Professional liability insurance as a criterion for privileges

Every medical staff requires professional liability insurance as a condition for the exercise of privileges. Every medical staff services department is diligent about receiving copies of a practitioner’s insurance coverage history and claims. And every medical staff is diligent about automatic relinquishment of privileges when a practitioner’s coverage lapses. However, they are not always as diligent as they should be regarding the reinstitution of professional liability insurance.

The problem is there are two types of insurance, and depending on the which a practitioner has, the organization may be at greater risk for getting sued. The two types of insurance are:

1. Claims-made, which covers claims that are brought forward during the covered period, whether the action occurred during the covered period or prior. This insurance is the most common type of professional liability insurance available today.
2. Occurrence, which covers claims that arise out of an action that occurs during the covered period, no matter when that claim is made (as long as it is within the statute of limitations). It is more expensive than claims-made insurance and it may not be available in every market. 

When a practitioner allows his or her professional liability insurance to lapse, medical staffs do not allow the practitioner to exercise his or her privileges. Usually, only upon verification of reinstitution of insurance coverage can a practitioner resume practice. If the practitioner had occurrence professional liability insurance, there is no problem with automatic reinstitution of privileges because any claim that may transpire is covered by the occurrence policy (because the practitioner did not practice in the hospital when there was no insurance).

But if the practitioner had claims-made insurance, claims may have been made during the period when the insurance was lapsed. This means the insurance carrier does not have to pay these claims, and the practitioner most likely cannot afford to pay out of pocket. This places the institution, and any other practitioners involved in the case at risk because suddenly they are the ones seen as having the “deep pocket”. 

It is no longer enough to verify that your practitioners have current liability insurance. To protect your organization and other members of the medical staff, require your practitioners to show that there were no gaps in their coverage history.