Marshall v. Marshall, A12-2117

Decision Date22 July 2013
Docket NumberA12-2117
PartiesMedical Staff of Avera Marshall Regional Medical Center on its Own behalf and in its Representative Capacity for its Members, et al., Appellants, v. Avera Marshall d/b/a Avera Marshall Regional Medical Center, et al., Respondents.
CourtCourt of Appeals of Minnesota


Kirk, Judge

Lyon County District Court

File No. 42-CV-12-69

Kathy S. Kimmel, Margo S. Struthers, Oppenheimer Wolff & Donnelly, LLP, Minneapolis, Minnesota (for appellants)

David R. Crosby, Bryant D. Tchida, Leonard, Street and Deinard, P.A., Minneapolis, Minnesota (for respondents)

Eric J. Magnuson, Daniel J. Supalla, Briggs and Morgan, P.A., Minneapolis, Minnesota (for amici curiae American Medical Association, Minnesota Medical Association, American Osteopathic Association, American Academy of Family Physicians, Minnesota Academy of Family Physicians, and Minnesota Chapter American Academy of Pediatrics)

David F. Herr, Michael C. McCarthy, Maslon Edelman Borman & Brand, LLP, Minneapolis, Minnesota; and Benjamin Peltier, Vice President, Legal Services, Minnesota Hospital Association, St. Paul, Minnesota (for amicus curiae Minnesota Hospital Association)

Considered and decided by Ross, Presiding Judge; Chutich, Judge; and Kirk, Judge.


1. A hospital medical staff is not a separate legal entity with capacity to sue or be sued.

2. The bylaws governing a hospital's medical staff do not create a contractual relationship between a medical staff and a hospital.


KIRK, Judge

This case presents two compelling and (in this case) competing policy interests. On one side is the interest of hospital management in controlling hospital operations and providing a safe environment for patients through bylaws governing the medical staff. On the other side is the interest of a medical staff in carrying out its obligations to patients by controlling how it organizes itself and how it influences the formation of and compliance with its bylaws. Although both sides raise persuasive policy arguments, we conclude that under Minnesota law a medical staff does not have legal capacity to sue and that the medical staff bylaws are not an enforceable contract. Therefore, we affirm the district court's grant of summary judgment to the hospital.


Respondent Avera Marshall Regional Medical Center is a nonprofit, charitable hospital incorporated under the Minnesota Nonprofit Corporation Act, Minn. Stat. §§ 317A.001-.909 (2012). In 2009, after more than 60 years of owning and operating the hospital, the City of Marshall transferred the facility to Avera in order to increase the range of health care services available in the community.

Appellants, physicians working at Avera Marshall, are collectively referred to as the medical staff. The corporate bylaws of Avera Marshall require that the hospital (through its board) establish medical staff bylaws. According to the medical staff bylaws, first approved in 1995, two of the "enumerated purposes" of the medical staff are

[t]o initiate and maintain rules, regulations and policies for the internal governance of the Medical Staff . . . [and to] provide a means whereby issues concerning the Medical Staff and the Medical Center may be directly discussed by the Medical Staff with the Board of Directors and the Administration, with the understanding that the Medical Staff is subject to the ultimate authority of the Board of Directors.

To serve on Avera Marshall's medical staff, a physician must agree to be bound by the medical staff bylaws.

The hospital affords an active medical staff member certain "prerogatives," which include the prerogative to attend and vote on matters presented at medical staff and committee meetings, and to hold medical staff office and vote on committees that the medical staff member serves on. These prerogatives are limited, however, "by other sections of [the] Medical Staff Bylaws and by the Medical Staff Rules and Regulations, subject to approval by the Board of Directors."

The powers of the medical staff to discharge its responsibilities under the bylaws and under the corporate bylaws of the medical center are "[s]ubject to the authority and approval of the Board of Directors." The medical staff bylaws provide that "[n]othing contained herein shall supersede the general authority of the Medical Center Board of Directors as set forth in its corporate bylaws or applicable common law or statutes." The corporate bylaws assign to the board of directors the duty to exercise "oversight of thebusiness affairs of the Corporation and . . . all of the powers which may be exercised or performed by the Corporation under the laws of the State of Minnesota."

