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Miscellaneous Liability IssuesHold Harmless and Indemnity AgreementsClient's Employee Civil Rights ClaimsAffiliation Agreements for Clinical Education (Field Education) ProgramsVendor Certificates of InsuranceClient's Certificates of InsuranceUKGC Claims BoardSubject: Hold Harmless and Indemnity Agreements
To set forth guidelines to be used in the evaluation of contractual language and, specifically, hold harmless agreements to determine acceptability with respect to the Client's liability exposure. With the increased activity in the legal liability arena, the Client will be experienced an increasing number of hold harmless clauses in its contractual agreements. Originally, it was the goal of the Attorney General and the Client that no hold harmless agreements be used against the Client. Because this is an unrealistic goal for a functioning entity, the requirements have been revised. Client must strives to avoid contracts where exculpatory and indemnity agreements exist, which transfer all responsibility to the Client regardless of blame. In addition, the Client must to seek to limit its own liability exposure in certain situations where outside entities utilize the facilities and functions of the Client's business. This is achieved by requiring participants to sign hold harmless agreements, which have been developed by the Client. Contractual Transfer Agreement: An agreement under which one party shifts to another the responsibility for a loss. Three types which exist are (1) hold harmless agreements, (2) exculpatory agreements, and (3) indemnity agreements. Hold Harmless Agreement: An agreement whereby the first party (the indemnitor) agrees to hold a second party (the indemnitee) harmless from tort liability arising out of the indemnitor's negligent act or omission. Exculpatory Agreement: An arrangement whereby one party agrees to absolve a second party from any blame even when damage or injury is caused by negligence of the second party. Indemnity Agreement: Although similar to a hold harmless agreement, an indemnity agreement is an arrangement whereby one party agrees to pay the other party for any damages regardless of who is at fault. 1. When Client, his division, etc. is presented with a contract from an outside party, whether it be for the use of facilities or equipment, for participation in some event, or for any other purpose, the contract should be sent to the risk management office for evaluation. The risk manager should: 1. Read through the contract to determine if contractual transfers exist in any form. 2. Evaluate the contractual transfer agreement to determine if it is of the exculpatory, hold harmless, or indemnity type. Then determine if the intent of the clause conforms to the acceptable language. Note: the UKGC will not agree to any Client's contractual transfer which is exculpatory or indemnity in nature but will take responsibility for its own negligence through a hold harmless agreement. In consideration of (some activity or privilege) , the Client - (party I) does hereby agree to hold harmless (party II) from any and all liability, loss, damages, costs or expenses which arise out of the negligent act or omission of an employee, officer, or agent of the Client while acting in the scope of their employment and in the course of their involvement with the above mentioned program. 3. If the contract does not meet the requirements of the UKGC demands, then negotiation for inclusion of our standard language should ensue. 4. If difficulties persist in developing acceptable language, Client's and UKGC Risk Management should be consulted for suggestions or alternatives. 5. Any time that a contract is used that contains contractual language which is not within the scope of UKGC Demands, then contractual liability insurance must be purchased from third party to cover the exposure (see Section 3, B of this document). This coverage is administered by Client's Risk Management. 2. When Client or his division desires to use a contract to limit its own liability when outside parties are using Client's facilities or participating in Client's functions, the department should consult with the risk manager in developing acceptable language. The risk manager should: 1. Consider the circumstance to determine what type of contractual transfer is desired based on the value of the particular program or function to the Client and to the outside party: i.e., if a group is using the Client's facility for a function which is outside the scope of the Client's mission and is of no benefit to the Client, then the shifting of the maximum possible amount liability is more desirable. 2. Develop language consistent with the circumstances and in accordance with the following: The undersigned does hereby agree to hold harmless and indemnify the Client, the Board of Director of Client, and the Client as Lagal entity- , their officers, agents and employees, from any and all liability, loss, damages, costs, or expenses which are sustained, incurred, or required arising out of the actions of the undersigned in the course of (description of program). 3. If the proposed language is unacceptable to the outside party then negotiation will follow, keeping in mind the benefit and potential loss that the program presents for the Client. 4. If an agreement is not reached, the Client's risk manager will consult with the UKGC Office of Risk Management (UKGCORM) in devising more acceptable language. 3. The Client's risk manager should maintain a file of all contractual agreements for a period of ten years to ensure that control of the contractual exposure is met. Although it is impractical to expect the risk manager to review all contracts on Client's office, a good flow of communication between departments will result in increased awareness by the risk manager and department heads. 4.Finally, it is the goal of Client's Risk Management that training in contractual review be addressed as an ongoing program in the course of daily interactions and specifically at the annual risk management conferences. 5.Key Points to Remember: 1. Because the Client's Insurance System is self-funded for liability arising out of the acts of its officers, employees, and agents, it is our goal to minimize our assumption of liability risk. This is achieved by eliminating exculpatory and indemnity agreements in all contracts that we sign, and by agreeing on hold harmless language only for liability arising out of the negligent acts of Client's employees, officers, and agents in the course of their duties. 2. The Client can attempt to shift the responsibility for injury and damage to others by proposing contracts which use exculpatory, indemnity, and hold harmless language that makes the other party responsible. Court interpretation of the contract of course, may differ from our intent. Subject: Client's Employee Civil Rights Claims
