Negotiating Malpractice Terms in Your Contract: Scripts and Checklists

You are staring at a 20-page employment contract from a hospital group. The salary looks decent, the signing bonus is tempting, and HR wants an answer “by the end of the week.” But there is a short paragraph labeled “Professional Liability Insurance” that might as well be written in ancient Greek.

Occurrence. Claims-made. Tail. Prior acts. Limits. Hammer clause.

You ask the recruiter for clarification and get the usual garbage: “This is our standard contract; everyone signs this.” Translation: “We are hoping you do not know what you are doing.”

Let us fix that.

This is a playbook for negotiating malpractice terms in your contract, with concrete scripts and checklists. Not theory. What to say. What to look for. When to walk away.

---

1. The Core Malpractice Concepts You Must Control

If you do not understand these four pieces, you are negotiating blind:

• Policy type (occurrence vs claims-made)
• Who pays for what (premium, tail, prior acts)
• Policy limits and structure
• Control of defense and settlement

Once you lock those down, the rest is fine-tuning.

A. Occurrence vs Claims-Made: The Big Fork in the Road

You are going to see one of these two in your contract.

Occurrence policy

• Covers incidents that occur during the policy period, regardless of when the claim is filed.
• No tail needed.
• Premium usually higher.

Claims-made policy

• Covers claims made and reported while the policy is active, for incidents after the retroactive date.
• When you leave, you need tail coverage or the next employer must provide prior-acts coverage.
• Premium lower early, increases over time.

If you see “claims-made” in your contract, your brain should immediately jump to one question:

“What happens to my coverage if I leave?”

Script: Clarifying coverage type

“Thanks for sending the draft. I see the professional liability section, but I need to clarify a few things for malpractice. Is the policy you provide occurrence or claims-made? And if claims-made, who is responsible for tail coverage when the relationship ends?”

If they will not answer that clearly in writing, that is a red flag. Full stop.

---

2. Who Pays Tail and Prior Acts: The Real Money Question

For physicians in private groups and many hospital-employed roles, the most expensive landmine is tail. That is where people get burned.

A. Tail Coverage Basics

Tail coverage (extended reporting endorsement) does one job:

• It lets you report future claims for care you provided while you were insured, after the policy terminates.

Typical cost:
1.5–2.5 times your final annual premium. For high-risk specialties, that can easily be six figures.

Estimated Tail Coverage Cost by Specialty (Relative to Annual Premium)

Category	Value
Family Med	1.5
Internal Med	1.8
OB/GYN	2.5
General Surgery	2.2
EM	2

So the contract clause “physician shall be solely responsible for any tail coverage” is not a minor line. It is a giant unpaid bill waiting for you at the exit.

B. Prior Acts (Nose) Coverage

This is the other way to solve the gap:

• New employer’s insurer agrees to cover your prior acts back to a stated date (retroactive date).
• This replaces buying a tail from the old carrier.

Not always available. Depends on the insurer, specialty, claims history.

C. Tail / Prior Acts Negotiation Checklist

Before you sign, you need these in writing:

• Policy type clearly stated (claims-made vs occurrence).
• Who pays for tail if:
  • You resign with notice.
  • They terminate you without cause.
  • They terminate you with cause.
  • The practice is sold / merges.
  • You become disabled or die.
• Whether employer will:
  • Pay full tail.
  • Pay partial tail (e.g., vesting).
  • Require you to pay but cap your cost.
• Whether a future employer can provide prior acts coverage instead of tail.
• What happens if you go from employed → partner in same group.

Script: Asking for employer-paid tail

“I see that the malpractice policy is claims-made and that the physician is currently responsible for any tail coverage. For me to feel comfortable committing long-term, I need clarity and protection around that.

What I would like to see is language stating that the employer will pay 100% of the tail premium upon termination of employment by the employer without cause, nonrenewal by the employer, physician disability, or death. If I voluntarily resign to move elsewhere, I understand that could be treated differently, but I cannot sign an open-ended obligation for a potentially six-figure tail.”

