Missouri Supreme Court: Doctors can sue if hospitals ignore bylaws in privileging issues

The court also said medical staff bylaws do not create a legal contract. The court will not review the privileging decision itself.

By Amy Lynn Sorrel — Posted April 7, 2008

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Physicians say a Missouri Supreme Court ruling, though narrow, recognizes the significance of medical staff bylaws and offers doctors some recourse in the face of unfair discipline.

Breaking with a 43-year-old precedent, a unanimous high court opened the door for medical staff members to sue hospitals over privileging disputes if the facilities fail to follow staff bylaws. Justices departed from a long-held principle that hospital privileging decisions were not subject to judicial review, noting that was the "nationwide majority rule" at the time of the high court's 1965 decision.

The court recently carved out an exception to that rule, however, saying courts can intervene to compel hospitals to follow bylaws in disciplinary proceedings before suspending or revoking a doctor's privileges.

"It is implicit under [state] regulation that hospitals not only have a legal duty to adopt bylaws but also a corresponding duty to abide by those bylaws," Justice Stephen N. Limbaugh Jr. wrote in a Feb. 5 opinion. "Although the [hospitals protest] that as a matter of public policy, government regulations for hospital staffing decisions exist to protect patients, not doctors, the public policy behind the regulation here clearly protects both."

The court noted that 46 states and the District of Columbia allow some form of judicial review of hospital privileging decisions. Missouri parted company with three states -- Iowa, Oklahoma and South Carolina -- that adhere to the principle that credentialing matters cannot be challenged in court.

Still, the Missouri court emphasized that bylaws do not create a legal contract between doctors and hospitals, precluding physicians from suing for money damages. Justices also said they would not step in to review the credibility of a hospital's staffing decision, but act only to ensure compliance with bylaws.

The ruling sends the case of Robert C. Egan, MD, to a trial court to decide whether the hospital board at St. Anthony's Medical Center broke staff bylaws when it revoked the general surgeon's privileges. A hearing date has not been scheduled.

Jeff Howell, director of legal affairs for the Missouri State Medical Assn., said the ruling is limited because doctors cannot sue for damages. Nevertheless, the decision gives physicians some relief where there was little to none before, he said. The MSMA was not involved in the case.

Howell said the decision also helps reinforce the value of staff bylaws put in place to protect physicians in disciplinary matters. "[The ruling] makes the bylaws more enforceable for an aggrieved physician," he said.

Hospitals also found some good in the court's decision.

"The court supported the notion that it is in the hospital's best interest to determine who is on its medical staff, and that's done through the peer review process in conjunction with doctors and the hospital," said Anne C. Curchin, associate general counsel to the Missouri Hospital Assn., which filed a friend-of-the-court brief in the case.

She said hospitals already work to abide by staff bylaws in disciplinary matters, and the high court provided further guidance on the issue. Neal F. Perryman, attorney for St. Anthony's, added that the ruling gives hospitals and peer review committees the ability to make such decisions without the threat of damages claims.

But Dr. Egan alleges that St. Anthony's did not play by the rules.

"This is a matter of access to a fair appraisal and boils down to access to due process," Dr. Egan said.

He appealed a preliminary peer review panel's recommendation to terminate his privileges in 2005 for allegedly performing an unnecessary surgery, according to court records. But he claimed in court documents that the appellate committee and the hospital board made their final decision based on additional outside testimony, not just the record from the initial peer review hearing, as required in staff bylaws. St. Anthony's denies any wrongdoing.

Dr. Egan sued the hospital, asking the court for a new hearing that complied with staff bylaws. The Supreme Court allowed him to pursue his case, and in addition to other legal precedents, considered a 1982 state regulation that requires hospitals to adopt bylaws that include peer review hearing and appeal procedures.

Despite that "preexisting duty," however, the court emphasized that the purpose of the regulation "is to implement a system of medical staff peer review, rather than judicial oversight, and it is clear that final authority to make staffing decisions is securely vested in the hospital's governing body with advice from the medical staff."

Gregory M. Abrams, a San Francisco-based lawyer who works with medical staffs, said the Missouri ruling brings the state in line with other jurisdictions that allow doctors to enforce bylaws while balancing peer review protections.

Courts generally will not second-guess the merits of a hospital's decision to discipline a doctor, Abrams said. But they will permit doctors to challenge the process.

"The courts aren't saying a doctor is good or bad, but it's a procedural check on hospitals" to ensure compliance with the bylaws in peer review proceedings, said Abrams, former legal counsel to the California Medical Assn."This kind of ruling [in Missouri] provides a deterrent, too, if hospitals aren't doing it right."

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Case at a glance

Can a doctor sue to force a hospital to follow medical staff bylaws in disciplinary matters?

The Missouri Supreme Court said yes but also noted that the courts will not review the merits of a hospital's privileging decision. Nor do the bylaws constitute a legal contract.

Impact: Physicians say the ruling gives them some recourse when peer review goes awry and brings Missouri in line with most jurisdictions on the issue. Hospitals say the ruling preserves their ability to make privileging decisions without court interference.

Robert C. Egan, MD, v. St. Aanthony's Medical Center, Supreme Court OF Missouri

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