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Changing Employers? Keep Your Tail Covered!

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in order to protect the APN against lawsuits that may be brought at a later date even though the original policy is no longer in effect.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

Dallas Law Firm Libby Sparks Willis Starnes Joins BMD Business Family

The business law firm of Brennan, Manna, Diamond (BMD) – with over 75 attorneys and eight offices across the country, has announced its first south-central U.S. location with the acquisition of Dallas law firm Libby Sparks Willis and Starnes (LSWS). LSWS is a team of trusted advisors practicing in the areas of M&A, Commercial Litigation, Construction, Finance, Intellectual Property, Estate Planning and Taxation. The LSWS firm includes seven attorneys and four paralegals with offices located in the University Park area of Dallas, Texas.

Work Environment Industry Leaders Join to Create Akros Network

Four industry leading firms that specialize in the critical building blocks of successful organizations have formed a network giving employers one place to go for answers to high-risk workplace issues including security and safety measures, ethics and fraud reporting, human resources compliance and employment law training, crisis and issues communication and more.

BMD Assists Olympic Steel on Recent Acquisitions

BMD recently assisted client Olympic Steel on two deals.

BMD Client Eating Recovery Center and Pathlight Mood & Anxiety Center Announce New Partners

BMD President and Healthcare Member Matthew Heinle advised Eating Recovery Center as they announce new partners

David Scott & Amanda Waesch Promoted to Vice President Roles as Part of Continued Succession Planning

Brennan, Manna and Diamond (BMD), an entrepreneurial business law firm with six offices in Ohio and Florida, has promoted Columbus Office Managing Partner David Scott and Executive Committee Member Amanda Waesch to the position of Vice President.