Bulletproof bylaws: Maintaining the right to protect doctors -- and patients

Physician-hospital conflicts over quality of care continue to push medical staff bylaw issues into the courts. Here's how to keep them out.

By Amy Lynn Sorrel — Posted Feb. 11, 2008

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Before joining the medical staff at Lawnwood Regional Medical Center in Fort Pierce, Fla., pathologist Anil G. Desai, MD, spent two years sitting in on meetings to learn what goes into the bylaws that he says ultimately safeguard patient care.

"The capability, the knowledge and the expertise is with the physicians," said Dr. Desai, who serves on Lawnwood's medical executive committee and has been a medical staff member since 2001. The bylaws "are the only way you can take care of patient care independently. Who will be the advocate of the patient if the medical staff is not there?"

Little did Dr. Desai know he would get swept into a court battle after Lawnwood in 2003 succeeded in getting passed a county law that doctors say eviscerated their rights. The statute allowed hospital board policy to supersede medical staff bylaws in conflicts over privileging, contracting and quality issues. Last June, a Florida appeals court found the law unconstitutional, but the case wages on before the state Supreme Court.

Medical and legal experts point to such fights as an indication of rising tensions between physicians and hospitals. Revised standards released by the Joint Commission in July 2007 spell out what belongs in medical staff bylaws in order to promote collaboration.

But the power struggle continues to push staff bylaws into the courts.

In the last two years, courts in Arkansas, Georgia and Illinois have addressed such disputes. As the feuds rise to the level of litigation, they often boil down to a difference of opinion over who's in control of patient care.

Doctors say they must be able to operate free from the hospital board's influence to effectively evaluate clinical care. That's done through a mutual respect of staff bylaws, said Stephen T. House, MD, chair of the American Medical Association Organized Medical Staff Section.

"The protection of the medical staff's right to self-govern and the rights of individual physicians to due process are essential to ensure the very best patient care," he said. The AMA, through the OMSS and its State Medical Societies Litigation Center, along with individual state societies, has joined recent court cases with legal and financial resources to support staffs' rights.

But hospitals say there is now more overlap between their role and that of the medical staff. With issues such as negligent credentialing going to court, hospitals find themselves responsible not only for financial considerations, but also for quality and safety concerns, some experts say.

Hospitals must rely on medical staff for clinical input, said Dan Mulholland, a hospital attorney and partner at Pittsburgh-based Horty Springer & Mattern. But medical staffs are "part and parcel" of the hospital and its quality assurance mission, he said.

Though a hospital doesn't have direct authority over medical staff bylaws, "[it] is always going to be responsible for what's done in its name and has to have ultimate authority," Mulholland said.

Power struggle

These divergent views are playing out in court on several fronts. The courts have answered with varying opinions, often hinging on the question of whether staff bylaws constitute a contract between the medical staff and hospital board.

Courts in at least 20 states have recognized staff bylaws as a formal contract or an otherwise enforceable document. That's important in solidifying the medical staff's rights and responsibilities, said Elizabeth A. Snelson, a St. Paul, Minn.-based attorney who counsels medical staffs.

"The bottom line is they are a mutually agreed-upon document," she said. Both the medical staff and hospital governing body negotiate bylaws, and Joint Commission standards prohibit either party from unilaterally amending them or passing bylaws or hospital policies that conflict.

Experts say they are seeing more litigation in states that consider staff bylaws binding. For example, an Illinois appeals court in May 2006 held that such bylaws are contractually binding, but only with respect to credentialing decisions. The court left it to the hospital to establish medical liability insurance limits that were in dispute.

Thomas J. Pliura, MD, an emergency physician and lawyer who represented the Danville, Ill., medical staff in the case, said courts are taking a more hands-on approach to medical staff issues, whereas judges historically have deferred to hospitals. Although Dr. Pliura disagrees with the judges' view, "the courts are keying in to the fact that [medical staffs] do have rights and they are going to exercise them."

But some hospitals consider themselves on uneven ground in the negotiations.

"A contract is usually between those who have equal bargaining power, and hospitals and medical staffs are trapped with each other and don't have that," said Los Angeles-based health lawyer Mark A. Kadzielski of Fulbright & Jaworski LLP.

In addition, medical staffs are equally bound by hospital policies, Mulholland said.

As an integral part of the hospital, staff bylaws "provide a framework for doctors to assist the hospital on things like peer review and quality assurance," he said. "But they are more like internal rules and regulations for hospitals to follow when doctors sign on," though that doesn't mean hospitals can reject medical staff recommendations without valid reason.

But if both sides reach an impasse, hospitals have a right to act, said Michael R. Callahan, a partner with Chicago-based Katten Muchin Rosenman LLP, who works primarily with hospitals. If bylaws are silent on a particular issue, that also raises questions for the court.

"Sometimes public policy considerations will take precedence," Callahan said. "If a hospital can say, 'We met with the medical executive committee and tried to work things out, and we made a good faith effort [to follow the bylaws], but at the end of the day we have to do what we have to do and here's why,' that's not the end of it, but at least a judge will understand."

The AMA's Dr. House said medical staffs must fulfill their duties under the bylaws or face losing authority. "Doctors are very busy. But many administrators get so frustrated when medical staffs don't step up to the table and do what they are supposed to be doing, and hospitals have to take control of it."

Observers say mounting financial pressures and an ever-rising bar for quality care continue to squeeze doctors and hospitals. What draws the ire of medical staffs, however, is hospital boards trying to meet those burdens without regard for bylaws.

Finding solutions

"Economic credentialing" policies -- hospitals granting privileges based on financial concerns rather than doctors' qualifications -- have come under increasing fire and are at the heart of a closely watched dispute in Little Rock, Ark.

