Physicians Buoyed by Minnesota Supreme Court Ruling

State's High Court Calls Medical Staff Bylaws 'Enforceable Contract'

February 10, 2015 10:23 am Sheri Porter

A Minnesota Supreme Court ruling( announced on the final day of 2014 signaled a victory for physicians in a rural Minnesota community involved in a three-year legal struggle with their local hospital administration and board of directors.

[Physician standing in front of Minnesota State Flag]

According to court documents that detail proceedings of the case, Medical Staff of Avera Marshall Regional Medical Center v. Marshall, the governing board of the 25-bed hospital in Marshall announced a plan in 2012 to unilaterally repeal and replace the hospital's medical staff bylaws.

In an interview with AAFP News, Steven Meister, M.D., M.B.A., a family physician and chief of staff at the hospital, said physician autonomy and self-governance were at stake. He said the hospital's actions undermined physicians' ability to contribute to decision-making on issues of critical importance to physicians such as peer review, credentialing and privileging.

"If the medical staff cannot be self-governed and cannot freely interact in matters of patient care and health care quality without fear of retribution from the CEO or the board, then patient care is potentially comprised," said Meister.

"Medical staff bylaws constitute a contract, and the hospital must follow those bylaws just as the physicians do," he added.

Story Highlights
  • The Minnesota Supreme Court recently ruled that a hospital's medical staff has the right to sue the hospital and that medical staff bylaws constitute an enforceable contract.
  • The ruling came after a three-year struggle between the medical staff and the hospital administration and board of directors at Avera Regional Medical Center in Marshall, Minn.
  • The hospital chief of staff spearheaded a legal struggle that gained the support of numerous physician organizations, including the AAFP, the Minnesota AFP, the AMA and the Minnesota Medical Association.

With their backs to the wall in 2012, Meister and the chief of staff-elect -- with a majority of the hospital's medical staff on board -- turned to the judicial system for relief.

Ultimately, the state's Supreme Court ruled that a hospital's medical staff had the capacity to sue and be sued, and that medical staff bylaws may be an enforceable contract between members of the medical staff and a hospital. The case was remanded to a lower court for further proceeding on a related issue.

Medical Organizations Lend Support

Minnesota AFP President Kurt Angstman, M.D., of Rochester, said the state chapter brought the issue to the attention of state and national physician organizations. "We have a distinct interest in supporting the work of our members," said Angstman.

In response, the AAFP, the Minnesota AFP, the AMA, the Minnesota Medical Association, the American Osteopathic Association and the Minnesota Chapter of the American Academy of Pediatrics filed an amicus curiae (friend-of-the-court) brief with the Minnesota Supreme Court in support of the Avera medical staff.

"The body of medicine was behind the physicians and I think that was very helpful," said Angstman.

He stressed the underlying motivation of the physicians involved. "The medical staff has the obligation of overseeing the medical care in their institution," said Angstman. "Medical care is provided by the physicians, not by administration.

"These physicians actively pursued this issue for the betterment of their patients and their community; this was not for personal gain."

Trend Is a Growing Concern

Meister's ties to Marshall are strong. He's delivered family medicine in a multispecialty practice there for a decade, and counts many of the town's 13,000 citizens among his patients. The practice also draws an additional 20,000 patients from surrounding communities.

Meister noted that in 2008-09, Marshall sold its small critical-access community hospital to Avera Health System, headquartered in Sioux Falls, S.D. Although the hospital ownership changed hands, it retained the same management and administration.

But Meister recalled a heavy-handed shift in management style and decision-making that didn't adhere to long-standing procedure. For example, medical staff bylaws required collaboration among the chief of staff, the chief of staff-elect and the hospital CEO when it came to choosing slates of candidates for medical staff peer-review and quality-review committees, but that protocol was not followed.

The hospital also was in an "acquisition phase," said Meister, and began employing more and more physicians, eventually tipping the medical staff balance in favor of employed physicians versus private physicians. Although Meister conceded that employing physicians certainly was the hospital's prerogative, he said it gave the hospital "a clear majority" among the medical staff.

Regardless of the internal political turmoil, physicians' commitment to patients never wavered, and the quality of patient care remained high throughout the legal proceedings, said Meister. But the whole business took an emotional toll on him. "This is my community. The hospital is a nonprofit organization that has stakeholders that include my family, my friends, my patients," said Meister.

"I love Marshall and I wouldn't move, but I want to make sure that patients -- who are mutual patients to both private practice and a nonprofit hospital -- have the best quality care, period."

Meister said he continues to worry about physician independence in a rapidly evolving health care environment, and he considers his a cautionary tale for physicians around the country.

"When a community hospital is acquired by a large health system, ideally, that system values its physician leadership and continues to allow the physician staff to maintain its self-governance to work closely with, and report directly to, the board of directors in matters of patient care," said Meister.

"When a system buys a hospital, physicians have to make sure that the bylaws are workable for both the hospital and the medical staff," he added.

More Decisions to Come

Even though physicians and the organizations that support them nationwide viewed the state Supreme Court ruling as a big win, the hospital administration and its legal team characterized the court's findings as just one more step in an ongoing dispute.

After the latest court decision was announced, the Avera Marshall Regional Medical Center shared with AAFP News a statement in which it respectfully disagreed with the split decision that "reversed two strong and well-reasoned decisions of both the trial and appellate courts."

The statement noted the majority opinion did not rule on the primary issue in the case -- whether Avera Marshall's board of directors retains, under the medical staff bylaws, "the ultimate authority to make decisions it deems to be in the best interest of the hospital and its patients."

"Instead, the majority determined that such issue shall be decided in further proceeding before the district court."

Avera Marshall continued: "Our position has always been that a hospital must be allowed to govern itself, particularly in the critical areas of patient safety and care. We believe that maintaining a clear line of authority is consistent with the law, as well as common sense in today's hospital environment."