A common question regarding employment, and particularly changes in employment, revolves around the idea of tail insurance coverage. As such, this issue’s legal column explores what tail coverage is, why you need it, and who pays for it.
In general, there are two types of medical malpractice insurance policies: (1) claims made policies and (2) occurrence policies. If an advanced practice nurse (“APN”) has a “claims made policy,” this means that the insurance will cover any claims that are made against the APN while that policy is in effect. However, it will not cover claims that are made after the policy is terminated (i.e. the APN moves to a new practice or the practice changes carriers). Anyone with a “claims made” policy should purchase a “tail” policy to be effective once the original policy ends. The tail policy will extend insurance coverage for a set amount of time in order to protect the APN against lawsuits that may be brought at a later date even though the original policy is no longer in effect. This tail should be purchased regardless of specialty. In general, it is best to negotiate who is responsible for purchasing the tail before entering into an employment agreement. Otherwise, the APN will likely hold full responsibility for purchasing the tail, unless his/her new employer will purchase it or a severance package can be negotiated with the former employer that includes tail coverage.
If an APN has an “occurrence policy,” this means that the insurance will cover any claims made against the APN for incidents that occurred while the policy was in place. (A lawsuit will still be covered after the policy ends, so long as the actual incident at issue occurred while the policy was in effect.) In this case, there is no need to purchase a tail policy, because the occurrence policy will continue to protect the APN for incidents that happened while the policy was in place. This type of policy is becoming rare. Most places now carry a “claims made” policy, but there are a few “occurrence policies” still used.
SHORT ANSWER: Anyone coming off of a “claims made policy” should purchase a tail.
STRATEGIC TIP: It is best to negotiate who will buy the tail during employment contract negotiations before employment even commences. There are many ways this can be structured.
Article by Jeana M. Singleton taken from the OAAPN Newsletter Challenge, September 2009