Indemnification In-Depth: The Surprisingly, Fascinating Elements of an Indemnification Provision
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1 Indemnification In-Depth: The Surprisingly, Fascinating Elements of an Indemnification Provision Molly G. Huggins, Partner, Huggins & Zuiker, LLP Erin Zuiker, Partner, Huggins & Zuiker, LLP October 14, 2016
2 Faculty Disclosure In compliance with ACCME Guidelines, I hereby declare: I do not have financial or other relationships with the manufacturer(s) of any commercial services(s) discussed in this educational activity. Molly G. Huggins, Partner, Huggins & Zuiker LLP Erin Zuiker, Partner, Huggins & Zuiker LLP Society for Clinical Research Sites, Inc. is accredited as a provider of continuing nursing education by the American Nurses Credentialing Center s Commission on Accreditation. Earn up to 14 CEUs, Nursing CEUs and CMEs (8 for Summit attendance & 3 per Master Workshop).
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4 Breaking Down the Provisions: What Sponsor shall indemnify, defend, and hold harmless Indemnify: Reimburse for an obligation already incurred or payment already made. Defend: Provide the defense against a claim Hold harmless: No assumption of liability, no requirement to pay first or assume the obligation
5 Breaking Down the Provisions: What SPONSOR EXAMPLE Sponsor shall indemnify the Site, including its employees, agents, and representatives ( Site s Indemnified Parties ) for all damages awarded pursuant to final judgment in actions filed against the Institution's Indemnified Parties
6 Breaking Down the Provisions: What SITE EXAMPLE Site will indemnify and hold harmless Sponsor and Sponsor s directors, officers, employees, agents, affiliates and contractors ( Sponsor Indemnitees ) from any and all liability, loss claims, expenses, costs (including attorneys' fees) or damage that the Sponsor Indemnitees may suffer as the result of third party claims, demands, costs, or judgments that arise or are alleged to arise from
7 Breaking Down the Provisions: Who Institution s officers, directors, employees, agents, and contractors ( Institution Indemnitees ) Depends on corporate structure of your organization. May also include here: trustees, affiliated entities, shareholders, members, residents, students.
8 Breaking Down the Provisions: Who SPONSOR EXAMPLE Sponsor hereby agrees to indemnify, and hold harmless the Institution and Investigator
9 Breaking Down the Provisions: Who SITE EXAMPLE Site agrees to indemnify, defend, and hold Sponsor and its directors, representatives, collaborators, affiliates (including other members of the ABC Group)) and licensees, and CRO harmless from any and all Damages as a result of a Claim to the extent such Damages arise from
10 Breaking Down the Provisions: from and against from and against any and all liabilities, damages, losses, claims, or expenses, including attorneys fees, (each a Loss )
11 Breaking Down the Provisions: Arising From 1. Personal injury, including death, resulting directly from [the Study Drug or Study Device], or the performance of any procedure required by the Protocol; 2. Sponsor s breach of this Agreement or failure to comply with applicable law;
12 Breaking Down the Provisions: Arising From 3. Negligence, omission, or willful misconduct by Sponsor; 4. Allegations that the performance of the Study in accordance with the Protocol infringes the intellectual property rights of any third party.
13 Breaking Down the Provisions: Arising From SPONSOR EXAMPLE damage they may suffer as the result of third party claims, demands, costs, or judgments against them that arise from the administration of the Study Drug in accordance with the Protocol or the procedures required under the Protocol, provided that Sponsor will not be obligated to indemnify and hold harmless the Site or the Investigator with respect to any liability, loss or damage that arises or is alleged to arise from (a) treatment received by Subject prior to enrolling in the Study; (b) natural progression of the underlying disease
14 Breaking Down the Provisions: Arising From SITE EXAMPLE The Institution will indemnify and hold Sponsor and Sponsor s directors, officers, employees, agents, affiliates and contractors ( Sponsor Indemnitees ) harmless from any and all liability, loss (including attorneys' fees) or damage that the Sponsor Indemnitees may suffer as the result of third party claims, demands, costs, or judgments that arise or are alleged to arise from
15 Breaking Down the Provisions: Arising From SITE EXAMPLE [from previous slide] that arise or are alleged to arise from, a) any treatment received by Subject from Institution prior to enrolling in the Study b)a failure to adhere strictly to the terms of the Protocol; c) negligence or willful misconduct on the part of the Site, its agents, officers, or employees or the Investigator or any Sub-Investigator; d) a breach of any Applicable Laws by the Site, its agents, officers or employees, or the Investigator or any Sub-Investigator.
