New pressure to plan: Tail coverage

Doctors need to be prepared for changes that could force them into purchasing insurance to cover prior acts at an overwhelming expense.

By Amy Lynn Sorrel, AMNews staff. Nov. 27, 2006.

As mid-career gastroenterologist Christopher J. Magiera, MD, and his wife, general surgeon Pamela G. Galloway, MD, can attest, tail coverage isn't just for retirement.

The two moved to Wausau, Wis., from Cleveland in February 2003 so they could afford to continue practicing after their liability premiums in Ohio went up. But the transition came at an unexpectedly high price. They had to buy a tail coverage policy because their Ohio carrier did not offer coverage in Wisconsin and the new insurer did not offer retroactive coverage.

"It's not every day you write a check for $147,000 for the privilege of leaving Ohio," Dr. Magiera said.

Dr. Magiera said the Ohio insurer told them they had to pay the full amount up front or risk going without tail coverage, and unprotected against any claims their Ohio patients might file after that insurance policy ended.

An increasing number of doctors are finding themselves in similar situations, given today's unstable medical liability market. Physicians who are moving to another state, leaving a medical group, or switching carriers could be faced with having to buy tail coverage sooner than planned. And, as in Drs. Magiera's and Galloway's case, tail coverage often comes at a painfully high price.

Tail coverage, also known as extended reporting endorsement coverage, typically costs between 150% and 200% of the price of a mature claims-made policy. With liability premiums holding at unaffordable levels for many doctors, particularly those in high-risk specialties, purchasing tail coverage can be a problem.