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Tail Coverage for Physicians Acquired by Hospitals Print E-mail
Written by Matt Gracey   
Tuesday, 14 June 2011 18:27

Med Mal Q & A 

Q: When a new doctor or a group of doctors is considering selling out to a hospital, will the hospital force the practice to purchase an expensive "tail" for its malpractice insurance policy or will the doctors be allowed to keep their retroactive coverage?

A: Doctors looking to become hospital employees undoubtedly have very different perspectives on this issue than hospitals. The hospitals prefer not to purchase retroactive coverage for the doctors they are integrating for a number of reasons. The first is the decreased expense of a first-year claims-made policy versus a more expensive policy that includes mature retroactive coverage. The second reason is that hospitals do not want the doctors' previous practice risk exposure to potentially harm the claims record of the hospital should a purchased doctor have a claim resulting from their previous practice. Third, if the hospital does allow doctors to join with their previous practice's retroactive coverage intact, then it could become a Stark issue if the whole package is considered over that undefined edge.  Additionally, some hospital insurers or their captives' reinsurers have started to strongly suggest, and in some cases require, that hospitals force doctors to purchase "tails" before a purchase is finalized. Finally, hospitals need to be very concerned about the differing "triggers" in malpractice insurance policies, as serious and expensive gaps in coverage can be created on this front. 

The only reason a hospital would ever want to purchase retroactive coverage for a new doctor is to make its recruitment efforts easier since doctors often balk at the high cost of malpractice insurance tails, but hospitals will inevitably learn that cheap can become expensive quickly on this coverage.
In short, many hospitals are taking the position that they do not want to insure what they cannot control, such as doctors' past malpractice exposure, so they are forcing doctors to purchase "tails" before practicing for the hospital

ABOUT THE AUTHOR:  Matt Gracey, Jr. is a medical malpractice insurance specialist agent with Danna-Gracey in downtown Delray Beach. 
To contact him call (561) 276-3553 or (800) 966-2120, or email:   

Last Updated on Tuesday, 14 June 2011 18:31

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