16 How We Would Edit a) any treatment received by Subject from Institution prior to enrolling in the Study; (b) a failure by Site Indemnitees to adhere strictly to the terms of the Protocol;
17 How We Would Edit (c) negligence or willful misconduct in the performance of the study on the part of the Site, its agents, officers, or employees or the Investigator or any Sub-Investigator; (d) a breach of any Applicable Laws in the performance of the study by the Site, its agents, officers or employees, or the Investigator or any Sub- Investigator.
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19 Reasonable Exclusions Except to the extent such Claims arise from: A Site Indemnitee s failure to conduct the Study in accordance with the terms of this Agreement, the Protocol, and applicable law; The negligence, omission, or willful misconduct of a Site Indemnitee
20 Unreasonable Exclusions Notwithstanding the foregoing, Sponsor will not have any obligation under this Section X for any Section X Damages to the extent they arise out of the negligent or more culpable act or omission, or failure to perform the Study in accordance with acceptable medical practice, of any Institution Indemnitee.
21 Process Requirements What does the Sponsor reasonably need in order to defend the claim Notice (Telegram) All notices required to be in writing under this Agreement shall be delivered personally, by courier, sent by telegram, or mailed to the parties at the addresses set forth below, or such other addresses as the parties may designate in writing. Right to direct counsel Right to settle Cooperation Access to records
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23 Case Examples SUPPORT Study Duke University Cancer Case
24 SUPPORT Study Litigation Surfactant, Positive Pressure and Oxygenation Randomized Trial (SUPPORT) University of Alabama (lead site) 23 sites total
25 SUPPORT Study Litigation Initial Claims included: negligence of IRB members lack of informed consent breach of fiduciary duty products liability negligence of Masimo specifically, for failure to produce the oximeters in accordance with the FDA-approved design wrongful death
26 Duke University Cancer Case Premise of litigation: 3 clinical trials based upon faulty underlying science.
27 Duke University Cancer Case Negligence Breach of Fiduciary Duty Medical Malpractice Constructive Fraud Misrepresentation/Unjust Enrichment Unfair or Deceptive Trade Practices Intentional/Negligent Infliction of Emotional Distress Loss of Chance Battery Loss of Consortium (Spouse) Punitive Damages
28 What Are Other Potential Claims? Wrongful Death Product Liability Negligent hiring and oversight Common law invasion of privacy HIPAA Breach
29 Special Considerations if Contract is with CRO Need both Sponsor and CRO to indemnify This can be accomplished: Either directly in the contract,* or Through a letter of indemnification Warning: Danger here (and more legal terms)
30 Special Considerations if Contract is with CRO Privity of Contract: A contract cannot confer rights or impose obligations arising under it on any person or agent except the parties to it. This means that a contract between a Site and a CRO cannot bind Sponsor to obligations, unless: (1) CRO has express authority as an agent of Sponsor to bind Sponsor, or (2) Sponsor provides Site with a separate agreement binding sponsor to its obligations
31 Special Considerations if Contract is with CRO CRO EXAMPLE Any indemnification of the SITE by the SPONSOR shall be through an agreement between SITE and SPONSOR directly. CRO shall not provide indemnification of SITE or any of their servants or agents. CRO shall act as the administrator of the Indemnification letters. Requests for such letters should be made in writing to the address below, or faxed to xxx-xxx-xxxx.
32 Special Considerations if Contract is with CRO Letter of Indemnification: Elements 1. All the same elements we ve discussed today 2. Inclusion of coverage for CRO bad acts if CRO does not provide 3. Subject injury 4. Insurance 5. Agreement to comply with obligations assigned to it 6. Agreement to make funds available
33 Special Considerations if Contract is with CRO Indemnification from CRO should cover: CRO s breach of the agreement or failure to comply with applicable law, and CRO s negligence, omission, or willful misconduct. Can be provided directly by CRO, or can be provided by Sponsor
34 Cross Indemnification Make sure the two clauses are reciprocal Often Site is asked to indemnify for far more than Sponsor has agreed to Ex Sponsor agrees to indemnify Site for Sponsor s negligence, but drafted language such that Site agrees to indemnify Sponsor for Site s negligence and its alleged negligence
35 Cross Indemnification Sponsor agrees to indemnify Site if Sponsor is found guilty of willful misconduct In same contract, Site agrees to indemnify Sponsor if Site is found guilty of wrongful misconduct
36 Breaking Down the Provisions: What MUTUAL INDEMNIFICATION EXAMPLE Each Party agrees to assume liability for that portion of any and all actions, claims, lawsuits, liabilities, demands, causes of action, costs, expenses, and damages (including reasonable attorney s fees) arising from the Study (each, a Claim ) brought against the others that
37 Pitfalls Elsewhere in the Contract Note other provisions in the CTA that relate back to the indemnification provision: Limitation of Liability Conditions on Indemnification No Warranty Choice of Law/Jurisdiction
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39 QUESTIONS Molly Huggins, JD, MHA Erin Zuiker, JD, MPH
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