American College of Physicians: Internal Medicine — Doctors for Adults ®

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Don't get slammed by tail coverage

Copyright 2003 by the American College of Physicians.

For Phil Hemstreet, ACP Associate, his experience as a third-year resident could have turned out to be a bad case of an expensive "tail" wagging the dog.

Dr. Hemstreet was moonlighting as chief resident for a hospitalist group in Birmingham, Ala. The insurance company that provided his coverage while he was moonlighting left the market, giving him 90 days to find new coverage.

With time almost up, the hospitalist group found another carrier—but Dr. Hemstreet had only a half-hour to review a 40-page insurance document. The document included language about "tail" coverage, a type of policy that safeguards against claims made when a physician's current insurance carrier is different from the one used at the time of a malpractice complaint.

Soon after, Dr. Hemstreet began a fellowship in cardiovascular medicine at the University of Texas-Houston and no longer needed the Alabama coverage. When he tried to cancel the policy after less than a year, however, he got some bad news.

A clause in the contract allowed the insurer to charge eight times the normal amount. "I may have to pay $15,000 for the tail," Dr. Hemstreet said. "If a lawyer had read the contract, we would have changed it to put the payment burden on the hospitalist group."

Although residents are covered by their residency programs while they are in training, doctors like Dr. Hemstreet who moonlight or who finish residency need to know how to safeguard themselves with additional coverage.

There are two main types of insurance: claims made and occurrence. Claims-made insurance protects physicians from claims brought as a result of care during residency if the insurer is the same one at the time the claim is filed.

If the insurer has left the market or you have changed insurers, however, you need occurrence or "tail" insurance. Tail insurance provides seamless coverage, although at a one-time price that is usually many times greater than claims-made coverage.

Insurance policies may also require you to consent to settlement, or they may impose policy limits if you don't consent. That's why some doctors consider settling some claims even when they did nothing wrong.

Fortunately for Dr. Hemstreet, the hospitalist group is working with him and the insurer to arrange a more favorable payment.

"An excellent relationship with the group," Dr. Hemstreet said, "is helping to work things out."

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