What Is Occurrence-Based Insurance for a Physician?

Physician Occurrence-Based Insurance

Occurrence-based insurance is a type of medical malpractice insurance which protects the physician from liability arising from care that results in a patient’s injury or death.

An occurrence-based policy differs from claims-made in that an occurrence-based policy covers any claim for an event that took place during the period of coverage, even if the claim is filed after the policy expires.  Thus, an occurrence-based insurance policy does not require tail insurance.   

How Much More Does Occurrence Cost Than Claims-Made Insurance?

Since tail insurance is not needed under an occurrence-based insurance policy, the annual premium for an occurrence-based policy is approximately 35% more than a claims-made policy.  So, if the average claims-made policy annual premium is $6000, an occurrence-based policy would cost $8100 in coverage. The American Medical Association provides resources to find affordable insurance.

The cost of coverage is based upon the claims history of the provider and the number of individual and group patients seen per year. Providers with high annual patient visit counts will have a lower insurance premium, since their claims are spread out over more people.

Additionally, doctors who perform below average in terms of malpractice claims will pay less than providers who incur higher claim rates.  A doctor’s risk profile is also taken into account when determining the rate an insurance company will charge for the occurrence-based policy.   Provider age is also factored into the equation, as younger physicians are considered to be at higher risk of committing malpractice or making an error than older practitioners.

What Is the Advantage of Occurrence Based Coverage?

The permanence of an occurrence-based policy is the main advantage over a claims-made policy.  The period of time you are protected under the policy lasts forever and you do not need to renew or buy tail insurance when you leave the employer. You can also take a job in another state, and you will still be covered.

One disadvantage of an occurrence policy is that if the doctor leaves the practice or hospital (in most cases), they may not be able to remain on the same occurrence-based policy with their former employer. The main reason for this is that the insured typically must have had prior experience as a provider in order to qualify for an occurrence-based policy – with or without tail insurance. Discover whether a claims-made or occurrence policy is best for your situation.

Claims Made Malpractice Resources for Physicians

In addition to being subject to cancellation upon leaving employment, claims made policies are designed to protect only against first time occurrences.   If there was an initial claim under a claims made policy then any following claims would not be covered by that same policy.  

A claims-made policy will only provide insurance coverage if the policy is in effect when both the incident first happened and when a lawsuit is filed against the doctor (when the claim is filed). Thus, there is a chance a lawsuit can be filed after a doctor leaves an employer. In situations like this, with claims-made medical malpractice insurance, a tail policy must be purchased by the provider which covers the gap between when physicians leave an employer and when the statute of limitations on filing a medical malpractice claims ends.

Claims-made coverage is used in cases where there may be periods of time when the reason coverage is not available, such as changing jobs. In these situations, the tail policy will provide protection for up to three years after leaving an employer (depending upon state law and the physician’s insurance carrier’s basis for coverage). The tail policy also has other limitations and exclusions which can make it difficult for providers who leave employers often or have a history of high liability claims against them to find affordable malpractice insurers.

Physician Contract Policy Review

Contracts are a pervasive and obligatory part of nearly all business and legal transactions. Well-drafted contracts help to enumerate the responsibilities of the involved parties, divide liabilities, protect legal rights, and insure future relationship statuses.

These touchstones are even more crucial when applying their roles to the case of a doctor employed by a hospital, group, or other provider. While contract drafting and negotiation can be a long and arduous process, legal representation is a must in order to ensure that your rights are being protected.The present-day conclusion is simple: A doctor should not enter into any contract without having the agreement reviewed by legal counsel.

There is simply too much at risk for a provider to take contract matters into their own hands. In addition to the specific professional implications, contract terms can significantly impact a doctorn’s family, lifestyle, and future. There are many important contract terms and clauses which can present complex and diverse issues for any doctor, including:

  • Non-compete clauses
  • Damages
  • Indemnification
  • Verbal guarantees
  • Insurance statements

Additionally, often times the most influential terms and clauses in any employment contract are the ones that are not present. With the advent of productivity based employment agreements it is imperative that any doctor have an employment agreement reviewed before it is executed. Attorney Robert Chelle has practical experience drafting and reviewing doctor contracts for nearly every specialty.

New residents, attending physicians, providers entering into their first employment contract or established physicians looking for new employment can all benefit from a thorough contract review. By employing an experienced attorney for your representation, you can insure that you will be able to fully understand the extensive and complex wording included in your contract. By having a full and complete understanding of the contract, you will be in a better position to make your own decision on whether or not you want to enter into the agreement which will affect your career life for years to come.

The financial benefits gained from having your contract reviewed and negotiated by an experienced healthcare attorney far outweigh the costs associated with a review and can assist with your mental health. You are a valuable resource, and you should be treated and respected as such. Attorney Robert Chelle will personally dedicate his time to make sure that your are fully protected and will assist you in the contract process so that your interests are fairly represented.

Every provider contract is unique.  However, nearly all contracts for health care providers should contain several essential terms.  If these essential terms in the contract are not spelled out in contracts, disputes can arise when there is a disagreement between the parties as to the details of the specific term.  For instance, if the doctor is expecting to work  Monday through Thursday and the employer is expecting the provider to work Monday through Friday, but the specific workdays are absent from the Agreement; who prevails?

Spelling out the details of your job is crucial to avoid contract conflicts during the term of your employment.  Below is a checklist of essential terms that contracts should contain (and a brief explanation of each term):

  1. Outside Activities: Are you permitted to pursue moonlighting or locum tenens opportunities? Do you need permission from the employer before you accept those practice of medicine related positions?
  2. Practice Call Schedule: How often are you on call (after hours office call, hospital call (if applicable))?
  3. Base Compensation: What is the annual base salary? What is the pay period frequency?  Does the base compensation increase over the term of the Agreement? Is there an annual review or quarterly review of compensation?
  4. Productivity Compensation: If there is productivity compensation; how is it calculated (wRVU, net collections, patient encounters, etc.)? Is there an annual review?
  5. Paid Time Off: How much time off does the job offer? What is the split between vacation, sick days, CME attendance and holidays?  Is there a HR guide?
  6. Dues and Fees: Which business financial expenses are covered (board licensing, DEA registration, privileging, AMA membership, Board review)?
  7. Signing Bonus: Is an employee signing bonus offered? When is it paid?  Do you have to pay it back if you leave before the initial term is completed? Are student loans paid back?  Is there a forgiveness period for student loans?
  8. Professional Liability Insurance: What type of liability insurance (malpractice) is offered: claims made, occurrence coverage, self-insurance?
  9. Tail Insurance: If tail insurance is necessary, who is responsible to pay for it when the Agreement is terminated?
  10. Without Cause Termination: How much notice is required for either party to terminate the Agreement without case?
  11. Non-Compete: How long does the non-compete last and what is the prohibited geographic scope?

If you have questions about your current medical malpractice policy or are interested in having your employment agreement reviewed contact Chelle Law today.

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