| It's common knowledge that litigation has | | | | Occurrence Coverage |
| exploded over the past few years. This is | | | | An occurrence policy insures for any incident that |
| particularly true with respect to malpractice suits | | | | occurs while the policy is in effect, regardless of |
| against licensed professionals. This category of | | | | when a claim is filed. Under an occurrence policy, |
| risk generally applies to: · | | | | insureds pay premiums that take into account not |
| - Doctors | | | | current experience, but future projections as well. |
| - Nurses | | | | Such claims are called "incurred but not reported" |
| - Other medical practitioners | | | | (IBNR). Occurrence insurance rates can vary |
| - Hospitals | | | | significantly because of the difficulty in projecting |
| What Is Medical Malpractice? | | | | future claims expenses. Under an occurrence |
| Medical malpractice occurs where a medical | | | | policy, the limits of liability are those in effect |
| practitioner acts in a negligent manner when | | | | when the incident occurred. |
| treating a medical condition. Malpractice can occur | | | | The advantage of an occurrence policy is that |
| from an action taken by the medical practitioner, | | | | neither retroactive (prior acts) nor tail coverage is |
| or by the failure to take a medically appropriate | | | | needed when terminating coverage. |
| action. Examples of medical malpractice include: | | | | Tail Coverage |
| - Failure to diagnose, or misdiagnosis of a disease | | | | Tail coverage is offered when the physician is |
| or medical condition; | | | | terminated from the current policy due to |
| - Failure to provide appropriate treatment for a | | | | retirement, change in employment, disability, etc. |
| medical condition; | | | | Every physician has a retroactive date within the |
| - Unreasonable delay in treating a diagnosed | | | | policy. The retroactive date indicates the |
| medical condition; | | | | physician's entry date in the policy. Claims will be |
| - Failure due to faulty equipments, negligence in | | | | entertained for any losses that occur during the |
| maintenance of the hospital facility or | | | | retroactive date and end date of the policy that is |
| non-conformance to standards also result in | | | | active as of the reporting date of claim. Tail |
| medical malpractice. | | | | coverage ensures that the reporting period of the |
| To prove a medical malpractice claim, the patient | | | | policy continues even after the expiry of the |
| must prove the health care provider did not | | | | policy or termination of the physician from the |
| comply with an acceptable and reasonable | | | | policy. Tail coverage is also known as Reporting |
| standard of medical care in their specialty, and | | | | Endorsement Coverage. |
| that this failure was the cause of the patient's | | | | Every Physician has separate limits within the |
| harm. | | | | policy. If the physician is covered for their |
| When a medical malpractice claim is placed, there | | | | individual limit and opts to get covered for Tail |
| need to be four basic elements for a successful | | | | coverage, then either the physician continues with |
| claim and compensation. The patient needs to | | | | the same limits or opts for lower limits. If the |
| show that a duty was owed when the hospital | | | | physician opts for lower limits there would be a |
| took on the patient. Next, they must show that | | | | discount that the physician can benefit on the tail |
| the duty was performed incorrectly and there | | | | premium. Any claim registered hence forth on the |
| were obvious errors. They should show that this | | | | policy will only be valid for the reduced limits. |
| breach in duty caused an injury and damages | | | | Physician can opt for tail coverage within 30 days |
| (which can be emotional) for which the hospital, | | | | from the expiry of the policy or the termination |
| physician or practice must pay financial | | | | date of the physician. |
| compensation. The majority of medical | | | | Premiums for tail coverage are determined by a |
| malpractice claims are due to medical error and | | | | doctor's specialty, territory, limits of liability and |
| 73% of these settle for compensation | | | | length of continuous claims-made coverage. Tail |
| How to Choose Medical Malpractice Insurance | | | | coverage gets more expensive the further back |
| Medical malpractice insurance falls into three | | | | in time it must provide coverage since the liability |
| categories: claims-made, occurrence and | | | | assumed by the carrier becomes greater. It is |
| claims-paid coverage. The most common type of | | | | usually a percentage of the insured's prior years |
| policy is claims-made coverage. | | | | premium. |
| Claims-Made Coverage | | | | Prior Acts ("Nose") Coverage |
| Claims-made policies cover policyholders for | | | | Prior acts coverage provides similar protection as |
| alleged acts of malpractice that take place and | | | | reporting endorsement coverage. However, unlike |
| are reported to the carrier during the policy | | | | a "tail," nose coverage is purchased through the |
| period. Claims-made policy premiums are relatively | | | | new insurer. |
| low for the first few years due to the fact that | | | | Claims-Paid Coverage |
| there is often a significant lag between when a | | | | Claims-paid coverage is often used by Trusts. |
| treatment is administered and the filing of a claim | | | | Under a claims-paid policy, premiums are based |
| resulting from that treatment. Because of this, | | | | only on claims settled during the previous year |
| claims-made premiums are structured to increase | | | | and projected for the current year. Claims-paid |
| each yearthat the coverage is in continuous force | | | | policies are generally assessable for a number of |
| until the risk presented approximates a "mature" | | | | years after the policy has been terminated. In |
| risk. This is usually in years 5, 6, or 7 for individual | | | | addition, claims-paid policies usually have restrictive |
| physicians. | | | | claims "triggers," under which a claim is not |
| As a result, one advantage of claims-made | | | | considered formally made until a "Summons and |
| coverage is that premiums are based on actual | | | | Complaint" is received. As a result, policyholders |
| past and current experience. Policyholders | | | | changing from claims-paid coverage to |
| therefore do not pay premiums for future liability | | | | claims-made coverage might find it difficult to |
| that is difficult to project. | | | | obtain retroactive (prior acts) coverage from the |
| Another advantage of claims-made coverage is | | | | new carrier. Physicians leaving a claims-paid carrier |
| that it enables physicians to increase liability limits | | | | will most likely have to purchase expensive tail |
| when necessary. For example, the limits of liability | | | | coverage from that claims-paid carrier. |
| in effect at a policy's inception may not be | | | | Common Exclusionso Contractual Liabilityo Clinical |
| enough to cover a settlement incurred today. In | | | | Trials however Research Projects may be |
| this case, the physician may wish to increase his | | | | covered, the insurer will require information on |
| or her limits of liability. Claims-made policies only | | | | these.o Genetic damage or manipulationo IVF |
| cover claims reported, and arising from, incidents | | | | treatmento Dishonest, Fraudulent, Malicious or |
| that occurred while that policy is in effect, | | | | Illegal acts or omissions. |
| policyholders must be wary when switching | | | | Risk Management & Assessment |
| carriers or otherwise terminating coverage. | | | | Implementing a risk management program can |
| For Example, assume you purchase a | | | | help improve patient care, prevent malpractice |
| claims-made policy with an effective date of 7/1 | | | | claims and reduce costs. Physician-led research |
| 2003. Assume you hold this policy with no | | | | shows "risk appears related to patients' |
| interruption in coverage for 10 years. In 2013, you | | | | dissatisfaction with their physicians' ability to |
| submit a claim for an event that occurred in 2004. | | | | establish rapport, provide access, administer care |
| The policy in force in 2013 will respond, meaning | | | | and treatment consistent with expectations, and |
| that you will be covered up to the full limits of the | | | | communicate effectively. |
| 2013 policy. | | | | |