A Tale of Tails: Malpractice Tail and Its Importance

In the vibrant tapestry of medical life, malpractice insurance is that necessary gray thread that weaves its way through, dull yet indispensable. Among its variants, there’s one that leaves even the brightest minds scratching their heads: tail insurance. Like a well-tailored suit, it follows you wherever you go, long after you’ve hung up your white coat for the day or said goodbye to your employer. Let’s journey into the world of medical malpractice tail insurance and the mishmash of occurrences it covers (or doesn’t cover).

What’s the Deal with the Tail?

You might wonder why anyone would want to insure their tail. But for healthcare professionals, the ‘tail’ is not some newfound evolutionary feature but refers to an extended reporting period (ERP). This allows you to report claims for alleged incidents that occurred during your policy term, even if they are filed after the policy ended. Think of it as a way to cover your professional backside.

It’s All About the Occurrences

In the medical malpractice world, policies are typically classified into “claims-made” or “occurrence-based”:

Claims-Made: This policy is like that friend who’s only there when you’re currently hanging out. It covers any incidents reported while your policy is active, even if the actual event happened earlier. But once your policy ends, it’s a ghost, leaving you high and dry unless you’ve invested in your trusty tail.

Occurrence-Based: This is the loyal friend who’s got your back no matter what. It covers incidents that happened during the policy period, regardless of when the claim is filed. The best part? No tail needed. It’s the gift that keeps on giving, long after the policy has ended.

Why Buy the Tail Coverage?

Now, you might be thinking, “Why get tail coverage if I can get an occurrence-based policy?” Excellent question, young Padawan! The thing is, occurrence-based policies can be pricier than their claims-made counterparts. They’re like that all-inclusive vacation deal – sounds excellent but check your wallet first. Tail coverage is a one-time purchase that bridges the gap when you switch jobs, retire, or if your policy lapses, ensuring you’re not left staring at a lawsuit with nothing but your stethoscope for defense.

Shopping for the Tail

Before you purchase tail coverage, it’s essential to know that not all tails are created equal (ask any dog, they’ll tell you). Some tails have a time limit, and some cover unlimited time. There are even ‘free tail’ provisions under certain conditions, like death, disability, or retirement. If you are switching jobs and need tail coverage you can sometimes negotiate that your new employer pays for the tail coverage (assuming you are that good and they need you that badly).

In the whimsical world of medicine, tail insurance is like that quirky sidekick in a sitcom: it’s there when things get messy, keeping you safe from the past’s boomerang. While it might seem like just another financial headache, a good tail coverage can be your best friend in a world where past mistakes may come knocking at the most inconvenient times. So, remember, in the great medical sitcom of life, make sure you’ve got a great ‘tail’ to tell!

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Letters of Intent to Trap Unwary Physicians

The following article is courtesy of Dennis Hursh, author of The Final Hurdle – A Physician’s Guide to Negotiating a Fair Employment Agreement. Dennis is an attorney who focuses on review and negotiation of physician employment agreements.

The contracting process for a physician employment agreement sometimes (but not always) begins with a letter of intent, so it makes sense for you to be aware of a common trap that many physicians find themselves in after they sign a letter of intent.

A letter of intent (“LOI”) is simply a very brief summary of the main terms of what the parties assume will be in a binding physician employment agreement. The purpose of an LOI is to make sure that the both parties are “on the same page” as far as the major terms of the agreement they hope to form.

For example, in a physician employment agreement, if you expect to be paid $300,000 a year but the employer is expecting to pay $200,000 a year, there probably isn’t any value in continuing negotiations. A letter of intent can save a lot of pain and aggravation (not to mention attorney’s fees) by avoiding negotiations that are not likely to lead to a signed deal.

Since the purpose of a LOI in physician employment agreements is just to determine if further negotiations are in order, the provisions in a LOI are generally not legally binding. Accordingly, it is very common for physicians to treat a LOI as an unimportant formality. Having been told that the document is not legally binding, they sign the LOI even though it contains some terms that they hope to negotiate.

You must remember that the purpose of a LOI is to make sure that you and your potential employer are on the same page with respect to the major terms of the physician employment agreement you hope to conclude. Although there will be many terms and conditions of the final agreement that the parties will negotiate, you should assume that anything you agree to in the LOI is “off the table”. Accordingly, do not sign a letter of intent unless you are completely comfortable with the compensation and other material terms set forth in the LOI. Legally binding or not, make sure you aren’t “agreeing” to something that you don’t want in the final agreement.

Footnotes, References, and Resources

(1) Some provisions of the LOI are typically legally binding. Specifically, the LOI will most likely provide that each party is responsible for its own attorney’s fees, that the negotiations will remain confidential, and that the physician will negotiate exclusively with this employer for some period of time. These provisions generally are legally binding. In other words, even if you do not sign a physician employment agreement, you are still bound to pay your own attorney’s fees and keep the terms of the negotiations confidential.

(2) For additional information about physician employment agreements, see www.TheFinalHurdle.com and The Physician Contract Blog.