If you’re employed by a hospital or health system, there’s a good chance malpractice coverage is part of the package. On the surface, that sounds reassuring. But it’s worth taking a closer look at what that coverage actually means for you.
Who does the policy really protect?
Most institutional malpractice policies are structured to protect the organization first. That means the legal strategy may prioritize minimizing the hospital’s liability—even if it comes at your expense. If the hospital wants to settle quickly and quietly, you may have little say in the matter.
Most hospital-based policies do not have a consent to settle provision. Meaning, they can and will settle without your consent. Particularly, if you left and all the other named defendants are still W2 employees back at the “mother ship.” Still, one of the main benefits of the hospital-based policy is that the institution may be able to intervene early, with a settlement, before YOU are named. Meaning, you are released with no reporting to the National Practitioner Data Bank.
What if you’re named individually?
In many lawsuits, both the institution and the physician are named. But if you’re accused of doing something outside the scope of your hospital duties—say, giving informal advice or treating someone off the clock—the hospital might refuse to defend you. Their position: You weren’t acting under their direction, so you’re on your own. And such a clause is almost certainly in your employment agreement. So, if you’re allowed to moonlight, for example, don’t go bare. The entity that hired you to cover must provide your coverage. Or you’ll need to purchase your own. The policy from your day job will not save you.
Are you covered if you leave?
If your employer provides a claims-made policy, you’re typically only covered while you’re employed and the policy is active. Once you leave, the coverage ends unless tail insurance is in place. Tail coverage can be expensive, but without it, past actions may come back to haunt you—with no coverage to rely on.
With your own policy, you maintain control. Coverage can follow you through job changes and life transitions.
Still, no reason to be surprised. Your employment agreement will identify whether you have a claims made or occurrence policy. If occurrence, you do not need tail coverage. Tail coverage is bundled into occurrence coverage.
Even something known as “modified claims made” comes with tail coverage.
If your employment agreement states you are in charge of purchasing tail coverage on the way out the door, and demonstrating proof thereof, try to negotiate with the institution picking up that tab. Before your first day of work.
If your employment agreement says you have a claims made policy and says nothing about tail coverage, don’t guess. Get it spelled out. Before your first day of work. In some states, the default legal interpretation of an employment agreement that is silent on tail coverage is your institution must pay. In other states, the legal interpretation is the exact opposite. You have to pay.
Will your employer cover all types of risk?
Institutional policies usually don’t include defense for criminal investigations or board complaints. If you’re facing a licensing board inquiry or allegations of misconduct, you’ll likely need separate legal representation, and that comes out of your pocket.
Some individual policies offer riders that cover these types of non-malpractice risks. That extra layer of protection can be a lifesaver in a high-stakes situation.
You can also purchase standalone policies for medical license defense. Those standalone policies are not expensive. And worth it. You can burn through lots of dollars in legal fees when your license is on the line and you have a case headed to a hearing.
Is the extra cost worth it?
For many physicians, yes. A personal policy gives you more than coverage, it gives you a seat at the table when legal decisions are made. You get to choose your own attorney. You get peace of mind knowing your interests come first, not the hospital’s. Still, it’s unclear you would use your own policy to defend, and your employer would be comfortable sitting on the sidelines. So, ask before you purchase. The best use case is purchasing a policy that fills in gaps, not replacement coverage.
The bottom line:
If you trust your employer’s coverage to protect you no matter what—fine. But if you want to make sure you’re not left exposed when priorities diverge, it may be time to consider getting your own policy.
What do you think?
Good post! The med mal issue here in Ohio has really cooled off since tort reform passed years ago. The issue used tohover
It sure makes important points. With more physicians now employees this is a important issue that we all need to consider.
What it seems to come down to is have an attorney go over any contract before you sign it so you know you will be protected. And don’t wait until after you’re hired, if possible. But if you can’t have this issue looked into before being hired, do so at some point. A Claims Made policy will cover you from the date of issuance, as long as a claim hasn’t been filed against you before that.
The hospital insurance company attorney works for the insurance company and is paid by the hospital through premiums. They are beholden to their client, which is the insurance company, first, the hospital second, and you third.
Having your own malpractice insurance with your own attorney will safeguard your interests and your rights.
Occurrence policies that included tail coverage are more rare today.
If you leave the hospital’s employee you are going to need to buy that tail coverage within a very short time of leaving the hospital.
In rarer instances you may be able to buy or have included nose coverage on your new policy which covers prior events, and may be cheaper.
If you are buying tail coverage it is important to find out the length of the tail.
Is it for the length of the state statute of limitations, which could be 2 or 3 years?
Is it for the length of the statute of limitations + the time to age of majority for kids?
Is it for the length of the time to discovery of the malpractice issue + 2 years?
All that needs to be spelled out.
While that time frame could be long, if you really want piece of mind and do not want to put your finances at risk, then buy complete tail coverage for lifetime.
While in some fields, like anesthesiology it will be pretty apparent in short order if something went amiss, for surgeons leaving behind a sponge in a body cavity it could be years before discovery