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Locum Tenens: Malpractice Insurance Is Vitally Important!

Locum tenens may be a mystery to medical practices that have not used a temporary physician staffing firm. A locum tenens physician allows for continuity of patient care when the office has an increased patient load or if a physician is away due to CME, sabbatical, vacation or illness. Your patients continue to be treated and you don't lose your revenue stream.

While considering locum tenens as an option, it is important to understand the contractual issues with regard to a locum company's obligation in locating and arranging for a licensed and qualified physician. Chief among these is that the locum company routinely is obligated to provide the malpractice insurance for the physician, so it is critical that all parties involved in a locum tenens agreement are aware of the type of malpractice insurance that will be provided. As we live in a very litigious society, malpractice insurance must be a priority when considering a locum tenens firm, especially given the difference between the predominant policy types.

According to Forrest S. Pullen, Healthcare Department Manager at Bowen, Miclette and Britt, "like most other segments in healthcare, locum tenens organizations are benefiting from the competitive insurance environment. The key is to leverage the strengths of the organization into measurable coverage improvements and pricing reductions." This is generally dictated by the type of coverage provided.

Claims Made Coverage
A claims-made insurance policy provides coverage for alleged medical malpractice incidents that are first reported during the policy period, and the date of the incident is after the retroactive date (how far coverage goes back) on the policy. Given the incubation time for a claim to be asserted, it is important to note the physician will be covered as long as the malpractice insurance is in effect and the retroactive date is maintained. Simply put, policy periods change annually and retroactive dates typically do not. If for any reason the malpractice insurance is not in effect, the physician is no longer covered. However, the physician will continue to have coverage if the locum firm obtains an extended reporting period endorsement (aka "tail coverage") to their policy.

Tail Coverage
This "tail coverage" will cover the physician in the event a claim is made after the policy is no longer in effect. Although tail coverage can be very expensive, provisions for an extended reporting period endorsement or "tail" assures continued coverage for the physician. To protect themselves, practices/clinics must carefully review the locum tenens agreement to make sure tail coverage is addressed if the policy provided is on a claims-made basis. Contractually, the locum firm should provide tail coverage but all firms may not. Be very leery if they don't.

Occurrence Based Coverage
An occurrence based insurance policy provides coverage for alleged medical malpractice incidents regardless of when the claim is actually filed. With an occurrence form policy, tail coverage is not necessary. The physician will have coverage if the incident occurred during the applicable policy period. As long as the policy was in effect when the medical incident occurred, coverage should be provided under the policy.

What is important to you? The bottom line is that whether a locum firm provides a claims-made policy or occurrence policy, the malpractice insurance should be addressed in the locum tenens agreement. Make sure the coverage is clearly spelled out in the agreement.