MedHIRE - Malpractice Issues for Neurosurgeons and Neurologists

The most common form of malpractice insurance is claims-made coverage. With claims-made malpractice insurance, you pay a premium for a specific term, and you are covered for claims that arise during the policy period.

The policy period ends.
You leave.
You don't renew.
A claim arises.
When did the act occur?
During the insured period.
Covered or not?
NOT.
How do you cover yourself?
How do you cover your rear?
You buy a tail.

The tail covers any claims brought after the period covered by the claims-made insurance. Typically, the tail becomes due when a doctor leaves the state of the area, or if a doctor changes professional liability carriers. This coverage is very expensive.

So, if your contract says only that, "We will provide for malpractice insurance," then it is up to the court to decide. To avoid the hassle, make sure your contract states who will be responsible for the costs of the tail insurance in the event of termination.

Who should pay for the tail ? you are the employer? If the employer says that you, the employee, should pay for the tail, try to negotiate.

You worked for your employer. Whatever happened while you were employed may have been a function of something you did or didn't do, but your employer had some responsibility.

More and more contracts are saying the tail costs will be shared 50-50 between employer and employee in the event of termination.

An occurrence policy provides coverage for a claim that occurs during the policy period, regardless of when the claim is reported.

For example, let's assume you carry a malpractice policy from December 1, 1999 to November 30, 2000 and it is an occurrence policy. You never renew your policy. On August 16, 2001 you receive notice that you have been named in a malpractice lawsuit for something that happened on February 4, 2000. Because the incident occurred during your coverage period, you would be covered for that claim, even though you received notice of the claim after your policy ended. A claims-made policy provides coverage for an incident that occurs during an active policy period only if the calim is also filed during an active policy period.

Suppose you have a claims made policy from December 1, 1999 to November 30, 2000 and do not renew that policy. On August 16, 2001 you receive notice that you have been named in a malpractice lawsuit for something that happened on February 4, 2000. You would not have coverage under your claims made policy because your coverage was not active when the claim was made.

If you own a claims-made policy, you may need to give some additional thought before you decide to cancel or non-renew your policy. If you decide to end a claims-made policy, you can purchase "tail" coverage. Tail coverage will extend the time that a claim can be reported, but the incident will still need to occur while the policy was active.