Legitimate concerns with individual liability, and the
sufficiency and enforceability of bylaw-based indemnification
agreements, are causing some officers and directors to seek separate, individual
agreements from their health system. Interest in such
agreements spiked after the issuance of the Yates Memorandum, and
will likely be exacerbated by concerns arising from recent health
industry FCA settlements that include penalties against board
officers and executives.
The organic corporate documents of most health systems provide
language committing to provide protection to officers and directors
who are targeted for claims by governmental and private parties
arising from their corporate conduct. In highly regulated industry
sectors and in connection with complex and controversial
transactions, particular concerns may arise as to whether the bylaw
provisions address all of the relevant issues, and provide for
sufficient protection should disputes arise over the scope
