Maintaining seamless malpractice coverage is a critical issue for all physicians. Over the last several years this has become a particularly challenging issue as physicians’ job opportunities became more transient in nature. Faced with a seemingly endless array of employment opportunities, many doctors can now choose when and where they work.
The explosion of hospitalist groups, locum tenens and physician staffing companies combined with an overall physician workforce interested in more transient and flexible work environments has resulted in a market for individual doctors and groups seeking their own extended reporting period or “tail” coverage policies.
Physicians currently employed or contracted by any of these groups typically face one of two scenarios when choosing to leave the group:
- The group is contractually required to provide the departing physician with tail coverage or maintain continuing coverage for future claims on the group policy or;
- The physician is required to purchase tail coverage or obtain prior acts (nose) coverage from a successive insurance carrier.
In the case of #1, there is typically no need for the physician to worry about their tail exposures. He/she can get a new medical professional liability policy at first-year claims made premiums rates or join a new group with no worry about their previous exposures. There is one big drawback to this that can occur if a group ceases to exist doesn’t purchase a group tail policy. This can happen when a group disbands or goes under financially and has no assets left to pay the 150 to 200 percent of their annual premium to purchase the tail. The departed docs in this case are often left with no alternative but to seek out their own tail policy. This happened recently with a large hospital-based radiology group that lost their hospital contract and went belly up. All of the current and former doctors who worked for the group were able to obtain their own tail policies at a reasonable cost.
In case # 2, the doctor is required to either purchase the tail coverage being offered by the group’s current insurance carrier or seek a stand-alone policy for tail coverage elsewhere. Often a departed doctor has little or no negotiating ability with the group’s carrier and they are offered only one option – unlimited.
The good news is that stand-alone tail coverage is readily available in the medical malpractice insurance marketplace. Tail options can range from one year in length to unlimited duration. Since, statutes of limitations for malpractice claims vary by state, many doctors can opt to save money and purchase a shorter length tail policy that runs concurrent with the state statutes. However, they do this at their own risk since there are often exceptions to statute limitations.
Insurance agents who specialize in medical malpractice insurance will be familiar with these scenarios and can help physicians look at options to find the right coverage at the right price.