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Malpractice Insurance

EXPERT ADVICE

Does Your Employment Agreement Address These

Five Points About Your Med Mal Coverage?

Employment-agreement clauses about complex issues regarding your med mal ing coverage from a financially unstable insurer ver-
coverage often are muddled at best, and some even create more questions than sus an A.M. Best top-rated insurer.
they would if they just didn’t deal with the important malpractice insurance 5. Departing physician’s tail issues: Will a tail BY JESSICA HOEN
issues. Confusion and ambiguous wording in contracts creates lawsuits, so fully purchase be required or will it be acceptable to pur-
understanding these five points will help immensely: chase continuing coverage, keeping the in-force
1. Who will be purchasing what coverage? Most employment agreements at retroactive coverage date for at least five years after leaving a group? Will the
least state if the employer or employed physician will be purchasing coverage. The choice between those two depend upon termination with cause or not, and/or ter-
issues go well beyond that, but most agreements only hit the broad-brush basics. mination by which party? Since there is now a stand-alone tail market, what qual-
2. Retro coverage or not when joining a new practice? Will retroactive cover- ity of tail insurer is acceptable and how long of a tail must be purchased, since
age be purchased for the employed doctor’s possible previous exposure? If not, even one-year tails can be bought but do not begin to offer relief for the much-
who will pay for the expensive “tail” coverage? If retroactive coverage is being longer liability risk window?
brought into the new practice, who will be paying the difference between the The employment agreement should outline all of these terms on whether the
“mature” policy cost and a first-year claims-made policy cost? Tail coverage allows group or the individual physician is obligated to pay for and purchase these cov-
a physician to extend coverage after the cancellation of a claims-made policy. With erages. By clearly stating the expectations and requirements in the employment
tail coverage, if a claim is filed that reflects the period of the expired policy, cov- agreement, there should be no question on what is expected surrounding the
erage is provided even though the policy is no longer in effect. An important por- beginning, duration of, and termination of the employment relationship. But
tion of the employment agreement should address any professional liability insur- remember, lawyers only write up what parties are agreeing to, so all parties to the
ance coverage that will be required, as well as which party will be responsible for employment agreement need to fully educate themselves with a knowledgeable
acquiring and paying for the coverage. If the professional liability insurance is a and experienced malpractice insurance expert to prevent unrealized expectations
“claims-made” policy, then tail coverage needs to be addressed in the agreement or lots of miscommunications about the key issues, both of which can lead to very
as well in case of departure or termination. costly legal actions, which does no parties other than the lawyers any good.
3. Liability limits: What limits will be required to be purchased? There are dif- Remember too that a misstep in this area can lead to coverage gaps or coverage
fering opinions on purchasing low or high liability limits, so the employment issues at a time when you are being sued and want top-drawer defense, not more
agreement needs to address the limits issues, as well as situations in which the legal issues because of a misworded employment agreement.
employed doctor might want higher limits than most in the group, which brings
up if this will be allowed and, if so, who will pay for the increased costs of a high-
er-limits policy. Jessica Hoehn, medical malpractice insurance
4. Quality of insurance company: To say the least, not all insurers are created specialist with Danna-Gracey, can be reached at
equal and there are vastly different thoughts on the risks versus costs of purchas- (888) 496-0059 or jessica@dannagracey.com.

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Specializing in healthcare real estate services, including acquisition and disposition, tenant and landlord representation, relocation, site selection and consulting.

South Florida Hospital News southfloridahospitalnews.com November 2017 9