Minnesota Supreme Court Rules on Medical Staff Procedural Issues

By Sara Noel and Laura Nelson

On December 31, 2014 the Minnesota Supreme Court ruled in Medical Staff of Avera Marshall Regional Medical Center v. Avera Marshall on limited issues regarding a medical staff’s capacity to sue and be sued and the contractual status of medical staff bylaws. The Court did not address the core of the dispute between the hospital and the medical staff – whether Avera Marshall could unilaterally modify the medical staff bylaws.

In the 5-2 ruling, the Court reversed the lower courts on two issues:
 1. the Medical Staff falls under the statutory definition of an “unincorporated association” and thus has the capacity to sue and be sued under Minnesota law, and
 2. Avera Marshall’s medical staff bylaws constituted enforceable contracts between the hospital and the individual members of the medical staff.

The Court did not answer the substantive question presented on appeal, namely, whether a hospital can unilaterally change medical staff bylaws when the bylaws repeatedly state that the ultimate authority with respect to bylaw changes is reserved to the hospital board, and the board determines that doing so is in the hospital’s best interests. Instead, the Court remanded that question to the district court for further proceedings not inconsistent with its opinion.

The Court’s ruling raises but does not address a number of questions regarding the extent to which members of the medical staff could be liable for the actions of other medical staff members, or which elements in medical staff bylaws are necessary to create a contractual relationship. Further light may be shed on these questions by the courts on remand (or in future separate litigation) so stay tuned for further developments.

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