There are two different types of malpractice insurance policies: an occurrence policy and a claims-made policy. Understanding the difference, and knowing which one you have with your current employer, will help in understanding:
- The contract terms;
- What happens when you leave; and
- What happens if you decide to start your own practice or become an employee of another practice.
Let’s start with a fact pattern for simplification of the policies: You start working for a practice in 2017. You work pursuant to the terms of the contract and then you decide to leave the practice in 2019. However, in the year 2020, a prior patient from the practice sues you for alleged medical/dental malpractice. Do you have coverage? This is an important question for any practitioner.
In the example above, it all depends on the type of policy that you had with the prior practice. An occurrence malpractice insurance policy means that you have coverage based upon the time of the occurrence; the time the treatment was rendered to the patient.
As the treatment was rendered while you were employed by the practice, you will have insurance coverage regardless of when that patient decides to sue you for said treatment. Please note that this does not take into account any Statute of Limitations rules regarding when a patient can sue a practitioner for alleged medical/dental malpractice. Keep in mind that since an occurrence malpractice insurance policy covers all treatment when rendered, it is generally more expensive than a claims-made malpractice insurance policy.
Now, a claims-made malpractice insurance policy relates to when the claim, or suit, was brought against a practitioner by a patient, which in the above example was 2020, after you left the practice. In order for you to have insurance coverage, you need to have purchased tail coverage, which ultimately converts a claims-made policy into an occurrence policy. If you did not purchase tail coverage, then you would not have malpractice insurance coverage in the example provided above.
It is very important to know who is responsible for purchasing the tail coverage when you leave a practice, if you have a claims-made policy through your employer. When you are looking to start at a practice, and the employment contract says the policy is a claims-made policy, discuss with the potential employer in their paying for your tail coverage.
Generally, tail coverage needs to be paid within a very short time period after leaving the practice, and it could amount to tens of thousands of dollars. Also, tail coverage is required for multiple years thereafter in order to fully protect you and the treatment that you rendered.
When you are looking to leave a practice or you have been terminated from a practice or the contract expires, it is very important that you revisit the contract terms to ensure that you are protected as you move into the next phase of your career.
Ask yourself: What coverage is the practice providing for you? Are they paying for your tail coverage or does the contract specifically state that you have to provide it yourself?
Make sure these questions are answered in a reasonable period of time after you leave, so that you do not have any break in coverage and put yourself at risk. You do not want any insurance carrier to disclaim coverage because you will then be held personally responsible for any and all costs and expenses related to settlement, verdict, attorney costs, or anything else related to the suit.
Keep in mind that when going into negotiations with a new potential practice for employment, the new firm or practice will not want to take on any costs related to your prior insurance coverage and will not be held responsible for any acts prior to your first date of employment.
If you have any questions about your malpractice insurance policy, speak to your current employer. If you are negotiating terms for a new employment, speak to your attorney or future employer.
Contact me today with questions or comments.
Stephanie J. Rodin, Esq.
Rodin Legal, P.C.
Tel: (917) 345-8972
Fax: (917) 591-4428