Physician Contracts: Evaluating Malpractice Insurance Benefits
Ask what type of malpractice insurance is provided before signing on with a new employer
Employers typically provide physician malpractice insurance and it should be evaluated before signing.
Most employers provide professional liability insurance, also known as physician malpractice insurance, as a part of the employment benefits package. Even if a physician is employed as an independent contractor, in most cases, the corporation or group covers the cost of this benefit. But what exactly are they likely to cover?
On the surface, physician malpractice insurance seems simple enough, but there are many factors that must be taken into account. A working knowledge of how this type of insurance works is required to accurately assess the coverage being offered.
What type of coverage is it: claims-based or occurrence-based?
- Claims-based: only provides coverage during employment and once the employment relationship ends, the coverage expires. Financial exposure is significantly higher when using claims-based rather than occurrence-based coverage.
- Occurrence-based: provides coverage during employment and afterward for a certain period.
In order to deal with the exposure that comes with claims-based coverage, a tail endorsement is required to provide coverage into the future. Most employers don’t want to pick up the cost for tail for obvious reasons, but it is still negotiable. We find in many cases, that when it is negotiated, it either gets accepted into the contract or the language in the termination section of the contract is modified. The modification may require the employer to pick up the cost in certain cases and the physician in others, so responsibility will be shared depending on how termination occurs.
What are the policy limits? Are they sufficient? Is there a blend between coverage provided by the employer’s policy and a state fund? How much coverage is enough? This depends on the specialty, number of years in practice and types of patients.
Does the employer or their policy cover prior acts? Many employers don’t want this responsibility especially when a physician has seen patients in multiple states as each state has different laws governing physician malpractice claims.
While there are many other factors to consider, we conclude with the importance of getting specialized counsel for this area of risk management. Physician malpractice coverage is multi-faceted and the financial ramifications of not understanding it can be catastrophic to a physician’s career. Knowing the rules in each state is critical, and in particular, preparing for those states that do not have a cap on your liability.
Physicians Thrive has clients nationwide and provides expertise in risk management. All contract service packages include an assessment and the strategic planning of physician malpractice insurance. Contact us for more information.