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  • Tail insurance limits

    Thank you in advance for any help you all can provide.

    I am a private practice orthopedic surgeon (see peds and adults) who has been in practice for just under 2 years. I have been employed by my group for the last 2 years, and was supposed to have a partnership vote coming up in September. However, due to practice circumstances, I have decided to leave the practice. I am joining a large academic health system.

    My question is regarding tail insurance limits. My private practice job does not include tail coverage unless I get fired without cause or leave with cause. Since I am leaving without cause, I have to get my own tail. My new employed job will not include nose coverage. My private practice job malpractice insurance has $4M/$6M limits. The company who provides my malpractice can do a tail policy for the same limits with indefinite coverage for $30k (yearly premiums were about $14k). My question is, do I actually need $4M/$6M limits to my tail for some reason? I definitely want indefinite coverage. A malpractice broker told me most people do $1M/$3M limits, and that he would not be able to find a company to provide $4M/$6M limits (and that if I want that, I should just go with my current malpractice provider for the tail). Do the tail limits need to match the malpractice limits for some reason? What are the pros/cons of going with lower limits?

  • #2
    Not ortho but things you need to consider:
    -what state you practiced in
    - what are the statutes of limitations for a claim (since you handled peds) in your state?
    - what is the normal policy for orthos in that state (1 mil/3 mil)?
    - are there any bad outcomes that you had that you can think of?

    That being said, for peace of mind 30 k is a very small price to pay. Even if new group wont pay nose, can they pay in another way (signing bonus)?

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    • #3
      1M/3M is generally considered sufficient. With that level of coverage, there is a more than 99% chance that your personal assets would not be at risk in a suit. You are early career, so your personal assets are more likely not that large a number at this point, so that also makes it low risk to carry 1M/3M.

      There is no need for you to carry coverage from the same insurer that you currently use, so feel free to shop the policy around with the broker.

      Another option would be to do asset protection by putting your home and any non-retirement assets into a trust, and then go bare without taking a tail. As you were an employee, the practice would get sued and have to pay any judgment on your behalf anyway, so in any case, the lawyers would be unlikely to go after you personally. Does your contract require you to purchase a tail, or is it your choice?

      If the statute of limitations is 2 years in your state, then 2 years should be sufficient. For peds, the statute may be age of majority plus 2 years, but in reality, the parents would likely sue now, on behalf of the child, in a timely fashion.

      Our group now only has occurrence insurance, so no tail needed, but when we had claims made and needed to purchase a tail, we only did it for the two years based on the statute for adults. There is a tiny risk that a child could file a suit after that, but again, quite low risk. You probably would not want to pay for the tail for 23 years to cover the small chance that a young child would bring a law suit 2 years after turning 21 years old. That would cost you $690k at 30k/year for 23 years!

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      • #4
        Is the 30 k a one time fee or yearly? I did not consider a yearly fee in my response

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        • #5
          Originally posted by billy View Post
          Is the 30 k a one time fee or yearly? I did not consider a yearly fee in my response
          Typically, this is a one-time fee.

          I agree that $1M/$3M should be adequate.

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          • #6
            If 30k is indefinite coverage I would go for it.

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            • #7
              Hello all, thank you for the responses. The $30k is a one time fee from my current insurer for the $4M/$6M indefinite tail. One quote I got for $1M/$3M coverage was $25k indefinite.

              I have heard that the statute of limitations applies once the error is discovered, not from when the error is committed. Can anyone comment on this?

              Thanks

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              • #8
                I'd go for the 1/3 for 25 k

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                • #9
                  Originally posted by jmartino2011 View Post
                  Hello all, thank you for the responses. The $30k is a one time fee from my current insurer for the $4M/$6M indefinite tail. One quote I got for $1M/$3M coverage was $25k indefinite.

                  I have heard that the statute of limitations applies once the error is discovered, not from when the error is committed. Can anyone comment on this?

                  Thanks
                  Look at your state law covering statute of limitations. This should be defined.

                  Comment


                  • #10
                    So I live in Tennessee but treat people who live in both TN and VA. Don't know if that makes me liable to both TN and VA law, or just TN. Do medical malpractice cases depend on what state the patient lives in or what state the doctor practices in?

                    In TN, the law says "In Tennessee, medical malpractice claims must be filed within one year of when the malpractice was discovered, but only up to three years after the incident occurred." Plus "only exceptions to this over-arching three year deadline in Tennessee are 1) when a medical malpractice case involves “fraudulent concealment on the part of the defendant,” or 2) “where a foreign object has been negligently left in a patient's body.”

                    In VA, the law says "Unless otherwise provided in this section or by other statute, every action for personal injuries, whatever the theory of recovery, and every action for damages resulting from fraud, shall be brought within two years after the cause of action accrues". Plus "The two-year limitations period specified in subsection A shall be extended in actions for malpractice against a health care provider as follows: 1. In cases arising out of a foreign object having no therapeutic or diagnostic effect being left in a patient's body, for a period of one year from the date the object is discovered or reasonably should have been discovered; 2. In cases in which fraud, concealment, or intentional misrepresentation prevented discovery of the injury within the two-year period, for one year from the date the injury is discovered or, by the exercise of due diligence, reasonably should have been discovered". VA has a catch all statute of limitations of 10 years from date of injury in medical malpractice cases, except in pediatric cases.

                    So, in my mind, if it was not for the pediatric treatment that I did, I could have gotten away with 3 year malpractice coverage. Since I did treat pediatrics, I likely will need indefinite coverage.

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                    • #11
                      25k or 30k for permanent tail insurance is not too bad. You are probably fine with either amount of coverage as the practice will likely be liable up to their limits, although that would depend on whether the practice has separate entity insurance or if the practice entity has a shared limit with each doc's policy as the primary shared limit policy.

                      Since you are purchasing permanent insurance, the statute of limitations makes no difference to you, unless the insurance company goes bankrupt, which does occur at times. We purchased occurrence insurance with state backing for several reasons. First, there is no tail to worry about. Second, there is no concern for bankruptcy of the carrier as the state picks up the coverage if they go bankrupt.

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                      • #12
                        And as far as your other question regarding the state whose laws would dominate, I know that in our state and our nearby state, the patient can bring the law suit where the hospital is located, where the practice office is located, or where they live. The plaintiffs often try to move their case to the most plaintiff friendly county so they can maximize the reward.

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