Indemnification and Medical Liability Insurance
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.