Baptist Health in 2003 adopted a policy precluding staff doctors with interests in competing hospitals from having privileges. Six cardiologists affected by the policy -- instituted without approval from the medical staff -- sued. The Arkansas Supreme Court in 2006 stopped Baptist Health from ending their privileges while the case headed to trial. The AMA Litigation Center and the Arkansas Medical Society joined the case as plaintiffs. The trial is set for March.

"This is strictly a money issue" without regard for appropriate credentialing processes or the effect on patient care, Snelson said. She acknowledged that hospitals are in a tight financial spot these days. "But is this the way we should fix it, by completely blotting out competition?"

Hospitals defend their right to exclude competing physicians, because they bear responsibility for meeting business and community needs. And that's a legitimate concern, Mulholland said.

He pointed to a 2001 South Dakota Supreme Court opinion upholding the decision of Avera St. Luke's Hospital in Aberdeen, S.D., to close its medical staff to orthopedic surgeons after a group of doctors built a competing surgery center. No doctors in the group lost privileges, and the court agreed the hospital's move was in patients' best interests.

Callahan said hospitals stand on firmer legal ground if they address conflict-of-interest policies up front rather than after privileges are granted. More often than not, hospitals are working with medical staffs to develop reasonable policies that apply only to medical staff leadership who serve on the hospital board.

With more hospitals employing physicians on staff, exclusive contracts with specialty groups also have posed problems.

Hospitals view such contracts as a way to provide more efficient patient care, and courts have generally upheld that right, experts say. While that can be a good thing, doctors worry they are being used for the wrong reason -- to control medical staff independence, Snelson said.

A Georgia appeals court seemed to agree in 2006 when it found that a hospital that entered into an exclusive agreement with a cardiology group unfairly restricted existing staff members' privileges without following the bylaws.

So how can medical staffs build good bylaws that preserve self-governance?

The AMA at its Interim Meeting last November adopted 12 principles aimed at strengthening physician-hospital relationships and staff bylaws.

In addition to open communication and a cooperative spirit, Snelson said getting legal counsel independent from the hospital is key to making sure doctors' views are fairly represented.

Medical staffs also should pay attention to ongoing revisions to Joint Commission standards. While recent changes -- set to take effect in January 2009 -- affirm self-governance elements to be included in staff bylaws, they also allow for the removal of certain procedural details that could undermine medical staff authority, Dr. House said.

Dr. Desai urges physicians to remain vigilant. He summarizes Joint Commission and AMA principles and staff bylaws, then places the summaries in the doctors' lounge.

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In the courts

A few key cases that address the status of hospital medical staff bylaws and self-governance:

Florida Supreme Court

Case: Lawnwood Regional Medical Center Inc. v. Randall Seeger, MD

Result: Florida's 1st District Court of Appeal in March 2006 ruled unconstitutional a county law allowing one hospital's bylaws to override medical staff bylaws. Judges said the law violated the contractual nature of the bylaws and created a special privilege for one hospital. The decision is being appealed to the Florida Supreme Court.

Pulaski County Circuit Court, Arkansas

Case: Bruce E. Murphy, MD, et al. v. Baptist Health Medical Center

Result: Baptist adopted policy that precludes staff doctors with ownership interests in competing hospitals from having privileges. Six staff cardiologists who own a competing cardiology center sued Baptist to block the policy. The Arkansas Supreme Court in 2006 upheld an injunction preventing Baptist from terminating the cardiologists' privileges while the case is pending. The AMA and the Arkansas Medical Society joined the lawsuit as plaintiffs. Trial is expected to begin in March.

Court of Appeals of Georgia, First Division, July 2006

Case: Satilla Health Services Inc. v. Bell et al.; Satilla Health Services Inc. v. Pilcher et al.

Result: A unanimous court said Satilla can't skirt staff bylaws to limit staff physicians' privileges in favor of an exclusive contract with other doctors for certain services.

Appellate Court of Illinois, Fourth District, May 2006

Case: Joseph Fabrizio, MD, v. Provena United Samaritans Medical Center

Result: Judges found staff bylaws to be contractually binding, but only with respect to granting or denying privileges. The court said the hospital did not violate bylaws when it set higher medical liability insurance limits without formal approval by the medical staff.

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Coming to the table

The American Medical Association at its Interim Meeting in November 2007 adopted new policy to strengthen medical staff self-governance and ease tensions between hospital boards and medical staff. Here are some of the AMA's guiding principles for organized medical staff:

  • Work with hospital governing body to improve and ensure quality of care and patient safety.
  • Make sure bylaws comply with state laws and accreditation standards and do not conflict with hospital policy.
  • Outline inherent medical staff self-governance rights and responsibilities such as developing medical staff bylaws, disciplinary and credentialing processes, and executive committee qualifications.
  • Address disputes between medical staff and hospital governing body through fair and well-defined processes.

Source: American Medical Association

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Where do bylaws stand?

States that have addressed the issue of medical staff bylaws have taken differing positions on their status as a contract and whether hospitals can make credentialing decisions based on economic considerations. (See correction)

State courts that recognize medical staff bylaws as a legal contract or otherwise enforceable document: Alaska, California, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa, Maine, Maryland, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Washington D.C., Wisconsin

States that restrict "economic" credentialing: California, Colorado, Idaho, Illinois, Louisiana, Massachusetts, Oklahoma, Oregon, Rhode Island, Texas, Tennessee, Virginia, Washington, D.C.

States that allow "economic" credentialing: Florida, Georgia, Indiana, Iowa, Kansas, Maryland, New York, North Carolina

Sources: American Medical Association, California Medical Assn., Horty Springer & Mattern PC

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State-by-state information accompanying this story should have noted that data for certain states not listed were not available at press time. American Medical News regrets the error.

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