It is important to know the medical malpractice insurance (also called medical professional liability insurance) implications of leaving a group practice. Many physicians have found out the hard way about sticky issues related to their coverage.
The Employment Contract should spell out issues related to leaving the group and your insurance ramifications. One of the biggest issues is whether or not you need to purchase a tail (extended reporting endorsement). Hopefully, you have made sure the responsibility for tail coverage if you leave the group has been spelled out in your employment contract. Even if the group pays for your medical malpractice insurance, often the issue of whether you need to purchase a tail is unclear. The tail policy can be expensive, so it is important to know who pays for it.
If you are not required to purchase a tail, you may often take your policy with you. Then the alternative to purchasing tail coverage is called “nose coverage”, the insurance term for prior acts coverage. So, when you move from one carrier to another, you may choose between tail coverage with the expiring carrier or retroactive coverage with the new carrier.
If you are changing carriers, you might want to ask your new carrier for a quote for retroactive coverage and compare it with the cost of purchasing tail coverage from your old carrier. It either case, it is important to make sure that the retroactive date covers the period of your previous policy.
If you leave a group that agreed to pay for your tail policy, it is important to double check with the carrier to verify that it has been paid.
In addition, be sure your coverage limits are the same as those of your old policy. Double check the aggregate limits, which is the amount the policy will pay for all claims combined for a stated period. An annual policy has aggregate limits for one year, but sometimes the aggregate limits for a tail policy apply to all the years the policy was in effect.
Barbara Gracey Backer
Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at 800-272-6055 X118 or at firstname.lastname@example.org.