Mutual Indemnification Employment Agreement

Sullivan cites the example of a doctor who helps a security guard restrain a patient with a head injury. In this scenario, the physician may be required to reimburse all expenses to the hospital if the hospital is subsequently named as a defendant in an action brought by the patient. “Indemnification clauses are not appropriate in medical contracts,” Sullivan argues. “In addition to financial risk, contractual compensation can also void a doctor`s insurance coverage for treatment errors.” “In addition, contractual indemnification of a medical group`s agreement with a hospital can be unnecessarily complicated by contractual compensation,” Sullivan says. In order to avoid compensation during a dispute, multiple defendants may disclose undesirable facts about other defendants, increasing the liability of all defendants. For example, in attempting to impose a mutual compensation clause in the event of a New York treatment error, a defendant obstetrician asserted that the hospital should compensate him because a hospital visit did not do the trick.1 In exchange, the defendant hospital asserted that the resident should compensate him because the resident had deprived him of important information and provided poor quality care. Let`s look at the language of the mutual compensation clause presented above. One of the ways a compensation provision can provide protection is against the rights of an officer`s former employer. For example, Ed Executive leaves Company 1 to join Company 2. Ed Executive signs an employment contract with Company 2 that contains a indemnification clause stipulating that Company 2 Ed Executive releases and defends claims, damages, attorneys` fees and expenses related to Ed Executive`s obligations to Company 2. After Ed Executive starts working for Company 2, Company 1 sues him claiming that his new job in Company 2 is contrary to various post-reserved agreements contained in his employment contract with Company 1.

Since Company 2 has agreed to keep Ed Executive unharmed, Company 2 must pay all costs and expenses incurred by Ed Executive in defending Company 1`s claims. There are two basic types of indemnification agreements, says Robert J. Milligan, JD, an attorney at Milligan Lawless in Phoenix. One of them is the common law exemption, according to which the party, who is solely responsible for a claim, must compensate another party mentioned in a legal action. Decisions on executive exemption require factual, legal, economic and strategic analysis. For any questions arising from compensation in employment contracts, please contact Clouse Brown PLLC. Our lawyers are available to executives who need help negotiating compensation rules. We also advise employers and contractors on reducing the risks associated with compensation rules and the organisation of employment contracts for executives. . .

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