Three questions decide whether there is real coverage behind a medical director arrangement. Most agreements answer none of them, and the gap opens on the day the relationship ends rather than on the day something goes wrong.
Is the policy claims-made or occurrence? Who buys the tail when the engagement terminates? And is the professional entity a named insured, or only the individual physician?
This post describes structures rather than pricing. What a policy costs turns on state, specialty, limits and history, and any number quoted in the abstract is noise.
Claims-made is the default, and it is the trap
An occurrence policy responds to an act that happened while the policy was in force, whenever the claim arrives. A claims-made policy responds only if the policy is in force when the claim is made.
Aesthetic and weight-management claims do not arrive promptly. A patient who is unhappy about a result, or who develops a problem attributed to a treatment, frequently surfaces months or years later. By then the director has moved on, the policy has lapsed, and the act that is being complained about was covered at the time and is not covered now.
| Responds to | Exposure after you leave | |
|---|---|---|
| Occurrence | Acts during the policy period | Covered, whenever the claim arrives |
| Claims-made | Claims made during the policy period | None, unless a tail is purchased |
The tail is the negotiation nobody has
An extended reporting endorsement, the tail, preserves cover for acts during the policy period after the policy ends. It is the single most important term in a claims-made arrangement and it is usually not mentioned in the director agreement at all.
Settle four things in writing before you sign:
- Who buys it. The clinic, the director, or split. Silence means the director pays, because the director is the one exposed.
- On what triggers. Termination for any reason, including the clinic terminating you, the clinic being sold, or the clinic ceasing to operate.
- For how long. Tails are offered in defined lengths and unlimited forms. Match it to the outside limit of the claims you would expect.
- What happens if the clinic dissolves. A promise to buy a tail from an entity that no longer exists is not a term, it is a hope. Ask for it pre-funded or purchased at inception.
The clinic closing is the exact scenario in which the tail matters most and the promisor is least able to perform.
Individual cover and entity cover are different things
A physician’s own professional policy covers the physician. It does not automatically cover the professional entity, and it certainly does not cover the management company.
In a PC-MSO arrangement there are at least three parties and they need to be looked at separately.
- The individual clinician. Covered by their own policy, subject to its terms.
- The professional entity. Claims are frequently pleaded against the practice as well as the clinician, on theories such as negligent supervision or credentialing. If the entity is not a named insured somewhere, it is defending itself. See friendly PC and MSO structure.
- The management company. A professional liability policy is not written for it. Its exposure is general liability, cyber, and employment practice, and it needs its own paper. How the two sides divide is set out at medical director.
Ask to see the declarations page rather than a certificate. The certificate tells you a policy exists. The declarations tell you who is insured and for what.
Where directors find the hole
Vicarious exposure for other people’s acts. You are named in a claim arising from an injector’s work. Whether your policy responds depends on how the role is characterized and whether supervisory activity is within the covered scope. Ask the carrier the question in writing, naming the role.
Undisclosed scope. The policy was written for a clinical practice and the insured is now directing four locations and a device menu the carrier never saw. Non-disclosure is how a covered claim becomes a coverage dispute.
A protocol-driven response also shapes how a claim develops, which is why the arrangements in adverse event response matter to the insurance question.
Consecutive carriers. Moving between claims-made carriers without matching retroactive dates leaves a gap in the middle of your own history that nobody notices until a claim lands in it.
What this means for you
Ask for the declarations page before you sign anything, and read who the named insureds are rather than trusting a certificate. Establish whether the policy is claims-made, and if it is, put the tail in the agreement with a named payer, named triggers and a stated length, funded in a way that survives the clinic closing. Tell your carrier in writing what the director role actually involves, including supervision of other clinicians, and keep the reply. And look at the entity separately from yourself, because a claim naming the practice and the physician is the normal shape, and a structure where only one of them is insured is the one that produces a fight in the middle of a defense. The related personal exposure, which no policy addresses at all, is at your personal license is the collateral.
Related reading
Frequently asked questions
What is the difference between claims-made and occurrence coverage?
Occurrence coverage responds to acts that happened during the policy period whenever the claim arrives. Claims-made coverage responds only if the policy is in force when the claim is made, so acts covered while you were engaged can become uncovered once the policy lapses.
What is tail coverage and who should pay for it?
A tail, or extended reporting endorsement, preserves cover for acts during the policy period after the policy ends. Who pays is a negotiation, and silence means the director pays. Agree the payer, the triggers, the length, and what happens if the clinic dissolves.
Does my personal malpractice policy cover the professional entity?
Not automatically. Claims are often pleaded against the practice as well as the clinician, on theories like negligent supervision. If the entity is not a named insured somewhere, it is defending itself separately.
Is the management company covered by professional liability insurance?
No. Professional liability policies are written for clinical practice. A management company’s exposure is general liability, cyber and employment practice, and it needs its own coverage.
What should I ask a clinic for before signing as medical director?
The declarations page rather than a certificate of insurance, so you can see who the named insureds are and what the limits and retroactive dates say, plus written confirmation from your own carrier that the director role as described falls within your covered scope.
This is general information, not legal advice. Rules vary by state and change. Confirm your own facts with counsel.