Malpractice Consult

November 18, 2005

Who pays for tail coverage?

Q. I'm planning to leave my current job with a small primary care group. Although our original oral agreement included "claims-made" liability insurance with "tail coverage," my employer now says that he has no intention of providing tail coverage. That would leave me with no protection against claims filed by former patients once I leave the group.

A. You're right that both you and your employer would be vulnerable if you don't have tail coverage. You would be at risk since your current "claims-made" policy covers you only for incidents that occur-and claims that are filed-during the policy period. If you leave the group, and a former patient sues you based on an incident that occurred while you were still employed there, you'd have no protection.

The other reason is that if the group is a PC, it may have a policy with extra limits, in addition to the coverage it provides for its individual physician employees. So if a jury does reach a verdict against you, and you have no tail coverage, the group's insurance carrier will probably end up paying the judgment anyway if the group is also named as a defendant.

But don't breathe a sigh of relief just yet. Any gaps in your insurance coverage can come back to haunt you later. When you apply for your next job, or for privileges at a new hospital, or even for a license in a different state, you'll be asked about your malpractice coverage. If you don't have tail coverage for the years of your previous employment, you could have problems.

To maintain uninterrupted coverage for that period, you'll either have to buy tail coverage from the previous insurer, or "prior acts" coverage-sometimes called a "nose policy"-from your new insurer. Those policies are hard to get, however, and can cost two to three times as much as a regular one.

That's why you should push your current employer to pay for your tail coverage before you leave. To convince him to live up to his promise, your best argument would be to cite the legal principle of "respondeat superior," which means that an employer is responsible for the acts of an employee if they take place within the scope of his employment. That means your employer-or the group's carrier-could end up paying for any judgment or settlement on your behalf. If that argument doesn't work, you'll have to decide whether saving the cost of a tail or nose policy is worth the risk of your liability exposure, and of potential problems with future employers. There's one obvious lesson from your experience: With your next job, make sure you get such promised insurance benefits in writing.

The author, who can be contacted at lj@bestweb.net
, is a healthcare attorney in Mt. Kisco, NY, specializing in risk management issues.

This department answers common professional liability questions. It isn't intended to provide specific legal advice. If you have a question, please submit it to Malpractice Consult, Medical Economics, 5 Paragon Drive, Montvale, NJ 07645-1742. You may also fax your question to 973-847-5390 or e-mail it to memalp@advanstar.com
.