Alabama court rules for hospital in bylaws case

The Alabama Supreme Court has ruled that there was nothing in a set of medical staff bylaws that would stop a hospital board from transferring ownership of a hospital-based oncology center to an office-based center.

Radiation Therapy Oncology -- a group of three physicians -- sued Providence Hospital in Mobile, Ala., arguing that the hospital's decision had breached medical staff bylaws.

The hospital's decision resulted in radiology equipment being moved out of the hospital and into office-based practices on property next to the hospital. So even though the radiation oncologists had privileges at Providence Hospital, they did not have the equipment to treat patients there.

Providence Hospital, which said it made the transfer because it thought the office-based center would provide for better patient care, disagreed that it had violated medical staff bylaws. In court documents, the hospital argued that the medical staff doesn't have the power to overrule a valid business decision by the hospital board.

The Alabama Supreme Court in January agreed with the hospital.

"Providence's corporate bylaws specifically authorize the board to make business decisions for the hospital, including transferring assets and reorganizing a department," the court wrote. "The medical staff bylaws specifically provide that the physicians who are part of the medical staff accept their privileges subject to the corporate bylaws and that the responsibilities of those physicians include 'abiding by Providence Hospital policies and procedures.' "

The Medical Assn. of the State of Alabama was disappointed in the decision but said it would not result in dramatic changes for other medical staffs in the immediate future.

The decision revolved around a narrow set of circumstances, and the court made its decision based on a motion for summary judgment rather than on a full trial, said Wendell Morgan, MASA general counsel. "We don't think at this point it will have broader impact on hospital medical staffs."

The Litigation Center of the AMA-State Medical Societies and MASA filed a friend-of-the-court brief supporting physicians who challenged the hospital board's decision.

The Alabama Hospital Assn.'s general counsel, Gregg Everett, said the decision made it clear that the hospital board could make business decisions that are best for serving the community. The Alabama Hospital Assn. and American Hospital Assn. filed a friend-of-the-court brief on behalf of Providence Hospital.

"The board is the ultimate decision point," Everett said.