If you are joining a hospital system or large health group, this is not an unreasonable ask. I have seen plenty of systems quietly agree to this once someone actually pushes.

Script: Graduated / vesting tail compromise

If they push back on full tail:

“I understand the concern about a full tail obligation from day one. A reasonable middle ground would be a vesting schedule, where the practice covers an increasing percentage of the tail based on years of service. For example:

• 0–1 year: physician 100%
• 1–2 years: practice 50%, physician 50%
• 2–3 years: practice 75%, physician 25%

• 3 years: practice 100%

Can we add a schedule like that to the malpractice section?”

Then shut up and let them respond. Silence is a negotiation tool.

D. Disability / Death Protection

If your contract says “physician pays tail no matter what” and then you become disabled or die, your family can be stuck with a massive bill.

Fix that.

Script: Adding protection for disability/death

“I need one specific protection added. In the event of my permanent disability or death, I want the contract to require the employer to pay the full cost of any necessary tail coverage. That is standard risk protection and prevents my family from being stuck with a large malpractice obligation in a worst-case scenario.”

If they refuse that, you are learning something about how they treat physicians.

---

3. Policy Limits and Structure: Are You Actually Covered?

People obsess over salary and ignore whether the malpractice limits are adequate. That is backwards.

A. Limits: Per-Claim and Aggregate

Typical formats:

• $1,000,000 per claim / $3,000,000 aggregate
• $2,000,000 / $4,000,000 in some higher risk settings or states

You want:

• Numbers stated in the contract
• Confirmation these apply per physician, not an absurdly low shared group limit

Structure Type	Example Limits
Standard community	$1M / $3M
Higher risk specialty	$2M / $4M
Low limit (red flag)	$500k / $1M
Excess layer added	+$1M above primary

Script: Clarifying policy limits

“Can you confirm the specific malpractice policy limits that will apply to me personally? I want the per-claim and aggregate limits, and whether those limits are per physician or shared across the group. I would like that spelled out directly in the contract.”

If they dance around it, assume the limits are weak until proven otherwise.

B. Defense Outside vs Inside Limits

Two flavors:

• Defense outside limits: Legal costs do not erode your liability limit. Better.
• Defense inside limits: Legal defense burns through your policy limit. Worse.

Ask directly.

Script: Asking about defense costs

“One technical question: Are defense costs paid outside the liability limits, or are they included within the per-claim/aggregate limit? I want to understand how much practical coverage I have if there is a high-defense-cost claim.”

You do not need to be a lawyer. You just need this answer.

---

4. Control, Consent, and Hammer Clauses

Your relationship with the carrier and employer in a lawsuit matters just as much as the raw dollars.

A. Who Controls Defense and Settlement?

Almost always, the insurer controls defense and settlement decisions.

But the contract can support or sabotage you:

• Will the employer stand behind you publicly, or throw you under the bus?
• Do you have any say in settlement?
• Will they fight a junk claim or just cut a check and move on?

B. Consent to Settle and Hammer Clauses

Key language to look for in the policy summary or contract exhibit:

• “Consent to settle” — ideally your consent is required before settling.
• “Hammer clause” — if you refuse a recommended settlement, the insurer’s liability may drop to the proposed settlement amount and you are on the hook for any excess.

You may not get perfect terms here. But you need to know how you will be treated.

Script: Asking for consent to settle language

“I want to understand how settlement decisions are made. Does the underlying malpractice policy include a true consent-to-settle provision for the physician? And if so, is there a hammer clause that reduces the insurer’s liability if I decline a settlement?

Ideally, I would like the contract to state that settlement will not be made in my name without my prior written consent, except where required by law or regulatory authorities.”

If they say “the hospital system will not change the policy,” fine. At least you know the ground you are standing on.

