Despite the fact that a counselor continued to give advice to a patient as they engaged in a sexual relationship, the counselor's employer is not vicariously liable for the negligence of the counselor absent evidence that the counselor was acting within the scope of his employment. An Oregon appellate court reversed a judgment for the patient on her claim for vicarious liability.

Toni Ann Thomas checked into Mt. Hood Medical Centers Chemical Treatment Facility ("Mt. Hood"). Thomas underwent 11 days of inpatient treatment and five days of daily intensive outpatient treatment at Mt. Hood's Gresham facility. On the last day of her outpatient treatment, one of the counselors, Thomas Dyer, approached her and invited her to meet him at a non-alcoholic bar. Later he invited her to meet him at a Cocaine Anonymous meeting. They continued to meet and discuss her treatment, and Dyer professed to Thomas that she was his "dream girl." Their relationship eventually became sexual. During this time, Thomas received outpatient treatment at Mt. Hood's Tualatin Facility. Nobody at Mt. Hood knew of their relationship.

After just under two months, Thomas broke off the relationship with Dyer and stopped receiving treatment from Mt. Hood. She then brought an action for negligence against Mt. Hood and Dyer. Dyer was never served and was dismissed as a defendant. Mt. Hood moved for a directed verdict, but it was denied. The jury found that Mt. Hood was liable for Dyer's conduct, but declined to award punitive damages. Mt. Hood appealed.

The court reversed finding that the trial court should have granted Mt. Hood's motion for a directed verdict because the hospital was not responsible for Dyer's actions conducted outside the scope of his employment.

The court first set out the three part test for determining whether an employee is acting within the scope of his employment: First, the acts must be committed within the time and space allowed by the employer; second, the employer has to have been motivated, at least partially, by a purpose to serve the employer; and finally, the employee's acts must be of a kind for which he was hired.

Mt. Hood's challenge centered on the second part of the test. They argued that in pursuing a sexual relationship, Dyer was not seeking to serve Mt. Hood so, as a matter of law, they could not be liable for Dyer's actions. The court agreed, holding that although Dyer gave treatment advice to Thomas, there was no evidence that he did so to benefit Mt. Hood. Instead, Dyer was pursuing a social relationship for his own benefit.