The United States Court of Appeals for the Fourth Circuit has held that, under Maryland law, a nurse placed by a staffing agency to work at a hospital qualifies as a hospital “employee” under the hospital’s insurance policy despite a separate contract describing the nurse as an employee of the agency, not the hospital. Interstate Fire & Cas. Co. v. Dimensions Assurance, Ltd, 2016 WL 7099822 (4th Cir. Dec. 6, 2016)

A temp nurse and a hospital were sued for malpractice.  The hospital’s insurer refused to defend the nurse, claiming that she was not a hospital employee.  The staffing agency’s professional liability insurer defended the nurse, ultimately settling the case. That insurer then filed an equitable contribution action against the hospital’s insurer, claiming that the nurse was an “employee” and thus entitled to coverage under the hospital policy.

The professional liability section of the hospital’s policy described present and former employees as protected persons; however, the general liability section stated that persons working on an agency or contract basis were not protected persons.  The policy did not define the term “employee.”  The staffing agreement between the agency and the hospital stated that agency-provided staff were employees of the agency, not the hospital.  Relying on the terms of the staffing agreement, the trial court held that agency-provided workers were not employees under the hospital policy and granted summary judgment to the hospital insurer.  On appeal, the agency insurer argued that the nurse qualified as an employee under the hospital policy’s plain terms and that the trial court erred in relying on a separate contract to determine the meaning of the policy.

The appellate court agreed with the agency insurer and reversed the trial court’s decision.  First, the appellate court pointed to the policy language excluding agency-placed practitioners as protected persons under the general liability section.  The court reasoned that the absence of similar language in the professional liability section reflected an intentional decision and therefore the term “employee” in the professional liability section included such individuals.  Second, the court rejected the argument that the staffing agreement controlled the meaning of the hospital policy, holding that Maryland principles of contract interpretation require courts to look only to the unambiguous policy itself and to interpret it as written.