In the emergency room setting, indemnification means that some third person, either the physician or the emergency room service company, contracts with the hospital to pay the hospital for any losses the hospital incurs due to the negligent actions of the emergency room physician. The two requisites for indemnification are (1) that the third party be legally obligated to pay the losses, and (2) that the third party have sufficient assets to cover the potential losses. The third party is usually required to carry insurance to cover any expected losses, although this is not essential if the third party has sufficient liquid (and nonexempt) assets. Indemnification is widely used in business contracts, but it is seldom found in medical services agreements.
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