Sara v. Saint Joseph Healthcare Sys., Inc. — Dec. 2015 (Summary)

BYLAWS AS A CONTRACT

Sara v. Saint Joseph Healthcare Sys., Inc.
No. 2013-CA-001909-MR (Ky. Ct. App. Dec. 23, 2015)

A nephrologist filed an action against a hospital, his former employer, after the Credentials Committee blocked his application to renew his staff privileges. The committee cited allegations against the physician, including violation of patient care policies, lapses in recordkeeping, and breaches of the hospital’s standard of conduct.

The physician pursued a review of the action through a Credentials Committee hearing, a Medical Governing Council review and the Hospital’s appeal board. The end result upheld the Credentials Committee’s recommendations.

The physician filed this legal action on two principal grounds. He first argued that because the hospital had to report the action against him to the Kentucky Board of Medical Licensure, this resulted in a delegation of the hospital’s investigatory and fact-finding functions, making the hospital a de facto state agency whose procedures were subject to the requirements of Kentucky statutes. Secondly, the physician argued that the hospital’s medical staff bylaws constituted a contract between the physician and hospital, and that the hospital breached that contract. The physician argued that the hospital wrongfully terminated his staff privileges in violation of the requirements of the bylaws.

This court held that the hospital did not function as a state agency based on the definition of agency in the applicable statute. As for the contractual argument, the court held that the bylaws did not constitute a contractual agreement in the instant case. The court held that the trial court properly dismissed Dr. Sara’s claims based upon breach of contract arising from the hospital’s bylaws.