Do construction contracts require compliance with applicable healthcare laws?

Yes. Here’s why.

By Brian A. Veeneman

Your organization is building a new healthcare facility. There are so many things to think about when planning for the project—funding, project delivery methods, facility space use and design, how healthcare reform affects the future use of the facility, hiring numerous consultants, hiring the right contractor—the list goes on and on. Assembling a project team that is knowledgeable in healthcare facility development is an essential element to a successful project.

However, not only is it important for your architect and contractor to be experienced in healthcare construction, but recognition of specific healthcare law requirements are a necessity in today’s complex regulatory environment.

The contracts that govern these relationships should specifically address healthcare law compliance requirements. As we all know, healthcare regulations are voluminous and always changing. The last thing an organization wants is for some aspect of their construction project to violate healthcare laws.

What to Include?
In addition to the many important contract provisions relating to construction itself what should

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healthcare entities consider including in these contracts related to healthcare laws? As a healthcare provider, you want to ensure regulatory compliance with the following issues:

Access to Books and Records
According to Section 952 of the Omnibus Reconciliation Act of 1980 and associated regulations, healthcare entities should ensure the Comptroller General, the Secretary of the Department of Health and Human Services, and authorized representatives are provided access to books and records related to the project if requested accordingly. This access to books and records should be confirmed with the contractor via the contract.

Anti-Kickback Law
The contracts should confirm the parties’ intent to fully comply with the provisions of 42 U.S.C. 1320a-7b – the “anti-kickback statute” and require the parties to comply with any reporting and disclosure requirements that may be applicable.

Exclusion from Federal Healthcare Programs
Healthcare organizations should ensure their contract includes provisions confirming contractors are not excluded from federal healthcare programs and that if any future exclusion occurs that it is disclosed and remedied appropriately.

Compliance with Privacy Laws and Health Information (HIPAA)
Projects in the healthcare arena may require contractors to be near patients and/or protected private patient information.

This is especially true if the project is a renovation project or a new project that connects with an existing building that houses ongoing healthcare services.

Not only should it be ensured that any contractor s on a project a re appropriately compliant with HIPAA— i.e. are they a business associate” under the regulations—procedures should be outlined to prevent incidental contact with private patient information and the appropriate steps regarding disclosure should incidental contact occur.

Patient Safety / Life Safety Codes
Does your contract require appropriate steps be taken to ensure the safety of patients that may be nearby during a project? Is the design and construction compliant with healthcare specific codes? Is your medical equipment housed appropriately to protect patients, staff and visitors from potential harmful materials or waves? These types of compliance issues should be outlined in your contract.

Certificate of Need
The introduction of new healthcare facilities in certain states is governed by Certificate of Need (CON) regulations. Is your project subject to CON requirements? These requirements may require additional work by the contractor to ensure compliance and should be outlined accordingly in your contract.

Americans with Disabilities Act (ADA) Compliance
Of course all new projects must be designed in compliance with the ADA. However, if you are engaging in a renovation project or a project that connects to an existing building that houses ongoing healthcare services, there may be a need to make temporary ADA accommodations for the duration of the project for patients and other visitors to the facility.

Wavier of Consequential Damages
Oftentimes, parties agree to waive consequential damages incurred by either party. Any potential waiver should be carefully considered with the understanding that the healthcare entity may be unable to recover any damages incurred as a result of violations of applicable healthcare laws by a contractor.

By no means is this a comprehensive list of healthcare related contract provisions—all projects have specific unique attributes and require specific contract provisions—and there are many other very important non-healthcare provisions in a construction contract.

However, if you are considering a healthcare construction project, take the time to make sure your project team and your project will be compliant with all applicable healthcare laws. By doing so, you’ll protect your organization, prevent disputes and help ensure your project’s success.

Brian Veeneman is an attorney with Hall Render Killian Heath & Lyman.