Hospital Agency Issues In New Locum Tenens Settings

A steadily increasing number of physicians practice medicine on a locum tenens basis. This Latin phrase, which means “holding a place,” applies to situations where a physician provides medical services at a facility temporarily to fill the facility’s staffing needs. Hundreds of locum tenens agencies provide temporary physician coverage for hospitals that need to fill gaps in schedules.

Traditionally, the hospital or medical facility relies on a locum tenens agency to locate and contract with a physician for services at the hospital. The locum tenens agency handles the following aspects of the placement process: negotiating the employment contract, compensating the physician, providing malpractice insurance, and credentialing the physician. The physician is an independent contractor of the hospital where he or she ultimately practices.

 The locum tenens option is appealing to physicians for a number of reasons.  A physician nearing retirement may want to practice on a less than full-time basis. Other physicians may wish to pursue part-time work in addition to their existing practices to earn extra money and pay off excessive loans. Some young physicians seek employment that provides the freedom to travel and spend only a few months at a time at a given medical facility.

In recent years, a number of companies have emerged which change the face of the locum tenens industry. These locum tenens agencies provide electronic platforms designed for physicians to find freelance clinical work and communicate directly with a medical facility, rather than utilizing a third-party recruitment agency or broker. This digital setting makes it easier for physicians to find work while lowering fees that hospitals currently pay brokers to locate staff. It also enables the physician to choose the facility, dates of service, and demand their own compensation rates. These new agencies generally charge a flat fee to a medical facility and will compensate the physician for services at the facility. The agencies also eliminate the problem of excessive paperwork submissions by handling a physician’s credentialing in the electronic format, which reduces the time a physician spends applying for the locum tenens job.

The emergence of these new locum tenens agencies may present new challenges in the medical malpractice setting. The user-friendly and efficient electronic format may persuade more and more physicians to select locum tenens work. Although these agencies compensate the physician for services at a medical facility and provide medical malpractice insurance, the medical facility may still be held  liable for the actions of the physician under an agency theory. Illinois hospitals may be found vicariously liable for the negligent actions of a physician providing care at the hospital, regardless of whether the physician is an independent contractor, unless the patient knew or should have known that the physician was an independent contractor.  Gilbert v. Sycamore Municipal Hospital, 156 Ill. 2d 511, 524 (1993).

One way that hospitals have traditionally dealt with this problem is to provide patients with consent forms indicating that physicians practicing at the hospital are independent contractors, rather than employees, of the hospital. In situations where a medical group employs a number of physicians at the hospital, the hospital may even specifically list the name of that medical group on the consent form to illustrate that the physicians are independent contractors. In the new locum tenens world, however, it would be difficult if not impossible for a hospital to anticipate every locum tenens agency that it may utilize for physician services. Thus, hospitals would have to rely on general “independent contractor” language in a consent form, which will not always absolve the hospital of vicarious liability in court.

Another litigation-related issue that may arise is the potential liability of the locum tenens service for independently verifying a physician’s credentials. Illinois courts have specifically recognized a duty on the part of hospitals to use reasonable care to discern the medical qualifications of persons who perform medical services in the hospital. Thus, hospitals may be held liable under a theory of institutional negligence for the improper credentialing of a given physician who ultimately provides negligent care at the hospital. Frigo v. Silver Cross Hosp. & Med. Ctr., 377 Ill. App. 3d 43, 70 (1st Dist. 2007). In such situations, liability is predicated on the hospital’s own negligence, rather than the negligence of the physician. Jones v. Chicago HMO Ltd. of Illinois, 191 Ill. 2d 278, 291 (2000).

The new locum tenens agencies independently verify a physician’s credentials and provide them to a hospital or medical facility. Future plaintiffs may present a theory of liability against these agencies for improper credentialing of physicians who are alleged to provide negligent treatment at a given facility. It is unclear whether the locum tenens agency’s act of verifying credentials would absolve the hospital of any duty to verify a physician’s background and credentials before allowing the physician to practice at the hospital.

As technology continues to change the manner in which we interact and communicate, it is inevitable that more electronic platforms for locum tenens physicians will arise in the healthcare industry. Both hospitals and locum tenens agencies should be wary of these potential areas of liability moving forward.

Jacquelyn Hill

Jacquelyn Hill

Jacquelyn M. Hill is an associate with Cassiday Schade LLP and is based in the firm's Chicago office. Ms. Hill has dedicated her practice to defending health care providers of all types against claims of medical negligence.