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Minnesota Supreme Courts Rules That Medical Staff Bylaws Are Enforceable Contracts

On Dec. 31, 2014, the Minnesota Supreme Court ruled that a hospital’s medical staff has standing to sue its hospital and that the medical staff bylaws are an enforceable contract between the hospital and its medical staff physicians. 

In 2012, the governing board of Avera Marshall Regional Medical Center unilaterally repealed and replaced the hospital’s medical staff bylaws, without input from the medical staff as a body. In Medical Staff of Avera Marshall Regional Medical Center v. Avera Marshall, A12-2117, 2014 LEXIS 693 (Minn. Dec. 31, 2014), the Minnesota Supreme Court ruled that the medical staff had standing to sue the hospital under a statutory provision granting unincorporated associations the right to sue and be sued. 

The court held that although the hospital and the medical staff’s physicians were all under pre-existing duties under Minnesota law to agree to the terms of the medical staff bylaws, that in this case, consideration existed, because “with the appointment of each member of the medical staff, that member and Avera Marshall both voluntarily assumed an obligation on the condition of an act by the other party – that is, each member of the medical staff agreed to be bound by the medical staff bylaws and Avera Marshall agreed to let each member of the medical staff practice at its hospital.” The court reasoned that Avera Marshall was not “under a preexisting legal duty to allow that particular physician to practice at its hospital.” Nor was each physician “under a pre-existing legal duty to follow Avera Marshall’s medical staff bylaws.” Thus, the Minnesota Supreme Court held that Avera Marshall formed a contractual relationship with each member of the medical staff upon appointment. 

As highlighted by the Avera Marshall case, a medical staff’s ability to sue a hospital regarding medical staff bylaws depends both on whether the state recognizes the medical staff as an unincorporated association with authority to sue, and whether under state law the medical staff bylaws meet the legal requirements of an enforceable contract. 

While Avera Marshall is only binding in Minnesota, the decision is the latest in a nationwide trend. Courts in approximately half of the states have expressly found medical staff bylaws to be enforceable contracts between hospitals and their medical staff physicians. The law is not universally settled; a handful of state courts have held that medical staff bylaws are not enforceable contracts. The issue has not been expressly addressed in all states. 

The issue of whether a hospital can amend medical staff bylaws without medical staff approval only applies to hospitals that are not accredited by the Joint Commission. Joint Commission standards prohibit such unilateral activity. 

© 2020 BARNES & THORNBURG LLPNational Law Review, Volume V, Number 28


About this Author

Heather Delgado Healthcare Attorney

Healthcare providers depend upon Heather Delgado for her commitment to responsiveness and practical legal advice. Heather focuses on finding the right solution for her clients. She is valued for her ability to overcome the obstacles her clients face and for her skill in applying complex laws and regulations to their business practices.

Heather’s experience includes the representation of healthcare providers, including hospitals, health systems, specialty hospitals, ambulatory surgery centers, multi- and single-specialty medical practices, and a wide variety of healthcare...

Mark E. Rust Barnes Thornburg Law firm Chicago Corporate Finance and Healthcare Law Attorney

Mark Rust is Managing Partner of the Chicago office of Barnes & Thornburg, LLP, and Chair of the firm’s national Healthcare Department. Mr. Rust concentrates his practice in transactional, regulatory and medical-legal issues affecting healthcare entities and provider organizations. For nearly 30 years he has written about or practiced in healthcare law, writing in a wide variety of publications from theJournal of the American Bar Association to USA Today. He is listed as a notable healthcare lawyer in Chambers USA, Top Healthcare Lawyers of Illinois,Superlawyers® and The Best Lawyers in America®.