Locum Tenens Medical Malpractice Insurance Considerations

Medical malpractice insurance coverage is an important consideration for locum tenens providers. In locums assignments, hospitals or groups generally purchase medical malpractice insurance and extended reporting coverage (“tail insurance”) to cover the independent contractor physician’s medical practice. Unfortunately, many locum tenens staffing companies have contract clauses that could cause providers to lose medical malpractice coverage. Below is language related to medical malpractice insurance coverage copied from other locum tenens staffing agency contracts. Note how this language can adversely affect a locums physician’s protection against liability.

Sample malpractice coverage language from other locum tenens staffing agency contracts

[STAFFING AGENCY shall provide malpractice insurance only if PROVIDER] immediately notifies [STAFFING AGENCY] of any act or omission that could result in professional liability. [PROVIDER’s] compliance with this requirement is a condition precedent to [STAFFING AGENCY] providing Professional Liability Insurance to [PROVIDER].

[COMMENT]: If the provider doesn’t notify the staffing agency about every possible event that could result in a malpractice suit, the staffing agency can withhold all malpractice insurance coverage. Think about this. ANY treatment of any patient “could” result in a malpractice suit. If a suit results from an event that the Physician didn’t disclose, the staffing agency could withhold malpractice insurance coverage.

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[PROVIDER] SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS [LOCUM TENENS AGENCY] … FROM ANY AND ALL DAMAGES, LOSSES, COSTS, EXPENSES (INCLUDING REASONABLE LEGAL COSTS, EXPENSES AND ATTORNEYS’ FEES) AND LIABILITIES INCIDENT TO ALL CLAIMS, DEMANDS OR CAUSES OF ACTION … WHOSE CLAIMS, DEMANDS OR CAUSES OF ACTION ARE INCIDENT TO OR RESULT FROM [PROVIDER’s] SERVICES TO CLIENTS OF [LOCUM TENENS AGENCY].

[COMMENT]: In other words, Physicians have to pay the locum tenens agency if the agency is named in a malpractice suit related to the Physician’s locum tenens assignment.

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[If PROVIDER ever in the past or in the future has an adverse malpractice action, an action taken against PROVIDER’s license, an action taken against PROVIDER’s medical staff privileges, or a NPDB report, or if PROVIDER does not disclose such actions to GROUP’s satisfaction, GROUP can withhold malpractice insurance coverage and may keep any payments due to PROVIDER under the agreement to offset any related costs].

[COMMENT]: Adverse actions taken against the provider after signing the agreement could cause the provider to lose malpractice coverage and to forfeit payment for services already provided.

General medical malpractice insurance considerations for locum tenens jobs

Type of Coverage. Most malpractice insurance policies are claims-made coverage. Claims-made malpractice insurance coverage means that there is only coverage if the policy is in effect when the incident occurs AND when the claim is made and reported. To maintain coverage with a claims-made policy if a malpractice claim is filed after a locum tenens assignment has ended, “extended reporting coverage” (“tail coverage”) must be purchased. Some insurance companies offer “slot coverage” meaning that the insurance covers a “full time equivalency” (FTE) of 40-50 hours. Coverage is provided regardless of how many locum tenens doctors work the number of hours in the “slot.” Coverage from prior events is provided as long as the premiums are paid for the slot. Occurrence policies provide coverage as long as the policy was in effect when the alleged malpractice occurred. There is no requirement for tail coverage with occurrence-based insurance.
Limits of Liability. The insurance policy coverage limit is the maximum amount that insurance providers will pay to defend a medical malpractice lawsuit or a judgment against a locum tenens physician. Standard policy limits are $1 million per occurrence. However, limits on some policies are as low as $200,000 per incident which will barely cover defense costs. To make sure that you are receiving adequate coverage, ask for a Certificate of Insurance for each assignment.
Insurance Carrier Rating. A medical malpractice insurance company with a good reputation and a strong rating improves the chances of a positive experience should a adverse patient outcome occur during a locum tenens assignment. Some locum tenens companies use offshore risk retention groups for malpractice insurance which do not have to abide by the same rules as traditional medical malpractice insurance companies. Make sure that your insurer has strong financial strength and has a good track record. Check your insurer’s rating at AM Best and make sure that the insurer has at least a B+ rating.
Cost. To maximize profits, some staffing companies may try to obtain the least expensive malpractice insurance coverage available. Inexpensive insurance coverage may provide little malpractice claim is brought against you. Consider the EPIX Risk Retention Group insolvency causing it to be put into receivership in February 2021. EPIX is now unable to pay claims for adverse events involving physicians that purchased its professional liability coverage.
Scope of coverage. Does the malpractice insurance policy provided by a traditional locum tenens staffing company require you to settle nuisance claims? Are you covered for medical licensing board inquiries or for hospital administrative hearings? Will the company provide you with a copy of the insurance policy? Again, ask for a Certificate of Insurance for each assignment.
Coverage Rescission. Do the contract terms allow the staffing company to withhold insurance coverage? If so, you could find yourself without any malpractice coverage even though you were told you were being properly insured. Review the examples from other contracts noted above.