C. Non-Economic Protection: Reputation and Reporting

A settlement may trigger:

• National Practitioner Data Bank reporting
• State medical board questions
• Credentialing headaches for the rest of your career

Sometimes fighting a case makes sense, purely for your professional future. Sometimes it does not. You want a policy and an employer that treat that tradeoff seriously.

---

5. Reading and Rewriting the Contract Clause

Now, the actual text. This is where most physicians glaze over and sign anyway. Do not.

Here is what a weak malpractice clause usually looks like (stripped down):

“Employer shall provide professional liability insurance coverage for Physician with limits of at least $1,000,000 per occurrence and $3,000,000 aggregate. In the event of termination of this Agreement for any reason, Physician shall be solely responsible for obtaining and paying for any tail coverage.”

If you sign that in a high-risk specialty with claims-made coverage, you are volunteering to write a very large check later.

A. Stronger Clause – Example Structure

You want the clause to address:

• Type of coverage
• Limits
• Who pays premiums
• Who pays tail, and when
• Disability/death protection
• Treatment of without-cause vs with-cause terminations

Here is the type of structure you want your lawyer to help you move toward (this is not legal advice, just a model):

“Employer shall, at its sole expense, provide and maintain professional liability insurance coverage for Physician under a claims-made policy with limits of not less than $1,000,000 per claim and $3,000,000 aggregate, covering Physician’s professional services on behalf of Employer from the Effective Date through the termination of this Agreement.

In the event this Agreement is terminated by Employer without cause, or not renewed by Employer, or terminates due to Physician’s death or permanent disability, Employer shall, at its sole expense, obtain tail coverage (extended reporting endorsement) providing coverage for claims arising out of Physician’s professional services on behalf of Employer during the term of this Agreement.

In the event Physician terminates this Agreement for reasons other than Employer’s material breach, Physician shall be responsible for the cost of any tail coverage, provided that Employer shall cooperate in good faith with any request by Physician’s subsequent employer to obtain prior-acts coverage.”

You might not get that exact language. But you can certainly use it as a starting template.

---

6. Scripts for Common Pushback Scenarios

You will hear the same lines over and over. Here is how to respond.

Scenario 1: “This is our standard contract; we never change it.”

Your move:

“Understood. I have no issue with standardization on most terms, but malpractice and tail can represent a very significant financial exposure for me personally. I am not asking you to redesign your entire document, just to add clear language on:

• Who pays for tail in specific scenarios, and
• Protection in the event of disability or death.

If the contract truly cannot be modified at all, that is a data point for me about how flexible the organization is with its physicians. But before I draw that conclusion, I would like you to check with your legal or compliance team.”

Then stop. Let them escalate.

Scenario 2: “No one else has ever asked for this.”

Good. That is their problem, not yours.

Your move:

“I am sure most people focus on salary and bonus, but as I am sure your legal team would agree, malpractice obligations and tail exposure are just as important. I am making a long-term decision; I need to be comfortable with the risk structure.

You may find that actually putting this in writing reduces disputes on the back end. I am simply asking to clarify the expectations we both already have.”

Scenario 3: “If you want tail paid, we will need to lower your salary.”

Sometimes true. Sometimes a bluff.

Your move:

“I understand there is a cost to employer-paid tail. Let us quantify it rather than guess.

I would like to see a side-by-side comparison: current salary plus physician-paid tail versus a slightly lower salary with employer-funded tail, particularly in the scenarios where you control termination. If we can structure it so that my total compensation is reasonable and my downside risk is capped, I am certainly open to that discussion.”

---

7. Checklists: What to Verify Before You Sign

Here is the short, ruthless version. Do not sign until you can check these boxes honestly.

