Patients or their survivors may initiate legal action against medical providers for bodily injury, mental anguish, medical expenses, and or property damage.
Medical malpractice insurance, also known as medical professional liability insurance or med-mal, protects medical professionals from liability associated with negligent or wrongful practices. The insurance may also cover the legal costs of defending against such claims.
Your employment contract should specify any medical malpractice insurance provided and the terms of that insurance. Since premiums can be high, and claims can be overwhelming, this is one of the more important considerations in your contract.
A crucial consideration is whether the policy offered by the employer is based on occurrence or claims-made. According to the American College of Physicians (ACP),
" “Claims-made” insurance protects you from malpractice claims only if the company that insured you at the time of the alleged “occurrence” is the same company at the time the claim is filed in court."
If you had a claims-made policy and move to a different insurer, usually because you changed jobs, you need to purchase an insurance “tail.” The tail (a onetime purchase) then provides protection for claims made on alleged incidents during which you used a different insurer. Buying the tail can be quite expensive when you leave an insurer. It can cost up to 2.5 times your previous annual premium. If your annual malpractice insurance premium was $50,000, purchase of the tail could cost as much as $125,000.
Try to get your prospective (new) employer to agree to pay for the tail in the event you change jobs. Other arrangements may include having your current employer pay for the tail if your employment is terminated (you are fired), or you may have to pay if you decide to leave.
According to ACP, under an occurrence policy,
"… any malpractice occurrence will be covered by the insurance carrier, provided it was the carrier at the time of the alleged event, regardless if it is the carrier at the time the claim is filed."
With such a policy in place, you don’t need the separate tail insurance.
In malpractice insurance policies, the insurer will usually pay for legal defense. Unlike most other insurance types, there may be no deductible requirement in such policies.
There are limits specified in medical malpractice policies. The insurer is only responsible for payments up to these limits. Any additional awards above and beyond must be made up from the assets of the practice or from the individual physicians’ personal assets. This can be very damaging. Entire practices have been wiped out by liability awards in excess of insurance. It behooves you to know how much coverage your employer will provide to you, and you must gauge whether that is likely to protect you sufficiently.
A big consideration is whether defense costs are included in the legal liability limit or are outside the limit. The latter is more favorable for you, as it leaves more funds available to cover a potential award.
Statutes of limitations on actions taken on medical malpractice grounds vary widely. On the high end they can be up to 21 years for pediatricians (limitation for them is 3 years after the minor becomes an adult). With such a long span of time over which liability persists, it’s necessary to ensure you have appropriate protection in place.
Make sure the malpractice conditions in your contract are explained to you by a qualified attorney! Otherwise, some of your pillars of wealth may be in danger.
There are numerous resources on the topic of professional liability. The New England Journal of Medicine provides the article: “Malpractice Risk According to Physician Specialty.” There’s information available on the Practice Management section of the American College of Physicians website. The American Medical Association publishes the book: The Physician Professional Liability Market and Regulatory Environment.
American College of Physicians on medical malpractice insurance
MedMal101 basics provided by Diederich Healthcare (Inclusion herein is not an endorsement of Diederich Healthcare products)