Why Buy Tail Insurance?

Physicians

Physician leaving a group practice or discontinuing your own private practice: Whether the group is contractually obligated to pay for your tail insurance or you are, there are some compelling reasons NOT to purchase tail coverage from the group's current carrier – not the least of which is the exorbitant cost.

Becoming employed by a hospital and good news they tell you no need to buy tail coverage, the hospital's captive is going to provide coverage for prior acts?  You probably feel relieved that you just avoided a big tail insurance expense, but beware... the cost allocation in your compensation formula just went up.  Contact us for some free education why this may not be in your best interest and for information to assist in your negotiation.

Group Practices

Group practice hiring a new physician(s) or acquiring other groups We just add the incoming physicians to our insurance coverage at mature rates inlcuing prior acts. Why - because it has always been more cost effective?  Not the case anymore, and when you include coverage with full prior-acts you are inviting claims from past practice activities to become part of your group's claims experience.

Group practice obligated to purchase tail coverage for a departing physician(s) Whether the departure is on good terms or bad terms, the departing physician is no longer part of your group.  Consider segregating the departing physician’s liabilities and potential future malpractice claims from your group’s experience by purchasing tail coverage from an A.M. Best "A" rated carrier - who is not your current insurance company.   If the group is paying for the departing physician’s tail insurance cost the bonus is you've minimize the expense.

Hospitals & Health Systems

Hospital hiring physicians or acquiring group practices. There are a multitude of reasons a hospital or health system should NOT cover a newly hired physician’s prior acts in their captive or self-insurance vehicle.  We don't have enough space to address the issues here but a careful financial analysis is a good start, followed by a lengthy discussion with the legal department about federal Stark and Anti Kick Back laws, "consideration" and "reimbursement" related to tail insurance expense.

Our hospital purchases first dollar commercial malpractice coverage for employed physicians and our self-insured program is excess.  This message is for a very specific audience (hospital Risk Managers, CFO's, and General Counsel) - following is a bad faith lawsuit between hospital, hospitals captive, and commercial insurance carrier