Med. Staff of Avera Marshall Reg’l Med. Ctr. v. Marshall (Summary)

MEDICAL STAFF BYLAWS; MEDICAL STAFF AS AN ORGANIZATION

Med. Staff of Avera Marshall Reg’l Med. Ctr. v. Marshall, No. A12-2117 (Minn. Dec. 31, 2014)

The Minnesota Supreme Court reversed a lower court and held that the medical staff of an Avera hospital could sue the hospital itself, in the process holding that the medical staff bylaws were a contract between the hospital and the individual members of the medical staff and that the medical staff as an entity is capable of bringing a lawsuit.

The legal dispute began in 2012, when the Board of Avera Marshall Regional Medical Center, a nonprofit hospital, announced its plan to repeal and revise the hospital’s medical staff bylaws. The medical staff, along with its chief of staff and chief of staff-elect, brought an action in the courts for a declaration that medical staff bylaws were an enforceable contract between the hospital and the medical staff.

According to the provisions of the bylaws, the chief of staff, the Medical Executive Committee, the Board, or one-third of the active medical staff members could propose amendments to or the repeal of the medical staff bylaws. To effect a change, an affirmative vote of two-thirds of the eligible medical staff members was required. However, the bylaws also stated that the amendment and repeal process could not supersede the general authority of the Board as set forth under the corporate bylaws and applicable common law. Although the Board had stated that its repeal of the bylaws would not be submitted for a vote by the medical staff, the medical staff nevertheless voted on the proposed changes and rejected the repeal.

When the revised bylaws took effect on May 1, 2012, the medical staff sued. At the trial level, the district court dismissed the case, concluding that the medical staff bylaws were not an enforceable contract and that the medical staff did not have the legal standing to sue the hospital. After the court of appeals affirmed this decision, the medical staff appealed to the Minnesota Supreme Court.

The Minnesota Supreme Court explained that under Minnesota law, unincorporated associations have the right to sue if they can meet statutory criteria. The court found that the medical staff met those requirements, since the physicians associated and acted together for the purpose of ensuring proper patient care at the hospital.

The supreme court next addressed the issue of whether the bylaws created an enforceable contract and determined that they were. The court noted that physicians who seek privileges at the hospital must agree to be bound by the medical staff bylaws as a condition of appointment. It reasoned that a physician might choose not to join the medical staff because of those bylaws. Consequently, the court concluded that there was a bargained-for exchange of promises and mutual consent to the exchange.

The lawsuit has now been remanded to the district court for further proceedings.