Our Thinking

If you are employed, as close to 78%[1] of physicians today are, your employer almost certainly provides medical professional liability coverage. But is it enough? “Maybe” is not a good answer.

If you were to examine the policy closely, you might find significant gaps. Suppose, for example, that your employer, a hospital, settled a claim, but you were later named individually in a suit arising from the same incident. Would you be covered in this case?
Don’t count on it.

Here’s another example: You are offered and accept a position with another health care system and are now covered under its liability policy. But a patient of your prior employer names you in a suit arising from treatment received while you were still employed there.

Would you be covered? Possibly not.

Leaving instances like these uncovered is a gamble with the potential for a very large loss. Because even if the suit never goes to trial and most do not, you might still be responsible for the amount of a settlement and thousands of dollars in legal fees.

How to avoid situations like these?

Make certain you are fully aware of all provisions of your employer’s coverage. This is truly a case where the best surprise is no surprise. You may need to familiarize yourself with the insurance world’s vocabulary. And that brings us to …

The difference between Claims-Made and Occurrence policies is important, because these terms define the way the insurance company treats claims. A Claims-Made policy will pay claims only if the incident occurs and the claim is filed while the policy is in force.

An Occurrence policy, on the other hand, pays claims if the policy was in force when the triggering incident occurred, even if the claim was filed sometime after the policy’s termination.

Let’s say that you, Dr. X, were an OBGYN resident at BigCity hospital and you were covered by the hospital’s liability policy. A few months prior to completion of your residency, you managed a difficult delivery. While mother and baby survived, after several months, the baby showed developmental issues, and the parents named you in a malpractice action.

If they won, or if the claim was settled, would BigCity Hospital’s policy cover you? If it was a Claims-Made policy, the answer is “no.”

A similar problem might occur if you were a physician entering retirement. If your only professional liability coverage was a Claims-Made policy, you could bear the financial responsibility for a claim filed months or even years after you retired.

Yes, the time period during which a malpractice claim can be filed is limited in every state. Two- or three- year terms are most common. Maryland, however, has a five-year or three years after discovery (Maryland §5-109).[1] The “after discovery” provision recognizes that some injuries are not immediately apparent. As in the example above, developmental deficits resulting from a birth injury might not be fully identified until the child is well past infancy. So, in states that provide for discovery periods, including Maryland, California, and Tennessee, your liability period could stretch for years. (Please note that this information is provided for educational purposes and should not be construed as legal advice. Consult an attorney in your state for state-specific information on the statute of limitation, whether there is a discovery period and if there are exceptions to either, as there often are.)

By contrast, an Occurrence policy, will pay a claim for an injury occurring while the policy is in force, even if the claim is made months or years after the policy’s expiration.