Legal victory in Minnesota

Thursday, January 01, 2015 11:29 AM

Medical staffs, bylaws legal standing recognized by court

by Elizabeth A. Snelson, Esq. Legal Counsel for the Medical Staff, PLLC

Hospital medical staff bylaws are contracts, and medical staffs have standing to sue and be sued under the decision of the Minnesota Supreme Court in Medical Staff of Avera Marshall Regional Medical Center et. al. v. Avera Marshall d/b/a Avera Marshall Regional Medical Center. Avera is a South Dakota-based Catholic hospital system that acquired the Regional Medical Center in the southwestern Minnesota town of Marshall. Issued on the last day of 2014, the decision successfully concludes the medical staff’s two-year battle against unilateral amendment of medical staff bylaws by the hospital, overturning decisions by Minnesota trial and appellate courts.

At issue was whether medical staffs could even take hospitals to court. In holding that medical staffs have standing to sue and be sued, the Minnesota Supreme Court rejected the hospital’s argument that, because it is subject to the hospital board’s authority, the medical staff is just a department or unit of the hospital. Rather, the court held, “the Medical Staff is composed of two or more physicians who associate and act together for the purpose of ensuring proper patient care at the hospital under the common name ‘Medical Staff.’ Therefore, because the Medical Staff satisfies the statutory criteria of (Minn. Stat.§) 540.151, we hold that it has the capacity to sue and be sued under Minnesota law.”

Finding standing, the Court declined to follow the lower courts’ analysis that since bylaws are required by law, the agreement by the parties to adopt and approve them lacks consideration, i.e., that the bylaws were adopted because the law required them, not because the hospital and medical staff accepted them as beneficial terms to work by. The Court points out that the content of the bylaws as agreed to by the parties exceeds the minimal requirements of the Minnesota code, qualifying the bylaws as a contract between medical staff and hospital. Further, since each medical staff member agrees to follow the medical staff bylaws’ mutual obligations as a condition of privileges, the hospital “formed a contractual relationship with each member of the Medical Staff upon appointment.”

Minnesota joins the majority of jurisdictions recognizing medical staff bylaws as contract, also a long-standing position of the American Medical Association. The Avera Marshall Medical Staff was supported by the AMA Litigation Center and Minnesota Medical Association in this case.