DC Circuit Holds Temporary Nurses are ‘Employees’ for Purposes of Hospital’s General Liability Policy

In Interstate Fire & Casualty Company v. Washington Hospital Center Corp., the D.C. Circuit Court of Appeals affirmed a lower court decision holding that a temporary nurse hired to work at the Washington Hospital Center (the hospital) by a staffing agency was an “employee” of the hospital and therefore an “insured” under the Hospital’s general liability policy. The hospital carried a $5 million general liability policy issued by Greenspring Financial Insurance Company. This policy defined an “insured” as “all past, present, or future full-time or part-time Employees” of the hospital. If coverage was duplicative, the Greenspring policy was primary insurance. Progressive Nursing Staffers, Inc. is a temporary employee agency that provided the Hospital with nurses under a staffing agreement. Progressive was insured through several policies issued by Interstate Fire & Casualty Co. The Interstate policies were considered “excess” if there was duplicate or other insurance coverage. The hospital and Progressive were co-defendants in a medical malpractice suit involving a nurse Progressive had arranged to work at the Hospital.  That case settled with the hospital/Greenspring paying the plaintiff $1.05 million, and Progressive/Interstate paying $3.055 million.  However, Interstate “expressly reserv[ed] the right to rely on the ‘other insurance’ clauses” in its policies to reallocate the settlement later.  Interstate then filed a declaratory judgment action seeking reimbursement from the hospital and Greenspring. The primary issue was whether the nurse who committed the malpractice – a temporary employee hired by a staffing agency and assigned to work at the hospital – was actually an “employee” of the hospital and therefore an “insured” under the Greenspring policy.  The court concluded that she was.  It felt that the nurse’s status as a temporary employee was irrelevant for purposes of the Greenspring policy in the absence of an express exclusion aimed at removing temporary or ‘leased’ employees from insurance coverage.  The court also rejected Greenspring’s assertion that they subjectively believed their insurance policy was not intended to cover temporary workers such as agency nurses (as the unambiguous language of the Greenspring policy covered all Hospital employees, regardless of their classification). Accordingly, Greenspring was ordered to reimburse Interstate for the $3.055 million it paid out under the settlement agreement, including Interstate’s defense costs, up to the limit of Greespring’s $5 million general liability policy.

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