Practice Corner: Mid-Level Practitioners and Professional Liability Insurance
For employers of mid-level practitioners who choose to enter into written employment agreements with these vital health care professionals, significant consideration should be given to various aspects of their professional liability insurance coverage.
It is a mistake to duplicate the professional liability insurance contract provisions applicable to employed physicians in employment agreements with mid-level practitioners. Different treatment of these licensed professionals under professional liability policies calls for tailored contract provisions.
Typically, the employer provides professional liability insurance for mid-level practitioners under an institutional policy. Physicians are much more commonly insured under individual professional liability policies. In fact, in Nebraska, nuances of the Nebraska Hospital-Medical Liability Act (the “Act”) make it a requirement that eligible provider have only one professional liability insurance policy, no matter how many employers they might work for.
So while a professional employment agreement for a provider covered under the Act will have limited options in terms of requiring a physician to secure his/her own professional liability insurance for a moonlighting engagement, that is not the case for a mid-level practitioner. The fact that institutional insurance policies will typically cover mid-level practitioners makes it much easier to require the employed mid-level practitioner to secure separate professional liability insurance for moonlighting engagements. In the typical scenario where a mid-level practitioner with experience in emergency department coverage moonlights for another emergency department, the mid-level can probably demand coverage under the second hospital emergency department’s professional liability insurance.
First, it is likely that the employer’s professional liability insurance will not cover the mid-level practitioner for moonlighting engagements, so the employer cannot unilaterally extend that coverage for a moonlighting engagement outside the scope of employment. Second, it is only fair that the second hospital bear the risk of liability for any acts or omissions that might occur during the moonlighting engagement.
Another important consideration for mid-level practitioners and their professional liability insurance coverage relates to tail coverage. As long as the mid-level practitioner is covered under an institutional, rather than an individual, policy, the institutional policy continues even after the employment relationship is over. That being the case, there might not be any need to secure tail coverage for the departing mid-level practitioner. This means that tail coverage provisions that are typically included in physician employment agreements should not be automatically included in employment agreements for employed mid-level practitioners.
It may be important to be in contact with your professional liability insurer to explore actual coverage as you negotiate with mid-level practitioner the employment terms related to professional liability insurance.