ERP (Tail) Coverage Insurance

Unfortunately, few insurance providers will accept your application, once you have chosen to remain uninsured for any period. You are considered a ‘high riosk’ prospect and even if you were accepted, you would probably find that your premiums would be much higher.

For this reason, you should carefully weigh your options before making a decision to risk remaining uninsured.

Commonly referred to as ‘Prior Acts Coverage’, it is generally uncommon for any employer to take on the obligations of a previous employer. While you could request this, you should take into account any consideration that may be required of you by your employer in exchange.

Medical malpractice lawsuits are a significant concern for physicians in the United States, with the likelihood of facing such claims varying by specialty and career stage.

Overall Risk

• A 2011 study published in the New England Journal of Medicine reported that by the age of 65, 75% of physicians in low-risk specialties and 99% in high-risk specialties had faced a malpractice claim. Wikipedia

Specialty-Specific Risk:

• A 2023 survey indicated that 90% of general surgeons had been named as defendants in malpractice lawsuits, making them the most frequently sued specialists. Statista

Annual Incidence

• Approximately 20,000 medical malpractice lawsuitsare filed annually in the U.S. Miller Zois

These statistics underscore the substantial risk of malpractice claims that physicians face, particularly in high-risk specialties. Understanding these risks is crucial for medical professionals when considering malpractice insurance and implementing risk management strategies.

The legality of practicing medicine without malpractice insurance, known as “going bare,” varies across the United States. While no federal mandate requires physicians to carry malpractice insurance, state laws differ significantly.

States Requiring Malpractice Insurance:

Several states mandate that physicians maintain active malpractice insurance policies:

• Colorado: Physicians must carry malpractice insurance with at least a $1 million per-occurrence limit and a $3 million aggregate limit.
• Connecticut, Kansas, Massachusetts, New Jersey, Rhode Island, Wisconsin: These states also require physicians to have malpractice insurance, though specific coverage limits may vary.

States with Conditional Requirements:

Some states do not universally require malpractice insurance but impose conditions under certain circumstances:

• Indiana, Louisiana, Nebraska, New Mexico, New York, Pennsylvania, Wyoming: In these states, physicians must carry a minimum level of coverage to participate in state programs that either limit the amount of damages from a malpractice claim or provide supplemental malpractice coverage.
• California: >Physicians are required to carry malpractice insurance only if they perform outpatient surgery.
• Florida: Physicians can be exempt from carrying malpractice insurance if they meet specific stipulations, such as posting a bond, maintaining an escrow account, or obtaining an irrevocable letter of credit. They must also notify patients of their lack of insurance.

States Without Malpractice Insurance Requirements:

Approximately 32 states do not have laws mandating malpractice insurance for physicians. However, hospitals, employers, or insurance plans within these states may still require physicians to carry such insurance as a condition of employment or practice privileges.

Requirements on Extended Reporting Period (ERP) or “Tail” Coverage:

Tail coverage is crucial for claims-made malpractice insurance policies, as it covers claims filedafter a policy has ended for incidents that occurred during the policy period. While some states mandate malpractice insurance, specific requirements for tail coverage are less common and often depend on employer policies or hospital bylaws. For instance,many hospitals require physicians to have tail coverage to maintain privileges, andsome insurers may also mandate it.

A common misconception is that not having malpractice insurance makes a medical professional less attractive to plaintiffs and their attorneys. However, this is untrue for several reasons:

• Lack of Transparency in Insurance Status: A plaintiff’s attorney will not know whether a medical practitioner is insured until the legal discovery process begins. By this stage, significant legal expenses may already have been incurred.
• Asset Assessment: Even without insurance, attorneys may pursue claims based on an evaluation of your assets. If you have significant unprotected assets, you may still be deemed a viable target for litigation.

Choosing to operate without malpractice insurance creates a substantial financial burden in the event of a claim:

• Defending Against Litigation: Without insurance, you bear the full cost of legal representation to defend yourself against claims. Defense costs alone can range from tens of thousands to hundreds of thousands of dollars, even if the case is frivolous or ultimately dismissed.
• Asset Disclosure Costs: In many jurisdictions, a defendant without insurance must disclose their personal assets to plaintiffs and their legal teams. This process can be invasive and costly, as it requires comprehensive documentation, legal assistance, and time.

If you choose to go bare and a claim is filed, your personal assets become vulnerable to seizure. Key points to consider:

• Timing is Critical: If your assets are not already protected by a trust, LLC, or other legal mechanism before a claim is lodged, it will be too late to shield them once litigation begins.
• Loss of Personal Property: Without adequate protection, your home, savings, investments, and other valuable assets could be at risk. The financial and emotional toll of losing these assets can be devastating, particularly for those with families or dependents.

Additional Considerations of “going bare.”

• Career Implications: Operating without malpractice insurance or tail coverage could harm your professional reputation. Employers and peers may view this decision as reckless or unprofessional, potentially impacting future job prospects.
• Long-Term Costs: While going bare may save money in the short term, the financial fallout from even one claim can far outweigh the cost of securing tail coverage. For example, settlements or judgments can reach millions of dollars, leaving you financially ruined.
• Peace of Mind: Beyond the financial and legal implications, having malpractice coverage provides psychological relief. Knowing you are protected in the event of a claim allows you to focus on patient care rather than potential lawsuits.