commas, or at least that’s what our job is. To do is either prove or disprove that we are an employee, depending on our working circumstance, of course, and being ethical and honest while we’re doing it. The onus has now shifted from the associate to the principal. To prove this correct, the emphasis has shifted.
Dr Jonathan:
Sorry, you said the emphasis has shifted from the associate onto the principal.
Dr James:
The onus and it’s shifted. Oh, if I said associate to principal, I actually meant the other way around.
Dr Jonathan:
Yeah, principal, the onus now is on the associate to prove that the HMRC have got it wrong and determined them to be employed whereas they actually are self employed. Because, if they? Because, as everybody knows, the tax coding for self employed in entirely different to the tax coding for employed staff. It is maybe some cases. In some cases it may be better for a dentist to be deemed employed Depends on their particular set of circumstances. They may want to be employed, they may want to be deemed employed for tax reasons. It may be better, in the majority of cases, that dentists, for tax purposes, stay self employed, and I would imagine that will be the case. I would imagine that the majority of practitioners who, up till April next year, have been deemed for tax reasons as self employed will want to stay that way. But there will be others who maybe want the comfort. But the bigger picture, much bigger picture, it is what happens if a dentist is deemed employed for tax purposes. Where does the burden then fall? The answer to that question is on the on the principal, because if the tax, for tax reasons, the associate is deemed to be employed, then the national insurance and the income tax will have to come out from the practice. Potentially, insurance for the dentist will have to come from the practice. How is that going to impact on the income that the dentist derives from the practice they’re working at? It’s ultimately going to decrease because if the costs for the principal are going up to cover an eye and income tax and indemnity, then they have to pass that on. So the principles have invested interest in this.
Dr James:
Yeah, yeah, yeah. So it’s definitely a shared responsibility, but there’s a shared crossover in interest between the parties both parties of their ducks in a row rather than fending for themselves.
Dr Jonathan:
The principles definitely have a vested interest. It’s easier for them to leave the status quo as it is now and to pay the associates gross and to allow the associates to then take care of their own tax interests themselves. If it goes the other way, whether that’s because a dentist wants it to go the other way, or the HMRC decide that they should be changing the status of a particular dentist, then it creates extra paperwork for the principal. And yeah, so that for that reason the principles do have a vested interest in what the HMRC are going to decide. But what they can’t do is influence the HMRC to decide one way or the other. The HMRC’s decision will be final and binding and it will be based upon what they believe to be the situation of themselves. It won’t be a case of them saying to the principal dentist would you like us to consider this dentist employed or self employed? Because if that were the case, james every principal would say self employed because it makes it easier for them. Yes, every principal would.
Dr James:
You’re right, not every associate, but every principal, at least from the point of view of finance, because it’s always going to be cheaper, given that you don’t have to pay their pension contributions, and what have you? Yeah, absolutely so. Okay. So let’s put ourselves in the shoes of the associates. What can the associates do to prove or disprove, or to get some firm footing on whether or not they are indeed self employed or employed?
Dr Jonathan:
Associates who well, there’s two different times of associates aren’t there. There’s those who are spending their full working week at one practice, relying solely on one principle for their patients. And there’s those associates who are splitting their week up between a number of practices, doing various different things at various different practices. The second lot of associates will find it much easier to persuade the HMRC to deem them as self-employed because they are not 100% contracted during the working week to one practice. They’ll have a contract. They’ll have more than one contract ongoing, however many practices they’re working at, and they’ll be relying on more than one principle to provide them with work at their respective practices. So control, which is one of the two things that we’re talking about, control over that associates work, is not wholly in the realms of one principle. It’s under the branches of all the principles that that associates working for. In the first transfer of associates, those who are exclusively working at one practice throughout Monday to Friday, and maybe weekends as well, it’s evident to HMRC as to who has to control. It would be now an impossible for the associates to say, well, I have total control over what I’m doing. If the HMRC then turned on and say, yes, but if you weren’t working at XYZ practice, you wouldn’t be working at all, because that’s the only practice you’re working at at the moment. So it has to be the case that they are feeding you with the patients that you need to see in order to derive your income. So, on that basis, we, the HMRC, believe that that relationship you have with your principle is ultimately as if you were employed by that practice. So this is the decision we’re going to reach and, on the flip, side of that coin the associate who has more than one practice that he’s contracted to would be able to much easier prove to HMRC that not one of those principles has total control over what they do. So their case to argue self-employment may be stronger but there will be cases where there are associates tied to one practice I use the word tied very loosely tied to one practice that may still be able to prove themselves as self-employed. I guess a lot depends on the working arrangements that the associates have with their principles, because it then comes down to what does the associate contract say? And we all know that the BDA have a model agreement, and we all know that the majority of associates have agreements that are very similar. But the wording of the agreement then needs to be looked at, and I guess that’s maybe where lawyers come in and lawyers have to assist the dentist to determine what they think their status is going to be. But we can only advise. We can’t do what the HMRC can do. We can’t make a decision based upon what their tax status is. We can only provide them with advice as to what the HMRC might look to in terms of making that decision. And control is definitely one thing. Choice about where they are working is another thing. Will it affect the relationships? Will it affect how associate dentists think going forward? Possibly, possibly more associates will think well, I want to be working at more than one practice during the week. I don’t want to be tied to one practice, but how will that impact on availability of dentists and how does the landscape develop from that point? Who knows? I mean, everybody knows that, certainly on the NHS side of Dentistry. Everybody knows what the current situation is and everybody knows how difficult things are. Is this yet another thing that’s just going to add to the current difficulties? We’ll know in April.
Dr James:
Do you expect, if that relationship between associates and their dental practice is firmed up and they’re proven to be in fact employee and employer, that they’re improving to have that relationship because of some sort of adjudication by HMRC? Do you expect that link, in terms of the vicarious liability ultimate of the owner, ultimately of being that of the principal, to become stronger and then more likely to be prosecuted or found liable, shall we say, is probably a better term in the instance that the associate is negligible?
Dr Jonathan:
I think so. I think there is a possibility. I think if an associate if I saw, of the 29th of September 2022, today, an associate dentist is self-employed and remains self-employed up until the end of March, beginning of April, next year, if HMRC then comes to a decision that that’s incorrect and that they determine that the tax status of this particular dentist has to change, if subsequent to that now, bear in mind, it has to be subsequent, because if a patient comes along with a claim and the claim goes back to a set of circumstances where the negligence happened prior to the change in status, it’s at the material time that it matters. So if the associate was still self-employed when the negligence act took place, then what we talked about previously would still be the situation. The negligence act takes place after the 6th of April next year, beginning of the tax year going forward. Then an associate deemed as an employee, then the vicarious liability principles, going back to what I explained at the very, very beginning, would then come into play and there would be no doubting the fact that there is an employer-employee relationship there, but it’s on so many levels. It won’t sue principal or associates to be employed unless they absolutely want it, and there will be some out there who will.
Dr James:
There we go, interesting, and that’s how those two things are linked, Jonathan, thank you for your time today. Anything that you’d like to say, just to round things off?
Dr Jonathan:
I think probably we’ve covered an awful lot and I hope I’ve not been too legalistic and too complicated and I guess, from your point of view, if there are questions that come back at you that need looking at, I’m more than happy to cast my eye.
Dr James:
Sure, jonathan Jacobs. You can find Jonathan on the members in the Dentist Union Fest group. Feel free to get in touch if you find anything today of interest or relevant to yourself and your situation. Jonathan, you’ve been super generous with your time today. Thank you so much. We’ll catch up again very soon. Okay, thanks, james.