The medical staff "bylaws may be amended or repealed, subject to approval by a majority vote of the Medical Center Board." A proposal to amend or repeal the bylaws can come from the chief of staff, the medical staff executive committee (MEC), the board of directors, or a petition signed by one third of the medical staff. The bylaws describe a process whereby the proposed changes to the bylaws are reviewed by the MEC or a special committee appointed by the MEC. Then, upon 30 days' notice, two-thirds of the medical staff must vote to approve or reject the change to the bylaws. If the medical staff fails to timely address a proposed change to the bylaws, the board of directors may adopt the amendment or its repeal. Regardless, all changes to the medical staff bylaws "become effective upon the approval of the Board of Directors." Moreover, the bylaws indicate that the process of amending or repealing the medical staff bylaws does not "supersede the authority of the Medical Center Board of Directors as set forth in its corporate bylaws or applicable common law or statutes."

The medical staff elects its officers and leaders, and it designates its MEC. The leaders of the medical staff are the chief of staff and the chief of staff-elect. At the time this action commenced, Dr. Steven Meister was the chief of staff at Avera Marshall. Dr. Jane Willett was chief of staff-elect. Both agreed that they are required, as a condition of receiving privileges at Avera Marshall, to be bound by and comply with the bylaws.

Many physicians who work for Affiliated Community Medical Centers, P.A. (ACMC) also hold privileges at Avera Marshall. In the fall of 2010, the physicianscomprising the MEC were half Avera Marshall physicians and half ACMC physicians. They informally agreed to maintain those proportions because they reflected the overall proportions of the medical staff at Avera Marshall (although ACMC physicians and those aligned with ACMC on the Avera Marshall staff made up a slim majority of the medical staff).

ACMC and Avera Marshall have not always seen eye to eye. In 2010, ACMC sued Avera Marshall for allegedly steering patients away from ACMC. Avera Marshall contends that ACMC physicians took advantage of the absence of some physicians at a critical vote in order to obtain a majority position on the MEC, despite the informal agreement to keep the body balanced between ACMC and Avera Marshall physicians. This imbalance in representation caused Avera Marshall to become concerned that ACMC would use its majority status on the MEC to advance its litigation against the hospital.

A dispute also arose between Avera Marshall and ACMC physicians on the MEC over the composition of a quality-improvement committee. The disagreement grew to the point where the two sides appointed conflicting slates of appointees to the committee. An Avera Marshall attorney began attending MEC meetings. ACMC ended up hiring an attorney to represent its interests in the composition of the MEC and the quality-control committee. Dr. Meister then ordered the exclusion of the president and CEO of the hospital and her staff from the MEC meetings. Eventually, ACMC members of the MEC began holding meetings at ACMC offices with their attorney.

Avera Marshall alleges that the conflict with ACMC affected the quality of patient care. It contends that ACMC physicians have interfered with patient orders prepared byAvera Marshall physicians, and that the medical staff leadership has neglected aspects of its credentialing duties. Dr. Meister denies that this dispute is about a conflict between Avera Marshall and ACMC, claiming instead that it is about the authority granted the medical staff by the bylaws to govern itself free of improper influence by Avera Marshall. He also denies that the medical staff has not met its credentialing obligations.

On January 17, 2012, Avera Marshall sent a letter advising the medical staff that it was repealing the medical staff bylaws and promulgating new bylaws. The letter indicated that the proposed bylaws were approved by the board of directors, and the letter solicited written feedback from medical staff members regarding the revisions by March 1. The changes were scheduled to take effect on April 1.

Dr. Meister claimed that he had no prior knowledge that the board intended to amend the bylaws. On January 24, the medical staff held a general meeting where Avera Marshall's CEO and president stated that the proposed bylaw changes would not be submitted to the medical staff for a vote, but that individual members of the medical staff could submit comments on the new bylaws.

The new bylaws made a variety of changes to the functions and governance of the medical staff. They also added requirements for eligibility to serve on the medical staff, established more clearly defined work requirements for the medical staff, modified the process and timing for electing medical staff officers, and modified clinical rules and regulations. The district court characterized the changes as a "transition to a top-down, management-based approach to hospital administration." The medical staff engaged in a process of reviewing the proposed bylaws and on March 20, 2012, the medical staff votedon the proposed changes. The medical staff rejected the repeal by a margin of 18 to...

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