The medical profession has seen dramatic changes over the past 10 years. For example, more and more doctors are leaving individual or small group practices to become physician employees. According to a New York Times report, nearly 60 percent of the nation’s family practitioners and pediatricians, half of its surgeons and a quarter of its surgical subspecialists were employees of a hospital in 2014.
Insecurity about the healthcare marketplace and dwindling reimbursement rates are some factors driving the change, according to the Times report. Physician employees can count on a salary. And they avoid many of the hassles that running their own practice entailed. Additionally, when a doctor becomes an employee, the hospital typically pays the malpractice insurance premiums for the entire organization, which represents huge savings. In Nassau County, New York, for example, annual individual malpractice premiums ranged from about $36,000 for an internist to $179,000 for an OB-Gyn in 2014.
But is it wise for a doctor to forego individual malpractice insurance when she becomes a physician employee? According to some professional liability insurance experts, the answer may be “no.”
To physicians moving from private practice, employer-sponsored malpractice coverage may seem like a great deal. But many physician employees are unaware that group policies may include significant and potentially devastating coverage gaps. Some things to watch out for include:
Shared liability limits
Many employer-sponsored professional liability policies are shared-limit policies. This means that the policy covers all physician employees (and perhaps ancillary health professionals) under one policy with a single shared limit. Under these circumstances, even one or two claims in a policy period could exhaust the aggregate limit, leaving any physician who’s covered under the (now useless) policy exposed.
Low liability limits
Depending on when the hospital bought its malpractice coverage, the limits on liability may not be adequate to defend a malpractice claim today. Even if a legal case ends with a judgment in your favor, attorneys fees and court costs can reach tens of thousands of dollars. According to Arthur J. Gallagher & Co., in 2016 the average malpractice claim cost $30,000 to defend. However, many claims cost thousands more.
No defense coverage
Not all employer-sponsored malpractice policies cover attorney’s fees and defense costs. If your employer doesn’t cover this expense, you will need to pay your attorney yourself.
No coverage for lost wages
Defending a malpractice claim means taking time off from your practice to attend depositions, meetings, and possibly a trial. Many individual policies will reimburse you for wages lost during these times. But most employer-sponsored plans will not.
One of the most significant shortfalls of employer-sponsored policies is that they are usually written on a claims-made basis. This means the policy will only cover you if you are still an employee of the hospital when the client files a claim. If you leave your employer without “tail” coverage (insurance that extends the coverage for a set period of time) you could find yourself footing the bill for claims filed after the policy period ends.
If you’re a physician employee and concerned about your malpractice coverage, call the insurance experts at The Carmoon Group today. We can answer your questions, discuss policy options, and recommend the right coverage to meet your needs.
No time to call? Contact us online, and we will get back to you right away.