To clarify the proper claims handling procedures for those claims which fall within the classification of civil rights cases. Civil rights claims filed against the Client are unique. Quite often these types of claims originate as personnel actions and escalate into civil rights claims. This unique development pattern often leads to attempted settlement of the claim outside the normal claims settlement process. This, in turn, often results in a failure to consult those people with the expertise and the authority to settle these types of claims. The Attorney General's staff, in concurrence with the Department of Administration of Client, has exclusive settlement authority for civil rights cases. Client's Risk Management funds may be used to cover plaintiff's attorneys fees and damages in such a claim. The Client does not have the authority to independently bind any Client's Risk Management funds. The Attorney General's staff must be involved in the settlement process. 1. Any time a civil rights claim or incident arises which could result in the use of risk management funds, notify Assistant Attorney General, and Bureau of UKGC Risk Management. 2. Notification must occur before any settlement negotiations are initiated with the plaintiff. 3. The Client may eventually be given authority to handle negotiations, but funds will not be payable from UKGC Risk Management unless prior approval has been given by the Department of Justice and the Department of Administration for the settlement. Subject: Affiliation Agreements for Clinical Education (Field Education) Programs
The purpose of this paper is to set forth procedures for establishing a contractual relationship between the Client and participating affiliates with respect to the responsibilities and liabilities of both parties. Many Clients require or encourage Staff to have clinical or field training as a part of the necessary to graduate professional level. Such training experience is usually attained with the cooperation of an outside agency, which agrees to participate in a cooperative effort with the particular Client. It is in the interest of both parties that a formal agreement be in place prior to the acceptance of Staff into such programs. From a risk management perspective it is especially beneficial for the Client's department to negotiate a contractual agreement which clearly delineates the level of liability for the parties involved in a way that is consistent with our risk management objectives. 1. Master Agreement These documents contain the primary terms to which the Board of Directors of the Client on behalf of the Client and the cooperating agency (affiliate) have agreed. The language in these documents carries the approvals of the Client's Attorney General's Office, UKGC and Client's Risk Management. (See Master Agreement Form.) 2. Negotiated Agreements Negotiated Agreements are those presented by the affiliate which may contain language in conflict with relevant UKGC Regulation or which are beyond our capability to comply. In such cases, the risk manager will attempt to negotiate changes in the language to make it consistent with the approved affiliation agreement. 3. Program Memoranda Program Memoranda are Client's issues and details of the program which exclude any reference to liability, indemnification, or insurance protection. They are statements of agreement between the program contact of the affiliate and the Client involved. They are limited to the time frame of a single program and are incorporated into the Affiliation Agreement by reference if not in any way inconsistent with it. 4. Master List The Master List is a listing of all affiliates with which an Affiliation Agreement is currently in effect. The list should be maintained and updated by the Client's risk manager with copies sent to UKGC Risk Management and to the President of Client. 1. When a Client wants to assign Staff to a particular outside agency (office) for clinical or field education experience, the Client's program coordinator shall: 1. If listed, proceed with development of the Program Memorandum Agreement. (Only one Affiliation Agreement is needed for all Staff) 2. If not listed, send a written request to initiate an Affiliation Agreement to the Client's risk management department. The following should be included: 2. The risk manager shall do the following on receipt of a request to initiate an Affiliation Agreement: 1. Check to determine if the requested Affiliation has been established since the last printing of the Master List. If it has, advise the requestor. If it has not, initiate a new agreement. 2. Initiate a Master Agreement document, have it pre-signed by the proper authority for the Client's Board of Directors and send two copies with the appropriate cover letter to the affiliate's contact person. 3. Advise the requestor when a fully executed copy of the Affiliation Agreement is received and enter same into Master List database. The requestor may then proceed with the Program Memorandum. 3. Should the prospective affiliate reject the Affiliation Agreement as written, or submit a contract of its own, the risk manager shall do the following: 1. Review the contract to determine that there is no conflict with UKGC Regulation or Client's interests. Note: Conflict most commonly arises out of the hold harmless and indemnification language or the insurance requirements. 1. If no conflict is found, request signature authority and advise Client's requestor. 2. If conflict is found, attempt direct negotiations with prospective affiliate to modify language to be acceptable. 3. If negotiations come to an impasse or if questions arise at any point in this process, solicit opinion of Client's legal affairs or the Client's Office of Risk Management (ORM). Should negotiations fail, advise Client's requestor to cancel plans for that agency. Subject: Vendor Certificates of Insurance
