Medical malpractice tails — those extended reporting periods for claims that unpredictably emerge from the past — can cost twice what a doctor currently pays in total annual premiums. But tails aren't always needed, despite prevailing misconceptions.

Healthcare professionals who are shopping carriers for lower premiums, better coverage or more secure underwriters, usually can avoid tails altogether if their new policies are written effectively.

A tail policy is often needed for retirement, and in some cases, a move out of state. The med-mal crisis of the 1990s mistakenly hatched a false notion that most policy changes required an expensive tail, eliminating a practitioner's opportunity to shop policies at renewal.

Most med-mal policies today are called claims-made policies, which cover all claims that emerge while the policy is in force, regardless of when the incident occurred. So, if a physician has a new claims-made policy and is sued for an incident that occurred a decade ago, that policy will cover the suit — and this is important — as long as the proper retroactive date is in place.

The date is the crux of that matter. The retroactive date (or the prior-acts date) is the date after which losses can occur while being covered under a claims-made policy. If the retroactive date is shown on the policy, any claim made during the policy period on a loss that occurred before the retroactive date will not be covered.

Many claims-made policies carry retroactive dates short of the time needed to cover all past exposures. Determining that amount of time depends on the state, statute of limitations, practice specifics and a host of other factors of which your broker or agent should be quite familiar.

In fact, it is inherently a broker's basic responsibility to ensure that the need to purchase a tail is eliminated whenever possible, while properly protecting the client's wide range of specific liabilities.

Claims-made policies, for the most part, phased out so-called occurrence policies in the 1970s, when underwriters saw the need to protect their own long-term liabilities. In an occurrence policy, claims are honored as long as the incident that triggered the claim happened while that policy was in force.

So, as long as the underwriter is still in business, all claims stemming from the active time of the policy are covered. This presented a problem for carriers failing to accurately predict their own risk against decades of latent claims.

Claims-made policies resolved this problem by simply covering all claims made in the present, regardless of when the incident occurred. However, if healthcare professionals change from claims-made insurance back to occurrence coverage, a tail is in fact needed. That's a move to be handled with care and proper insurance advice.

For more information, contact Steve Bogart at Hylant Group's Medical Risk Practice. He can be reached at (419) 259-6028, or at steve.bogart@hylant.com.

 
There's no escaping the ever-growing dependence on electronic storage for private health information. And while cyber theft continues to make headlines, healthcare professionals fall especially vulnerable from the added responsibility of HIPAA and related safeguards of medical records.

The exposures are far reaching. They include viruses, laptop theft, insider abuse and outside hacking through the Internet and wireless systems. When information is lost, the exposures include information and identity theft, extortion, tampering and a host of other problems that cost single organizations hundreds of thousands of dollars, and in some cases, millions.

Last year, more than half of all companies reported some unauthorized computer use with an average recovery cost of $150,000. These numbers were supplied by the Computer Security Institute, which acknowledges the real figures are likely steeper because many companies resist reporting abuses for fear of negative publicity.

The bottom line for healthcare professionals is that they are personally liable for safeguarding information. Corporate board members and practitioners alike have found themselves defending lawsuits of alleged fiduciary breaches because the latest cyber protections were not in place, despite lightning-fast advances in technological corruption.

HIPAA violations alone carry fines in excess of $250,000, and that's before civil claims hit the docket for personal damages. But insuring cyber risk is a relatively new move that has left many organizations weighing the need.

Too often, healthcare organizations falsely assume existing coverage includes cyber liability, while courts routinely prove them wrong. Traditional policies and most professional liability coverage is not written to address cyber errors and omissions, or property infringement.

Cyber liability is designed to fill the gaps in traditional coverage and can be customized to each organization and even existing policies. It some cases, it can be included with general and professional liability insurance at renewal.

Cyber coverage is generally divided into two categories: cyber property and cyber liability, which is third-party coverage protecting libel, trademark infringement, unlawful information use and other related issues.

The cost of cyber coverage is relatively low, especially considering that the average healthcare organization now spends more than $500 per employee on computer security and safeguards. Because the potential for exposures are endless, each healthcare organization should undergo a full assessment to determine specific needs.

For more information, contact Steve Bogart at Hylant Group's Medical Risk Practice. He can be reached at (419) 259-6028, or at steve.bogart@hylant.com.