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NHIF ordered to pay clinic Sh130m in contract dispute

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Meridian Medical Centre in Nyeri on June 6, 2012. FILE PHOTO | NMG

The National Hospital Insurance Fund (NHIF) has been ordered to pay Meridian Medical Centre Sh130 million it owed after terminating a contract for outpatient services nine years ago.

The contract between NHIF and the facility was to run for three years but it was terminated after six months in June 2012, after what the government termed as public outcry for non-availability of Meridian clinics countrywide.

“I find it hard to believe that the defendants entered into such a major contract without first establishing that the provider had the capacity to fulfil its obligations under the contract,” High Court judge Maureen Odero said.

The amount includes Sh12.4 million which was not paid to the firm for a six-month pilot project and a further Sh118 million, which was to be paid for the second quarter, after executing the contract. Justice Odero ruled that the contracts were duly executed by NHIF board which manages the fund and therefore the insurer cannot run away from it.

“As such I find that there do exist a valid and enforceable contracts between the Plaintiff (Meridian) and the Defendant (NHIF) and that the said contracts created binding obligations between the two parties,” the judge said.

The company tendered and won a contract for a pilot for the provision of out-patient medical care, in September 2008. The pilot project ran for six months from January to June 2010.

Under the agreement, the total amount payable was Sh77.6 million, with an advance payment of Sh12.9 million paid in equal monthly instalments for the six month period. The facility later won another contract for provision of out-patient services for civil servants and disciplined forces, to run for three years starting January 2012.