When a Client's company (institution) contracts with a vendor for materials, equipment, supplies, or services, that vendor's activities and the goods provided create an inherent liability risk to the institution. The goal of this program is to protect the Client's institution from loss or exposure to loss resulting from any negligence on the part of an under/uninsured vendor who furnishes services to the Client's institution. By obtaining an appropriate certificate of insurance and maintaining a current certificate of insurance on file, for a high risk procurement, the Client's institution has evidence that insurance has been obtained which transfers risks associated with the business relationship with the vendor from the institution to the insurer. This document reinforces and adds to policy as established by UKGC. Due to the uniqueness of some services provided to the Client, Client's Risk Management has added six additional high risk services. These high risk service vendors are required to meet the certificate requirements in this document for the additional service vendors. Certificate of Insurance: A document issued by an insurer which evidences that an insurance policy exists and provides information such as insurer, insurance agency, insured, types of insurance, policy numbers, effective dates, limits, certificate holder, cancellation procedure, special Provisions, e.g., additional insured, and the name of the representative authorizing the policy. High Risk Services Procurement: Means a contract or procurement that significantly increases the possibility of loss or exposure to loss to the Client from a third party. Additional Insured: Affords the Board of Directors (Regents) coverage under the vendor's policy including defense should the Board be sued based on the actions of the vendor. Minimum Limits: Minimum specified limits must be received unless prior approval is received by the Purchasing Director. These limits may be reached by combining a commercial general liability policy limit with an umbrella policy limit. For example, a vendor may have a general/automobile liability policy with a $500,000 limit and a $1,000,000 umbrella. This total meets a $1,000,000 general/automobile/umbrella requirement. The Standard Limits are the minimum acceptable for any vendor, but there are specific requirements for vendors of high risk services that supersede the Standard Limits. Please refer to this document before specifying vendor coverage requirements. If commodity purchase requires installation of heavy equipment, contact Risk Management. The following are criteria and a list of high risk services. CRITERIA OF HIGH RISK SERVICES: HIGH RISK SERVICES: Air Charter * Denotes High Risk Service Vendors requirement unique to the Client HIGH RISK services, other than the above, are to be evaluated on a case-by-case basis. The following pages delineate the requirements for each class of vendor and provide a list of vendor types for each class. Judgment must be used by the contract manager, when dealing with vendors that are not specified on these pages. Attention must be paid to the various outside contractors who service the institutions with respect to their insurance protection. Failure to monitor this exposure by the contract manager may result in substantial losses for the institution. Certificates are required for all service vendors, however, high risk service vendors require receipt of the certificate and continued renewal of the certificate while the contract exists. Internal audit will periodically sample the service contracts to ensure compliance. If a certificate of insurance is not received prior to issuance of the Purchase Order or is incomplete, notice should be given to the vendor indicating the certificate must be received by the contract administrator, via certified mail within 15 days or the contract will be canceled. See sample letter shown in Appendix 1. Receipt of one certificate from the vendor is all that is necessary for that one year, if the institution has multiple contracts with the vendor. However, the vendor must send a renewal each year or cancellation should take place. Appendix 2 is a sample letter for noncompliance after the 15 day period. Specific procedures for the evaluation of vendor certificates of insurance exist at each institution and at the Management level. Client's Risk Management considers the Additional Insured Provision an important condition to be stated on the certificate, especially with regards to our high risk service vendors. The following requirements may be used by the institutions as minimal guidelines and additional guidance may be obtained from Client's Risk Management as necessary. Categories for high risk services require a certificate of insurance be in the contract administrator's possession before the purchase order is issued. Standard Limits (Non High Risk Service Vendors)
In addition to these coverages the contract must contain all of the clauses listed under the Special Terms and Conditions for the Client.Limits For High Risk Service Vendors Air Charter
In addition to these coverages the contract must contain all of the clauses listed under the Special Terms and Conditions for the Client.Ambulance Service
In addition to these coverages the contract must contain all of the clauses listed under the Special Terms and Conditions for the Client.Asbestos Abatement
In addition to these coverages the contract must contain all of the clauses listed under the Special Terms and Conditions for the Client.Building Remodeling and Construction
In addition to these coverages the contract must contain all of the clauses listed under the Special Terms and Conditions for the Client.Custodial Services
In addition to these coverages the contract must contain all of the clauses listed under the Special Terms and Conditions for the Client.Day Care
In addition to these coverages the contract must contain all of the clauses listed under the Special Terms and Conditions for the Client.Elevator Maintenance - This applies to all passenger and freight elevators.
In addition to these coverages the contract must contain all of the clauses listed under the Special Terms and Conditions for the Client.Manual Food Service - All contracts
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