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2 cases test power of medical staff bylaws claims

Legal challenges in Minnesota and California will highlight the legal authority of medical staff bylaws on hospital decision-making.

By Alicia Gallegos — Posted March 6, 2013

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Physician leaders are watching closely two cases that will go before state courts this year that center on the independent rights of hospital medical staffs.

In Medical Staff of Avera Marshall Regional Medical Center et al. v. Avera Marshall Regional Medical Center, the Minnesota Court of Appeals will weigh whether medical staff bylaws constitute a contract between physicians and hospitals. The court also will decide whether a medical staff is an independent body that can sue the hospital where it operates.

The California Supreme Court in Osamah A. El-Attar v. Hollywood Presbyterian Medical Center will examine whether a hospital that terminated a physician’s privileges can assume control of a subsequent peer review process.

The Minnesota case stems from a 2012 decision by Avera, a critical care hospital in Marshall, Minn., to introduce new bylaws, allegedly without the input of medical staff. A group of doctors on the Avera medical staff sued the hospital over the new bylaws. They said the new rules strip physicians of “nearly all rights and responsibilities” and give Avera’s governing board controlling power in processes that require medical staff direction. Avera argued that bylaws are not a contract, and that the medical staff cannot prevent Avera from making decisions that are best for the hospital.

The hospital believes the lawsuit is being fueled by anti-competitive efforts by some medical staff doctors to usurp control from Avera’s board of directors. The medical staff at Avera, which is nonprofit, primarily consists of Avera-employed doctors and physicians who have privileges at Avera but who are aligned with another medical center, which is for-profit.

A district judge ruled in favor of the hospital, and the doctors appealed.

The Litigation Center of the American Medical Association and the State Medical Societies on Feb. 6 issued a friend-of-the-court brief to the appeals court in favor of the doctor plaintiffs. The brief was joined by the American Academy of Family Physicians, the American Osteopathic Association, the Minnesota Medical Assn. and several other professional medical associations.

“The Minnesota district court made a serious error that gave Avera’s governing board unchecked power over the medical staff,” AMA President Jeremy A. Lazarus, MD, said in a Feb. 15 statement. “Our brief urges the state’s court of appeals to reverse this mistake and allow the medical staff to press its genuine case for self-governance. Restoring the medical staff’s autonomy will assure an accountable balance between patient care and corporate interests at the hospital.”

Avera plans to file its response brief to the appeals court in March. “We’re confident that the Court of Appeals will uphold the decision of the trial court that our hospital must have the right to manage its own affairs so as to ensure the highest possible standards of patient safety and service to the community,” Avera Marshall spokesman Jon Austin said. The case probably will be heard in the spring.

Was peer review process fair?

In the California case, cardiologist Osamah A. El-Attar, MD, requested a peer review hearing after Hollywood Presbyterian Medical Center in Los Angeles revoked his privileges in 2002. The medical staff’s executive medical committee had recommended that Dr. El-Attar’s privileges be renewed. A peer review was conducted, but the hospital’s governing board appointed the hearing officer and members of the panel, according to court documents. Under the medical staff bylaws, only the medical executive committee had the authority to appoint the peer review hearing members. The panel upheld Dr. El-Attar’s termination. He sued, and a trial court ruled in the hospital’s favor.

A California appeals court reversed, holding that the hospital was wrong to take over the executive committee’s authority in appointing the peer review hearing members. The hospital appealed, and the Supreme Court of California accepted the case in 2012. Oral arguments are expected to be heard in a few months.

The AMA Litigation Center and the California Medical Assn. issued a friend-of-the-court brief urging the state high court to uphold the appellate decision. Medical staff bylaws must be strictly enforced to uphold the systemic safeguards of a fair and just peer review system, the brief said.

“This really goes to the heart of the balance between the medical staff and the hospital governing body,” said Long Do, CMA legal counsel. “Under California law as with other states, there’s supposed to be an equal balance. The hospital has the ultimate authority, but it’s oversight authority. The hospital should not be interfering with the function of the medical staff.”

An attorney for the medical center declined to comment. In a court brief, Hollywood Presbyterian Medical Center said the peer review was conducted by a committee of qualified physicians who were appointed by the governing body because “the medical staff’s leadership failed to make the necessary appointments.”

The California Hospital Assn. issued a brief to the state Supreme Court on the hospital’s behalf.

“California law requires a hospital’s governing body to act in order to protect the quality of medical care provided and the competency of its medical staff, and to ensure the responsible governance of the hospital in the event that the medical staff fails in any of its substantive duties and responsibilities,” CHA spokeswoman Jan Emersen-Shea said in an email.

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