What is Claims-Made Insurance for a Physician?
Physician Claims-Made Insurance is a type of medical malpractice insurance purchased from an insurance company which provides legal defense coverage to the physician from medical liability arising from clinical care that results in a patient’s injury or death. Each policy provides limits; which are the maximum amount an insurance company will pay per event. Thus, if your insurance policy has a limit listed of $1,000,000 per occurrence, that is the maximum amount of coverage your medical malpractice insurer will pay towards any claim filed within the term outlined in your policy.
Claims Made Policy Coverage
A claims-made policy will only provide coverage if the policy is in effect when both the incident first happened and when a lawsuit is filed against the doctor (when the claim is made). Thus, there is a chance a lawsuit can be filed after a physician leaves an employer. In situations like this, with claims-made medical malpractice insurance, a tail policy must be purchased by the medical provider which covers the gap between when physicians leave an employer and when the statute of limitations on filing medical malpractice claims ends.
How Much Does Tail Insurance Cost for a Physician?
Assuming claims-made coverage is in effect, a good rule of thumb is tail coverage costs around 2 times your annual medical malpractice insurance premium. Thus, if your annual medical premium costs $6000; your tail cost paid to the insurance carrier would be around $12,000. Your tail insurance cost is a one-time payment; it is not an annual cost. The American College of Physicians offers resources and multiple insurance options through AGIA Affinity for individual providers and any medical practice.
Who Pays for Tail insurance Policies?
The physician’s employment agreement will specify whether physicians or employers pay for the tail insurance coverage if it is claims made malpractice insurance. Learn 3 Ways to Get Out of Paying for Tail Insurance.
Some physicians have trouble maintaining an affordable malpractice insurance policy because of their tendency to switch jobs often. If they leave a doctor’s office and find another one, tail coverage can last for up to three years (or more in some states) after the date that they left. It is important though, not only during this time but also when applying for new employment with other doctors offices if you are considering leaving again before your claim-made period expires or else it will be difficult to get renewed policies in case there was any sort of legal liability issue that occurred while working at these different places.
As with any type of insurance and coverage, it’s important that you understand what your tail covers before purchasing one. There are two types of tails – open and closed – each with their own benefits and drawbacks against a claim.
Practice Resources for Physicians
An open tail insurance policy covers the physician for up to three years after leaving an employer (depending upon state law and the insurance carrier) against a claim. Closed tail policies last between six months and one year, depending on which insurer you choose (this is generally not used by physicians).
The primary benefit of a closed policy for claims is that it’s premium is cheaper than open coverage – but they have some significant drawbacks. For example, if you are a high-risk physician with prior claims against them or frequent job changes who needs continuous coverage protection against claims, then this type of insurance may not be right for you because your premium will increase dramatically every time you leave employment.
In contrast, an open policy provides continuous medical coverage as long as there has been no new claims filed within the past five years over the course of any covered professional services rendered by that physician during their tenure at each respective institution.
Retroactive Dates for a Claim
A retroactive date defines how far back in time a medical loss can occur for your policy to provide coverage to claims. If a claim happens prior to the date the policy is retroactive, the insured’s policy won’t provide coverage from the company. It’s a feature of claims-made professional liability coverage.
Occurrence vs. Claims-Made
An occurrence-based policy differs from claims-made in that an occurrence-based insurance policy covers any medical claim for an event that took place during the period of coverage, even if the medical claim is filed after the insurance policy expires. Thus, an occurrence-based insurance policy does not require tail insurance for claims.
Physician Contract Attorney Review
Contracts are a pervasive and obligatory part of nearly all business and legal transactions. Well-drafted contracts help to enumerate the responsibilities of the involved parties, divide liabilities, protect legal rights, and insure future relationship statuses. These touchstones are even more crucial when applying their roles to the case of a physician employed by a hospital, medical group, or other health care provider.
While contract drafting and negotiation can be a long and arduous process, legal representation is a must in order to ensure that your rights are being protected. The present-day conclusion is simple: A physician should not enter into any contract without having the agreement reviewed by legal counsel.
There is simply too much at risk for a physician to take contract matters into their own hands. In addition to the specific professional implications, contract terms can significantly impact a physician’s family, lifestyle, and future. There are many important contract terms and clauses which can present complex and diverse issues for any physician, including:
- Non-compete clauses
- Verbal guarantees
- Insurance (occurrence policy or claims-made)
Additionally, often times the most influential terms and clauses in any employment contract are the ones that are not present. With the advent of productivity based employment agreements it is imperative that any physician have an employment agreement reviewed before it is executed. Attorney Robert Chelle has practical experience drafting and reviewing physician contracts for nearly every specialty.
New residents, attending physicians, providers entering into their first employment contract or established physicians looking for new employment can all benefit from a thorough contract review. By employing an experienced attorney for your representation, you can insure that you will be able to fully understand the extensive and complex wording included in your contract.
By having a full and complete understanding of the contract, you will be in a better position to make your own decision on whether or not you want to enter into the agreement which will affect your career life for years to come.
The financial benefits gained from having your contract reviewed and negotiated by an experienced healthcare attorney far outweigh the costs associated with a review. You are a valuable resource, and you should be treated and respected as such. Attorney Robert Chelle will personally dedicate his time to make sure that your are fully protected and will assist you in the contract process so that your interests are fairly represented.
If you have questions about your current medical malpractice policy or are interested in having your employment agreement reviewed contact Chelle Law today.