Occurrence insurance and claims-made insurance are the two basic types of medical malpractice insurance. With occurrence insurance if a physician has insurance when the malpractice occurred then the physician is covered. However this is not the case with claim-made insurance coverage. If a physician has a claim-made policy then they are only covered if two conditions are met. First, the physician needs to have had insurance when the malpractice occurred. Second, the physician needs to have coverage when the claim is brought.
If a physician allows their policy to lapse between the time the physician saw the patient and the time they were sued, or they change carriers, the physician needs to by “tail” coverage. If no tail coverage is purchased then it is as if the physician never had any insurance. However if tail is purchased the policy then acts an occurrence policy and the physician is covered no matter how long it takes for the claim to be brought.
Despite the way claim-made medical malpractice insurance operates it is still widespread for several reasons. It may be the only coverage available or cost less than occurrence coverage and a practice may not be willing to pay the extra costs to have an occurrence policy. It appears that more often than not that associate contracts have claims-made insurance.
Years ago it used to be the practice that when a medical practice hired an associate physician would cover all of the costs of the doctor’s medical malpractice insurance and if that coverage was claim-made the practice would also cover 100 percent of the doctor’s tail. However, now it is more common practice that employers require that an associate pay 100 percent of their own tail. This can have a significant financial impact on the physician.
If the contact requires that an associate physician purchase tail, the physician may not always follow through. Physicians cannot purchase tail until the term of the policy has expired or has been terminated early. Once the policy has ended the doctor usually has 60 days to purchase tail. If the associate has left the practice the employer could “chase him down” to have him fulfill his obligation to purchase the tail. The employer may have incentive to do this because any potential plaintiff will not just name the associate in the lawsuit but the employer as well, and the employer is automatically responsible for the associate’s acts and omissions under respondeat superior a/k/a vicarious liability.
One way an employer can cover themselves in case an associate does not purchase tail is to maintain corporate malpractice coverage which is separate from the physician’s individual policy. This generally protects the corporation whether or not a physician buys tail which eliminates that worry.
But what do you think? I would love to hear from you! Leave a comment or I also welcome your phone call on my toll-free cell at 1-866-889-6882 or you can drop me an e-mail at [email protected] . You are always welcome to request my FREE book, The Seven Deadly Mistakes of Malpractice Victims, at the home page of my website at www.protectingpatientrights.com.