Our radiology practice experiences occasional turnover of our doctors, are we obligated to purchase tail coverage when they leave?
If a medical practice doesn’t already have this, we strongly recommend having an employment agreement document with your providers. In addition to discussing the ever important policies on dress codes and common lunch breaks, this document ought to contain more important language to your business that discusses who is responsible for medical malpractice when a physician leaves the practice. This isn’t cheap, typically double the annual premium, and you don’t want to be stuck in limbo trying to figure out who is responsible for this bill after the employee has already provided the letter of resignation.
The carrier is obligated to provided a tail quote to the First Named Insured on the policy, this is generally to the corporation. Depending on the carrier, the corporation has 30-60 days after the last day of physician’s employment to decide whether or not to purchase tail. As mentioned above, who actually is responsible for this cost is entirely up to the practice, but you always have the right to purchase tail coverage.
We have seen this policy range quite a bit. Some practice require that the provider be with the practice for a minimum of two years before the corporation picks up the tail cost. We have also seen a scaling schedule, eg. 0-1 years of service: provider pays 80% of tail cost, 1-2 years of service: provider pays 50% of tail cost, more than 2 years of service: provider pays 0% of tail cost. And of course, in some cases, there are no policies in place. Whatever your firm has determined, just have a standardized agreement in place with your providers, this will avoid a future headache!
