Structuring Indemnification Provisions in Business Associate Agreements: Allocating Risk in Healthcare Contracting

Description

Many covered entities and business associates consider indemnification critical. Business associates are directly liable under HIPAA, and covered entities view indemnification provisions as additional protection. Business associates, as well as covered entities, use them to allocate or mitigate their risk.

Not all BAAs contain indemnification provisions and, when included, these clauses vary and can generate heavy negotiation. Often, however, parties (particularly business associates) enter into BAAs without recognizing the significance and potential variations of indemnification terms.

Before deciding whether to include or exclude indemnification provisions and their scope, healthcare counsel should weigh various considerations. For example, will such a provision adversely impact insurance coverage, limit liability, or unfairly shift costs? When designing indemnification provisions, counsel should consider the consequences of state law, whether a court will interpret a unilateral provision as reciprocal, how the provisions interact with the terms of the underlying contract, and whether the provisions incorporate appropriate controls if breach notification issues arise.

Listen as our authoritative panel of healthcare attorneys discusses whether and when to include indemnification provisions in BAAs, variations in the scope of indemnification, and the factors counsel should consider when making those determinations. The panel will offer alternatives and best practices for negotiating and structuring these provisions.