All healthcare providers in New Zealand are covered by the provisions of the Accident Compensation Act 1972. This provides for a “no fault” regime to compensate for any “treatment injury” arising from negligent or incorrect treatment provided by a Healthcare Provider specified in the Act. Treatment injury is defined widely and encompasses any clinical treatment or decision making. Because of this, there is a complete bar on any claim being made, against a listed Healthcare Provider for any compensatory damages arising from a treatment injury.

Consequently, any liability is limited to claims which arise because of conduct outside of the provision of healthcare to a patient. These claims are referred to as third-party claims. An example of such a claim would be where negligent or reckless use of equipment causes damage. 

If you are a contractor/employee your contract/agreement may contain a clause such is this:

You accept liability, and we will reimburse/Indemnify the practice for any loss, damages, or compensation which the practice incurs or is required to pay (Including without limitation any legal fees, or amount paid by way of settlement) in relation to any claim, which is threatened, notified or commenced against the practice and which:

(a) arises directly or indirectly out of any act or omission by you while providing the services under this agreement;  and

(b) Alleges a breach of any duty owed by the practice or you in contract or tort.

While our Medical Protection membership does protect you against all the consequences of your conduct in a clinical context (e.g. HDC complaints, MCNZ processes, Privacy Act complaints and processes), it does not normally extend cover for this kind of third-party liability. In addition, Medical Protection membership does not normally extend cover for any costs (for example legal costs) the practice or organisation may incur as a result of any acts or omissions occurring in your clinical practice unless the Practice has taken MPS Practice Cover.  Therefore, if you agree to such a clause, you will be responsible for honouring that part of the contract.

Prior to signing any contract/agreement it is a matter for negotiation as to what is included within it. Discuss the situation with the other party and try to negotiate a change, removing the clause entirely and replacing it with the following (or something similar): 

“The doctor (contractor or employee) will, during the term of this agreement, have and maintain professional liability cover from a recognised medical defence organisation or insurer. The doctor (contractor or employee) will, on request, provide evidence of his or her defence organisation membership or insurance cover.”

2. The organisation or practice holding insurance to cover third-party losses, and corporate or practice membership with Medical Protection

An organisation or practice will normally have insurance to cover the third-party losses and will be better placed to secure it. However, often this insurance will only cover employees of the organisation or practice, and not contractors. In this case you should seek independent advice about your working arrangements.

Some organisations and practices will hold corporate or practice membership with Medical Protection. This will cover the practice for any vicarious liability they have arising from any act or omission in your clinical work while you remain a member of Medical Protection, and the organisation while you belong to that entity.

If you are unable to reach an agreement you will need to decide whether you are happy to accept the potential for third-party damages claims, limited though that potential may be, or costs that the practice or organisation incurs arising from acts or omissions in your clinical practice. This is an issue that you should discuss with your insurance agent/ broker or contact Medical Protection for further advice.

Remember, contracts are legally binding. If you have any concerns about the indemnity clause of the contract you are about to sign, contact Medical Protection or your legal advisor.