What you absolutely need to know about tail coverage


Can you negotiate your tail coverage?

Negotiating tail coverage in the employment contract involves some familiarity with medical malpractice insurance and a close reading of the contract. First, you have to determine that the employer is providing claims-made coverage, which would require a tail if you leave. Then you have to determine whether the employer will pay for the tail coverage.

Often, the contract does not even mention tail coverage. “It could merely state that the practice will be responsible for malpractice coverage while you are working there,” Mr. Hursh said. Although it never specifies the tail, this language indicates that you will be paying for it, he says.

Therefore, it’s wise to have a conversation with your prospective employer about the tail. “Some new doctors never ask the question ‘What happens if I leave? Do I get tail coverage?’ ” said Israel Teitelbaum, an attorney who is chairman of Contemporary Insurance Services, an insurance broker in Silver Spring, Md.

Talking about the tail, however, can be a touchy subject for many young doctors applying for their first job. The tail matters only if you leave the job, and you may not want to imply that you would ever want to leave. Too much money, however, is on the line for you not to ask, Mr. Teitelbaum said.

Even if the employer verbally agrees to pay for the tail coverage, experts advise that you try to get the employer’s commitment in writing and have it put it into the contract.

Getting the employer to cover the tail in the initial contract is crucial because once you have agreed to work there, “it’s much more difficult to get it changed,” Mr. Teitelbaum said. However, even if tail coverage is not in the first contract, you shouldn’t give up, he says. You should try again in the next contract a few years later.

“It’s never too late to bring it up,” Mr. Teitelbaum said. After a few years of employment, you have a track record at the job. “A doctor who is very desirable to the employer may be able to get tail coverage on contract renewal.”

Coverage: Large employers vs. small employers

Willingness to pay for an employee’s tail coverage varies depending on the size of the employer. Large employers – systems, hospitals, and large practices – are much more likely to cover the tail than small and medium-sized practices.

Large employers tend to pay for at least part of the tail because they realize that it is in their interest to do so. Since they have the deepest pockets, they’re often the first to be named in a lawsuit. They might have to pay the whole claim if the physician did not have tail coverage.

However, many large employers want to use tail coverage as a bargaining chip to make sure doctors stay for a while at least. One typical arrangement, Mr. Hursh says, is to pay only one-fifth of the tail if the physician leaves in the first year of employment and then to pay one fifth more in each succeeding year until year five, when the employer assumes the entire cost of the tail.

Smaller practices, on the other hand, are usually close-fisted about tail coverage. “They tend to view the tail as an unnecessary expense,” Mr. Hursh said. “They don’t want to pay for a doctor who is not generating revenue for them any more.”

Traditionally, when physicians become partners, practices are more generous and agree to pay their tails if they leave, Mr. Hursh says. But he thinks this is changing, too – recent partnership contracts he has reviewed did not provide for tail coverage.


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