Tail Coverage vs Occurrence Policy

Tail Coverage vs. Occurrence Policy

Occurrence-based insurance is a type of medical malpractice insurance that protects the physician from liability arising from care that results in a patient’s injury or death. Tail Coverage vs. Occurrence Policy is essential to understand.

An occurrence-based policy differs from claims-made in that an occurrence-based policy covers any claim for an event that took place during the period of coverage, even if the claim is filed after the policy expires. Thus, an occurrence-based insurance policy does not require tail insurance.

How Much More Does Occurrence Cost Than Claims-Made Insurance?

Since one does not need tail insurance under an occurrence-based insurance policy, the annual premium for an occurrence-based policy is approximately 35% more than a claims-made policy. So, if the average claims-made policy yearly premium is $6000, an occurrence-based policy would cost $8100 in coverage. The American Medical Association provides resources to find affordable insurance.

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The cost of coverage is based on the claims history of the provider and the number of individual and group patients seen per year. Providers with high annual patient visit counts will have a lower insurance premium since their claims are spread out over more people.

Additionally, doctors who perform below average in terms of malpractice claims will pay less than providers who incur higher claim rates. A doctor’s risk profile is also considered when determining the rate an insurance company will charge for the occurrence-based policy. According to the National Institutes of Health, provider age is also factored into the equation, as younger physicians are at higher risk of committing malpractice or making an error than older practitioners.

What Is the Advantage of Occurrence-Based Coverage?

The permanence of an occurrence-based policy is the main advantage over a claims-made policy. The period you are protected under the policy lasts forever, and you do not need to renew or buy tail insurance when you leave the employer. You can also work in another state and still be covered, as the U.S. Department of Health and Human Services confirmed.

One disadvantage of an occurrence policy is that if the doctor leaves the practice or hospital (in most cases), they may be unable to remain on the same occurrence-based policy with their former employer. The main reason for this is that the insured typically must have had prior experience as a provider to qualify for an occurrence-based policy – with or without tail insurance. Discover whether a claims-made or occurrence policy is best for your situation.

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Claims Made Malpractice Resources for Physicians

In addition to being subject to cancellation upon leaving employment, claims-made policies are designed to protect only against first-time occurrences; if there were an initial claim under a claims-made policy, then any following claims would not be covered by that same policy. 

A claims-made policy will only provide insurance coverage if the policy is in effect when the incident first happened and when a lawsuit is filed against the doctor (when the claim is filed). Thus, a lawsuit can be filed after a doctor leaves an employer. In situations like this, with claims-made medical malpractice insurance, the provider must purchase a tail policy, which covers the gap between when physicians leave an employer and when the statute of limitations on filing a medical malpractice claim ends.

Claims-made coverage is used in cases where there may be periods when the reason coverage is unavailable, such as changing jobs. In these situations, the tail policy will protect for up to three years after leaving an employer (depending upon state law and the physician’s insurance carrier’s basis for coverage). The tail policy also has other limitations and exclusions, making it difficult for providers who leave employers often or have a history of high liability claims against them to find affordable malpractice insurers, according to the Insurance Information Institute.

Physician Contract Policy Review

Contracts are a pervasive and obligatory part of nearly all business and legal transactions. Well-drafted contracts help to enumerate the responsibilities of the involved parties, divide liabilities, protect legal rights, and ensure future relationship statuses.

These touchstones are even more crucial when applying their roles to the case of a doctor employed by a hospital, group, or other provider. While contract drafting and negotiation can be long and arduous, legal representation is a must to protect your rights. The present-day conclusion is simple: A doctor should only enter into a contract with the agreement reviewed by legal counsel.

There is too much at risk for a provider to take contract matters into their own hands. In addition to the specific professional implications, contract terms can significantly impact a doctor’s family, lifestyle, and future. 

There are many essential contract terms and clauses that can present complex and diverse issues for any doctor, including:

  • Non-compete clauses
  • Damages
  • Indemnification
  • Verbal guarantees
  • Insurance statements

Additionally, often the most influential terms and clauses in any employment contract are the ones that are not present. With the advent of productivity-based employment agreements, any doctor must review an employment agreement before it is executed. Attorney Robert Chelle has practical experience drafting and reviewing doctor contracts for nearly every specialty.

A thorough contract review can benefit new residents, attending physicians, providers entering their first employment contract, or established physicians looking for new employment. By employing an experienced attorney for your representation, you can ensure that you will be able to fully understand the extensive and complex wording included in your contract. By having a complete understanding of the contract, you will be in a better position to decide whether or not you want to enter into the agreement, which will affect your career life for years to come.

The financial benefits gained from having your contract reviewed and negotiated by an experienced healthcare attorney far outweigh the costs associated with a review and can assist with your mental health. You are a valuable resource, and you should be treated and respected as such. Attorney Robert Chelle will personally dedicate his time to ensure you are fully protected and will assist you in the contract process to represent your interests fairly.

Every provider contract is unique. However, nearly all contracts for health care providers should contain several essential terms. If these important terms are not spelled out in contracts, disputes can arise when there is a disagreement between the parties regarding the details of the specific term. 

For instance, if the doctor expects to work Monday through Thursday and the employer expects the provider to work Monday through Friday, but the particular workdays are absent from the Agreement, who prevails?

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Spelling out the details of your job is crucial to avoid contract conflicts during the term of your employment. Below is a checklist of important terms that contracts should contain (and a brief explanation of each):

  1. Outside Activities: Are you permitted to pursue moonlighting or locum tenens opportunities? Do you need permission from the employer before you accept those practice of medicine-related positions?
  2. Practice Call Schedule: How often are you on call (after-hours office call, hospital call (if applicable))?
  3. Base Compensation: What is the annual base salary? What is the pay period frequency? Does the base compensation increase over the term of the Agreement? Is there a yearly review or quarterly review of compensation?
  4. Productivity Compensation: If there is productivity compensation, how is it calculated (wRVU, net collections, patient encounters, etc.)? Is there an annual review?
  5. Paid Time Off: How much time off does the job offer? What is the split between vacation, sick days, CME attendance, and holidays? Is there an HR guide?
  6. Dues and Fees: Which business financial expenses are covered (board licensing, DEA registration, privileging, AMA membership, Board review)?
  7. Signing Bonus: Is an employee signing bonus offered? When is it paid? Do you have to pay it back if you leave before completing the initial term? Are student loans paid back? Is there a forgiveness period for student loans?
  8. Professional Liability Insurance: What type of liability insurance (malpractice) is offered: claims made, occurrence coverage, self-insurance?
  9. Tail Insurance: If tail insurance is necessary, who pays for it when the Agreement is terminated?
  10. Without Cause Termination: How much notice is required for either party to terminate the Agreement without cause?
  11. Non-Compete: How long does the non-compete last, and what is the prohibited geographic scope?

If you have questions about your current medical malpractice policy or want your employment agreement reviewed, contact Chelle Law today.

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About Us

We are a dedicated team of legal professionals specializing in physician contracts at Physician Contract Review. With years of experience in the healthcare industry, we deeply understand the challenges faced by physicians when navigating complex employment contracts. Our mission is to ensure that our clients are protected and well-represented. We focus on providing sound legal advice tailored to your unique needs, empowering you to negotiate your contract with confidence. For more information or to schedule a consultation, please reach out to us today.

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