Physician agrees to defend, indemnify and hold harmless [Hospital] and its affiliates from any and all damages, liability, and expense (including legal costs, other exspenses, and attorney’s fees) in any way related to physician’s provision of medical care, even if caused in whole or part by the negligence, gross negligence, or other fault of [Hospital] or its affiliates.

Think about the immense risk the physician is accepting by agreeing to this indemnification clause. Suppose that the hospital is named in a medical malpractice suit alleging injury to a patient the physician treated. Under this indemnification or “hold harmless” agreement, the physician agrees to pay for the costs of the hospital’s legal representation, depositions, and expert witnesses in addition to any judgment rendered against the hospital at trial. Suppose a hospital employee accesses patient information in violation of HIPAA laws during a physician’s shift. The hospital could allege that the physician wasn’t supervising staff properly and could demand that the physician personally reimburse the hospital for any government fines, lost hospital revenue, costs to develop new HIPAA policies, and even recruitment expenses to find a new employee, since the physician agreed to indemnify the hospital for all damages and expenses related to the physician’s care.

Or suppose that the hospital overbills Medicare on several of the physician’s patients and the hospital is then audited by CMS. No problem (for the hospital). The physician has agreed to pay for all costs of responding to the audit and any penalties that may be imposed upon the hospital. In fact, under the above indemnification clause, the hospital could even publish blatantly untrue information about a physician’s medical care in a newspaper.

Because the physician agreed to hold the hospital harmless for any liability relating to the physician’s provision of medical care – regardless of the hospital’s legal fault – a court would be left to decide whether the physician had any recourse against the hospital for its intentional misstatements. The examples could go on and on.

Don’t plan on your insurer covering the liability imposed by an indemnification agreement, either. Medical malpractice insurance covers a physician for professional negligence involving the physician’s medical care. Indemnification agreements are contractual in nature and are therefore not considered “medical care” covered under a typical medical malpractice insurance policy. Indemnification clauses therefore can provide a convenient means for a malpractice insurer to withhold policy coverage.

Some employers argue that indemnification is needed to protect their interests. This is patently untrue. There are multiple legal remedies available to employers who have been the victim of employee misconduct. First, every employer or hospital maintains liability insurance to protect (indemnify itself) against just such occurrences.