By Marc Leffler, DDS, Esq. for MedPro Group

Background facts

A middle-aged general dentist, Dr. V, was in a practice partnership with his dental school classmate for over 10 years. Both of them performed mostly restorative dentistry, but would occasionally also perform root canal therapy and basic periodontal treatments. As part of their partnership agreement, they maintained professional liability, i.e., malpractice, insurance which covered both of them individually and the practice entity, on a claims-made basis.

Because of ongoing and worsening disputes about approaches to interacting with office staff, the partners agreed to split, with Dr. V to set up his own office just a few miles away; patients were appropriately notified of the change, with their patient records to be maintained by the dentist of their choice. When Dr. V did his business planning in anticipation of the upcoming change, he opted to obtain claims-made malpractice insurance from a different carrier than the current one because of receiving a better rate quote, which had a retroactive (“retro”) date on the day he opened the new office. He did not purchase an extended reporting endorsement – better known as a “tail” – from his prior carrier because he did not think that he needed it, given that there would be no time gap between the coverage periods of the old and new policies.

Less than a year into his new practice, he received a letter from an attorney, seeking records regarding a patient, J, whom he had treated at the former office with a full-arch maxillary bridge, approximately a year-and-a-half earlier. He asked his previous office’s staff to provide records to the attorney, which they immediately did. Then, he contacted his current malpractice carrier to advise it of a potential claim, but was told that his current policy would not cover him for acts prior to the retro date; so he called his prior carrier regarding the potential claim, but was advised that the old policy provided no coverage for him, because the claim, if pursued, would not be filed while the prior claims-made policy for him was in effect and he had not purchased a tail upon discontinuation of that policy. Dr. V quickly realized that he had no coverage in the event that the potential claim came to fruition as an actual claim.

Legal action

Shortly after receiving the dental records, J’s attorney retained a dental expert to examine J, and to review and comment upon Dr. V’s treatment, and she was of the opinion that, because of numerous open margins which she believed were created by faulty preparation and insertion techniques, the bridge was not acceptable or serviceable and required replacement. On behalf of J, the attorney filed suit against Dr. V, claiming negligence in association with the bridge.

With no insurance coverage in place, Dr. V located and retained an attorney, at his own expense. The attorney explained to Dr. V that he would be responsible for all legal fees, litigation expenses, defense expert fees, and the amount of a pre-trial settlement or judgment from a court following trial.

Discovery and case resolution

While Dr. V felt confident in the quality of his work, and believed that any open margins were likely due to post-insertion caries development as a result of the patient’s inadequate oral hygiene, he saw legal costs piling up very quickly. His attorney advised that Dr. V retain an expert to examine J with regard to his complaints of a defective prosthesis, as Dr. V would need to have testimony on his behalf to counter the claims of the patient, now plaintiff, in order to be able to try to defend his actions and avoid a payout to J.

Dr. V faced a critical decision at this point: whether to continue defending the case through litigation, likely to lead to a jury trial, or agree to pay J an amount to be negotiated between the attorneys. He opted for the latter, concluding that he would rather pay a certain known amount, than be faced with continuing costs with an uncertain end. He calculated that, even if he were to be successful at a trial, the costs to get to that point might realistically match or exceed a settlement figure now, and a loss at trial would place him into a difficult financial hole.

Takeaways

In terms of policy types, they can be divided into two—claims-made or occurrence. As the names imply, a claims-made policy will provide coverage (for both defense costs and indemnification up to chosen dollar limits, meaning the amount of a settlement or a jury/court judgment) if the claim (a lawsuit or the threat of one) is made while the policy is in effect, while an occurrence policy will cover the insured if the policy was in effect at the time of the occurrence (treatment) which is asserted to have been negligent.

Tail coverage will protect a dentist who is insured under a claims-made policy in situations when a claim of negligence is made after the policy has expired or been cancelled. While there are certain circumstances where a tail might be provided free of charge – such as death, disability, retirement, or other specifically-stated policy provisions – there is usually a cost in obtaining that coverage. Considering the definition of an occurrence policy, a dentist protected by such a policy will not ever need to purchase a tail. In this case, had Dr. V either been insured while with his partner by an occurrence policy, or if he had purchased a tail at the time he cancelled his initial policy upon leaving his partner, he would have had defense and indemnity protection when he was sued by J.

A hypothetical issue to be considered is that J might have sued the partnership in addition to suing Dr. V. Those types of decisions are generally made by attorneys for plaintiffs, in conjunction with their clients. In that circumstance, depending upon the specific terms of that entity policy, the potential exists that coverage protection might have been in place to at least partially cover Dr. V, even after he left, so long as entity coverage remained in place after Dr. V’s departure or if Dr. V’s former partner purchased a tail on that policy.

We conclude by noting that some jurisdictional regulations or statutes might place a liability defense and indemnification burden for prior negligent acts upon the buyer of a dental practice. While this might not feel even reasonably fair, practice purchasers could be encumbered with a lawsuit and all that goes with it, if the selling dentist(s) is(are) sued for acts performed before the practice sale, regardless of when that suit is filed, as long as it is done within the applicable statute of limitations.

Professional liability insurance coverage is a very important means of protection, potentially including personal assets, but it is also nuanced and legally complex. MedPro staff and insurance agents/brokers are valuable sources of information to help guide dentists through unfamiliar waters at the times of policy purchase, threats of lawsuits, court filings of suits, and practice status changes. Questions asked early can often prevent problems from arising later.

As the nation’s leading dental malpractice insurance carrier, MedPro Group has unparalleled success in defending malpractice claims and providing patient safety & risk solutions. MedPro is the nation’s highest-rated malpractice carrier, rated A++ by A.M. Best. The Berkshire Hathaway business has been defending dentists’ assets and reputations since 1899 and will continue to for years to come.
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The opinions expressed through this post are the opinions of the individual authors and may not reflect the opinions of MedPro Group or any of its individual employees. This document should not be construed as medical or legal advice. Because the facts applicable to your situation may vary, or the laws applicable in your jurisdiction may differ, please contact your attorney or other professional advisors if you have any questions related to your legal or medical obligations or rights, state or federal laws, contract interpretation, or other legal questions. MedPro Group is the marketing name used to refer to the insurance operations of The Medical Protective Company, Princeton Insurance Company, PLICO, Inc. and MedPro RRG Risk Retention Group. All insurance products are underwritten and administered by these and other Berkshire Hathaway affiliates, including National Fire & Marine Insurance Company. Product availability is based upon business and/or regulatory approval and may differ among companies. © 2022 MedPro Group Inc. All rights reserved.