All Americans, including physicians, are aging. A report earlier this year from the AMA showed that about 25 percent of all doctors in the United States are aged 65 and older, although not all are seeing patients.
Clearly, many of these doctors are continuing to work past age 65, and like most of us, they are likely thinking about retirement. But unlike most other workers who retire, physicians need to be concerned about the possibility of a malpractice suit long after they see their last patient. Why? A patient could discover years later that a doctor missed a diagnosis, for example.
The problem is ensuring adequate coverage can be difficult because most doctors will stop paying malpractice premiums when they retire, close a practice, relocate, change insurers, become disabled, or otherwise leave the practice of medicine.
In any of these events, a physician will have options that depend on the state laws where the practice is located and other factors that are best discussed with an insurance broker. For this discussion, we'll consider two common options: one is to buy a modified claims-made policy and the other is to get tail coverage, which may be a less costly option.
To ensure malpractice coverage is in place, consider taking these three steps in the months well before discontinuing practice:
Step 1: Understand how your state's statute of limitations applies to malpractice cases. Clearly, some lawsuits will come years after a patient is treated, and so statutes of limitations will apply. Most states have a two-year limit on medical malpractice filings, meaning physicians will need coverage for only two years after the last day they treat patients.
However, some states also have a rule that allows a patient to bring a medical malpractice claim if a doctor erred in a way that caused the patient harm. Under what's called the "discovery rule exception," where a doctor might miss a tumor when viewing a patient's X-rays, for example, a patient diagnosed with cancer years later could ask that the X-rays be reviewed again. If the tumor can be seen on the earlier film, then a doctor could face a medical malpractice claim.
Step 2: Ask your insurance adviser about tail coverage.
Tail coverage is useful for claims filed after the end of the policy to cover events like the one described above that can come years later.
The advantage of tail coverage is that most malpractice insurers will provide it at no cost if the physician was insured with them for five years or more before retirement. Some insurance companies require only one year of malpractice coverage for a retiring physician to receive a no-cost tail coverage policy. Be sure you know your carrier's policy.
Step 3: Select tail coverage from an insurer that will be in business for many years.
This point is vitally important because if your insurer goes out of business, your tail coverage would be worthless. Therefore, insurance brokers should advise physicians to do whatever they can to ensure they're covered by a financially secure and reputable insurance company with a high rating, such as an + by AM Best.