Court: Medical staff bylaws are not contracts between doctors and hospitals

A judge has ruled in a Minnesota case that medical staff bylaws do not constitute a contract between physicians and hospitals.

The State of Minnesota District Court, 5th Judicial District, County of Lyon, said the creation of bylaws does not include the necessary legal requirements to make the regulations a binding contract. Avera Marshall Regional Medical Center in Marshall, Minn., had the authority to change the hospital’s former medical staff bylaws, and physicians must follow the latest rules, the court said in its Sept. 25 opinion.

The ruling sets a bad precedent and is contrary to the widely held view that medical staff bylaws are a contract, said Robert Meiches, MD, CEO of the Minnesota Medical Assn. The MMA co-wrote a friend-of-the-court brief, along with the Litigation Center for the American Medical Association and the State Medical Societies, in support of the plaintiff doctors. A judge declined to accept the brief, saying it was not necessary at the time.

“A hospital’s medical staff serves a critical role in facilitating and maintaining quality patient care in a hospital setting and needs to have a strong voice in the governance process regarding patient care,” Dr. Meiches said in an email. The ruling diminishes “the role of the physician in making patient care decisions, in conducting medical staff investigations and peer review proceedings and performing regular duties,” he added.

Avera Marshall President and CEO Mary Maertens said the ruling was a well-reasoned affirmation of a hospital’s right to manage itself.

“We’re grateful for the careful and measured approach the court took in analyzing the relevant precedents, for its review of the facts at issue and for a decision that supports our long-standing and common-sense position that the hospital board is responsible for ensuring the health and safety of our patients,” Maertens said in a statement.

A group of doctors on the Avera medical staff sued the hospital in January. The physicians alleged that the medical center had violated its bylaws when it repealed the rules and adopted new bylaws. The hospital failed to follow the process for amending rules outlined by the current bylaws, the doctors said, thus breaching its “contract.” The new bylaws strip physicians of “nearly all rights and responsibilities” and give Avera absolute power in controlling processes that require medical staff direction, the doctors said.

Avera asked the court to dismiss the lawsuit. Because the medical staff is part of the hospital, the plaintiffs have no grounds to sue, Avera said. The bylaws are not a contract, and the medical staff cannot prevent Avera from making decisions that are best for the hospital, the hospital said.

District Judge Michelle Dietrich ruled in July that a medical staff is not an unincorporated body and cannot sue the hospital where it operates. However, the lawsuit moved forward with several individual doctors as plaintiffs.

In the latest decision, Dietrich said medical staff bylaws cannot be considered contracts because they are missing the necessary components of such documents.

Doctors may appeal decision

The plaintiffs are weighing their legal options, including an appeal, said Kathy Kimmel, an attorney for the physicians.

The ruling was mixed for doctors, Kimmel said. The court ruled in favor of some of the doctors’ claims, she said. In addition to the contract issue, the plaintiffs had argued that Avera must follow the former bylaws, including going through the proper process to amend any of the rules. The judge agreed that hospitals are bound by medical staff bylaws, but she ruled Avera had the authority to change those bylaws as it saw fit.

“Certainly, the medical staff does feel vindicated in part by the ruling, that the hospital does have to follow the bylaws,” Kimmel said. But “they are disappointed from the effect of the court’s ruling to allow the unilateral changes” to stand, despite the amendments being overwhelmingly rejected by the medical staff.Avera hopes that the ruling means the end of the protracted dispute between the hospital and one of its “for-profit competitors,” Maertens said.

“With this ruling, our hope is that all parties will consider this matter once and for all settled,” she said.