52.237-7 Indemnification and Medical Liability Insurance
Source: FAR 52.237-7 on acquisition.gov
Contractors providing healthcare services under nonpersonal services contracts must indemnify the government and maintain specified medical liability insurance, including for all subcontractors, with strict documentation and notification requirements.
Overview
FAR 52.237-7 establishes requirements for indemnification and medical liability insurance in nonpersonal services contracts involving healthcare services. The clause clarifies that the contractor acts as an independent entity, not as a government employee, and is solely responsible for professional acts or omissions. Contractors must indemnify the government against liability and maintain medical liability insurance at specified levels. The regulation details the types of acceptable insurance (occurrence or claims-made), mandates evidence of insurance before work begins, and requires extended reporting endorsements for claims-made policies. Contractors must also ensure that subcontractors providing healthcare services meet the same insurance requirements and provide timely evidence to the Contracting Officer. The clause includes provisions for notification of policy changes or cancellations and withholds final payment until all insurance obligations are met.
Key Rules
- Independent Contractor Status and Indemnification
- Contractors are independent and must indemnify the government for liability arising from their acts or omissions.
- Mandatory Medical Liability Insurance
- Contractors must maintain liability insurance at levels specified by the Contracting Officer, covering each specialty involved.
- Proof of Insurability and Coverage
- Contractors must provide evidence of insurance before contract award and commencement of services, including for all healthcare providers and subcontractors.
- Claims-Made Policy Requirements
- If using claims-made insurance, an extended reporting endorsement (tail coverage) for at least 3 years post-contract is required.
- Notification of Policy Changes
- Insurance policies must include a 30-day advance notice to the Contracting Officer for cancellations or material changes.
- Subcontractor Flowdown
- Contractors must flow down these requirements to all healthcare service subcontracts and provide evidence of subcontractor insurance.
Responsibilities
- Contracting Officers: Specify insurance amounts, verify evidence of insurance, withhold final payment if requirements are unmet, and ensure flowdown to subcontractors.
- Contractors: Maintain required insurance, provide timely evidence, indemnify the government, ensure subcontractor compliance, and notify of policy changes.
- Agencies: Oversee compliance and enforce insurance and indemnification provisions.
Practical Implications
- This clause protects the government from liability related to contractor-provided healthcare services.
- Contractors must proactively manage insurance documentation and ensure all providers and subcontractors are covered.
- Delays in providing evidence or endorsements can result in withheld payments or contract issues.
As prescribed in 37.403 , insert the following clause:
Indemnification and Medical Liability Insurance (Jan 1997)
(a) It is expressly agreed and understood that this is a nonpersonal services contract, as defined in Federal Acquisition Regulation (FAR) 37.101, under which the professional services rendered by the Contractor are rendered in its capacity as an independent contractor. The Government may evaluate the quality of professional and administrative services provided, but retains no control over professional aspects of the services rendered, including by example, the Contractor’s professional medical judgment, diagnosis, or specific medical treatments. The Contractor shall be solely liable for and expressly agrees to indemnify the Government with respect to any liability producing acts or omissions by it or by its employees or agents. The Contractor shall maintain during the term of this contract liability insurance issued by a responsible insurance carrier of not less than the following amount(s) per specialty per occurrence: *_______________.
(b) An apparently successful offeror, upon request by the Contracting Officer, shall furnish prior to contract award evidence of its insurability concerning the medical liability insurance required by paragraph (a) of this clause.
(c) Liability insurance may be on either an occurrences basis or on a claims-made basis. If the policy is on a claims-made basis, an extended reporting endorsement (tail) for a period of not less than 3 years after the end of the contract term must also be provided.
(d) Evidence of insurance documenting the required coverage for each health care provider who will perform under this contract shall be provided to the Contracting Officer prior to the commencement of services under this contract. If the insurance is on a claims-made basis and evidence of an extended reporting endorsement is not provided prior to the commencement of services, evidence of such endorsement shall be provided to the Contracting Officer prior to the expiration of this contract. Final payment under this contract shall be withheld until evidence of the extended reporting endorsement is provided to the Contracting Officer.
(e) The policies evidencing required insurance shall also contain an endorsement to the effect that any cancellation or material change adversely affecting the Government’s interest shall not be effective until 30 days after the insurer or the Contractor gives written notice to the Contracting Officer. If, during the performance period of the contract the Contractor changes insurance providers, the Contractor must provide evidence that the Government will be indemnified to the limits specified in paragraph (a) of this clause, for the entire period of the contract, either under the new policy, or a combination of old and new policies.
(f) The Contractor shall insert the substance of this clause, including this paragraph (f), in all subcontracts under this contract for health care services and shall require such subcontractors to provide evidence of and maintain insurance in accordance with paragraph (a) of this clause. At least 5 days before the commencement of work by any subcontractor, the Contractor shall furnish to the Contracting Officer evidence of such insurance.
* Contracting Officer insert the dollar value(s) of standard coverage(s) prevailing within the local community as to the specific medical specialty, or specialties, concerned, or such higher amount as the Contracting Officer deems necessary to protect the Government's interests.
(End of clause)