New TRICARE contract might create gap in medical malpractice coverage

May 24, 2013

The California Medical Association (CMA) has recently become aware of a broad "indemnification" clause in the UnitedHealth Military & Veterans Services (UMVS) TRICARE provider contracts that is causing concern. The indemnification clause stems, at least in part, from a requirement of federal regulation 32 C.F.R. S. 199.17(p)(1), which relates to the Civilian Preferred Provider Network of the TRICARE program. Exact language of the contractual indemnity clause in question does vary from the regulatory language, is subject to interpretation and, depending on insurance policy language, may result in liability that is excluded from coverage under a physician’s medical professional liability insurance policy.

Contractual indemnity obligations are typically excluded from coverage under a medical professional liability insurance policy. However, such an exclusion would usually not be invoked for liability that the insured would have under the law in the absence of a contract or agreement. Because medical professional liability insurance policies are typically written to cover liability for negligent acts or omissions of the insured physician in providing professional medical services, the contractual indemnity provision in the TRICARE contract would typically NOT result in an exclusion from coverage of claims brought against the insured physician by a TRICARE beneficiary. Hence, although the amount of any uncovered liability could be significant, it would likely be a low probability event.

CMA is working directly with the medical professional liability carriers and UVMS on this issue. CMA strongly recommends that physicians contact their medical professional liability carriers directly regarding the indemnification provision in the TRICARE contract and obtain information from them on what the clause means in terms of liability insurance coverage and exclusions from coverage.

As with all contracts, physicians should read the new TRICARE contract carefully and thoroughly and should consider obtaining legal advice from their personal attorney before deciding whether to sign the TRICARE contract.

Contact: CMA's reimbursement help line, (888) 401-5911 or economicservices@cmadocs.org.

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