July 10, 2012



You mentioned in the last newsletter before the holiday that a hospital could contractually agree to protect you from an investigation. How does that work?

D. M


Yes, a hospital could contractually agree to protect you through indemnification. Indemnification is a legal concept whereby another party would step into your shoes to defend against and take responsibility for a contracted obligation, claim or loss. So, lets say you had a contract with a local hospital where you work as an employee, and that hospital performs all billing services for you, you render care to patients as an internist and you get paid a salary. The hospital may agree to indemnify you for all billing mistakes. With that provision in place, should a third party payor show up at your door accusing you or indicating you will be accused of upcoding, you may be in a situation where, depending on how the provision between you and the hospital is drafted, the hospital would come in and defend you in any investigation or subsequent lawsuit and take responsibility for the upcoding. Now, unless the particular provision is drafted specifically enough that there is no doubt who is responsible for what, which is not likely, litigation may also arise between you and the hospital to determine who is responsible for what. If your lawyer was paying attention when reviewing this provision or drafting it for you, he or she should have incorporated a provision where legal fees would also be covered by the losing party for the prevailing.

Indemnification is a very helpful legal protection to have in your contract. If you are not sure whether your contract includes it, or you want to discuss further, contact me directly (Jennifer@Kirschenbaumesq.com) to discuss.


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