Coverage Structure Checklist

• Policy type is clearly stated:
  • Occurrence, or
  • Claims-made with written tail/prior-acts provisions
• Limits are specified in the contract:
  • Minimum $1M / $3M (or higher, depending on specialty/state)
  • Clarified if limits are per physician vs shared
• Defense costs:
  • You know if they are inside or outside the limits

Financial Responsibility Checklist

• Who pays the base premium: clearly “Employer”
• Tail coverage responsibility is spelled out for:
  • Employer without-cause termination
  • Employer nonrenewal
  • Physician with-cause termination (you screwed up)
  • Physician voluntary resignation
  • Disability
  • Death
• If you are responsible for tail:
  • Cost estimate obtained in writing from the actual insurer
  • You have a realistic plan to cover that cost
• If there is a vesting schedule:
  • Years and percentages are clearly listed
  • No “to be determined” language

Control and Legal Process Checklist

• You have read at least a summary of the actual malpractice policy
• Consent-to-settle provisions are known:
  • Whether your consent is needed
  • Whether there is a hammer clause
• You know who selects your defense counsel (insurer vs in-house vs panel)

Practical Scenario Checklist

Before you sign, you should be able to answer:

• “If I leave after 3 years to join another group, how much could I owe for tail, realistically?”
• “If they fire me without cause because the hospital is restructuring, who pays tail?”
• “If I am disabled and cannot work, does anyone pay tail? Or is my family on the hook?”
• “If my next employer offers prior-acts coverage, is the current employer required to cooperate?”

If you cannot answer these cleanly, you are not ready to sign. That simple.

---

8. How to Run the Negotiation Step-by-Step

You do not need to turn into a contract lawyer. You do need a process.

Step 1: Get the Actual Language and Policy Info

• Ask for:
  • Full contract draft (obviously)
  • A summary of the malpractice policy, or at least:
    • Carrier name
    • Policy type
    • Limits
    • Defense inside/outside limits
• If they send you garbage like “we have great coverage, trust us,” push once more:
  “I need the specific limits and policy type for my records.”

Step 2: Mark Up the Malpractice Section

Do this in writing. Use track changes or comments.

• Highlight:
  • Any phrase putting tail on you.
  • Any missing information (limits, type, cost).
• Add comments like:
  • “Please clarify who pays for tail upon employer without-cause termination.”
  • “Request adding disability/death protection for tail.”

Step 3: Send a Focused, One-Page Email

Do not send a 3-page legal essay. One page. Focus on malpractice.

Example structure:

1. Thank them.
2. List 3–5 specific malpractice items you want clarified/changed.
3. Attach marked-up section.
4. Ask them to confer with legal and respond.

Step 4: Get a Physician-Side Lawyer to Review

Not optional if the dollars at stake are high.

• Find:
  • A healthcare attorney who regularly reviews physician contracts.
• Give them:
  • Contract
  • Any policy summaries
  • Your notes and concerns
• Ask them specifically:
  • “Where am I exposed on malpractice and tail, in practical terms? What dollar range are we talking about in worst-case scenarios?”

Step 5: Decide Your Red Lines

Before you go back for the final round, decide:

• “If they refuse X, I will still sign.”
• “If they refuse Y, I will walk.”

Common red lines I have seen physicians reasonably use:

• Employer refuses to pay tail even if they terminate you without cause.
• No protection for death/disability and high-risk specialty with large tail costs.
• Extremely low limits for a high-risk specialty.

Step 6: Final Conversation

Schedule a call with:

• Recruiter and/or
• HR rep and/or
• Medical director

On the call:

• Start with appreciation.
• Then walk through your 2–3 core malpractice points.
• Use the scripts above.
• Do not argue every comma. Focus on the big-dollar, big-risk issues.

Then stop talking. Let them respond, take notes, and tell them you will review any revised draft with your counsel.

---

Your Next Step Today

Do one concrete thing now:

Open your current contract (or the most recent draft) and scroll to the malpractice or “Professional Liability” section. Highlight every sentence that mentions:

• “claims-made”
• “tail”
• “extended reporting”
• “prior acts”
• “limits”
• “physician shall be responsible”

Then, in the margin or in a notebook, write one sentence for each: “What does this mean in dollars for me if I leave?”

If you cannot answer that question, that is your first fix. Once you understand your exposure, the scripts and checklists above will give you the language to change it.