St. John's Hospital Medical Staff v. St. John Regional Medical Center, Inc.
| Decision Date | 03 September 1976 |
| Docket Number | No. 11746,11746 |
| Citation | 245 N.W.2d 472,90 S.D. 674 |
| Parties | ST. JOHN'S HOSPITAL MEDICAL STAFF et al., Plaintiffs and Respondents, v. ST. JOHN REGIONAL MEDICAL CENTER, INC., a corporation, Defendant andAppellant, Guillermo M. Huet, M.D., et al., Defendants. |
| Court | South Dakota Supreme Court |
Glenn A. Fingerson and Everett E. Hoyt, Huron, for plaintiffs and respondents.
James E. Doyle, of Doyle & Bierle, Yankton, Horty, Springer & Mattern, Pittsburgh, Pa., for defendant and appellant.
David A. Gerdes, of May, Porter, Adam, Gerdes & Thompson, Pierre, for amicus curiae, South Dakota Medical Association.
St. John's Hospital Medical Staff (hereinafter referred to as medical staff) is an unincorporated association whose members are physicians duly licensed to practice medicine in South Dakota, holding medical staff privileges at and utilizing the facilities of the St. John Regional Medical Center, Inc., of Huron, South Dakota. St. John Regional Medical Center (hereinafter referred to as medical center) is a South Dakota corporation, incorporated under the laws regulating nonprofit corporations and is authorized to operate in the State of South Dakota.
This is an action for declaratory judgment under SDCL 21--24--1 et seq. It was commenced by the medical staff on June 25, 1973, asking the trial court to determine the rights and duties of the parties under an agreement designated as the 'Bylaws, Rules, and Regulations of St. John's Hospital Medical Staff' (hereinafter referred to as medical staff bylaws) as those bylaws relate to the corporate bylaws (hereinafter referred to as medical center bylaws) enacted by the defendant. Plaintiffs requested the trial court to compel the defendant to abide by the provisions of certain medical staff bylaws and to invalidate the purported changes unilaterally made by the medical center in such bylaws. The trial court granted the requested relief and the medical center appealed. On appeal, the medical center argues (1) that the trial court erred in holding that a legal contract existed between the medical staff and the medical center by reason of the medical staff bylaws, and (2) that the medical staff lacks the attributes of a legal entity necessary to commence this action.
In 1947, and prior thereto, there were two hospitals operating in Huron; one was Sprague Hospital, operated by the Huron Clinic Group and the other was the Tschetter Hospital, operated by the Tschetter-Hohm Clinic Group. Other physicians practicing in the community but not associated with either group constituted a third group. In 1944, the Huron Clinic Group encouraged the Franciscan Sisters of Chicago to come to Huron and construct a hospital which is now the medical center. At this same time, plans were being made and steps were being taken by the Tschetter-Hohm Group to build a hospital in Huron. Because of economic factors, however, the Tschetter-Hohm Group abandoned its plans to construct a competing hospital and joined in the construction of the medical center. In October 1947, as construction of the medical center neared completion, the Sisters of the Franciscan Order proposed certain medical staff bylaws to regulate the affairs of the physicians wanting to use the hospital. These bylaws were taken from a book on hospital organization and management. 1 They were printed and distributed to the doctors of the area who were considering association with the hospital. The proposed medical staff bylaws contained an 'Amendment Article' and an 'Equally Binding Article.' The interpretation and effect of these articles formulate the main issues of this action. The 'Amendment Article' provides:
'Article VIII notice given at any regular meeting of ntoice
given at any regular meeting of the staff. Such notices
shall be laid on the table until the next regular meeting
and shall require a two-thirds majority of those present for
adoption. Amendments so made shall be effective when
approved by the governing body.'
The 'Equally Binding' article provides:
After a great deal of discussion concerning these two provisions, as well as provisions relating to the internal rotation of staff, the medical staff bylaws were adopted by the medical staff and approved by the medical center.
These medical staff bylaws were in effect from 1947 until 1972. During that time, various amendments were made to them in accordance with the amendment procedure prescribed. In 1972, the medical center wished to make certain changes in the bylaws. 2 The attempted changes were unacceptable to the medical staff and an impasse developed. Out of this impasse springs the present lawsuit.
On November 24, 1972, the board of directors of the medical center unilaterally adopted new medical staff bylaws which were Not approved by the medical staff. The medical center now insists that the medical staff is bound by the bylaws so adopted. The medical staff contends and the trial court held that the 1972 revised medical staff bylaws are null and void by reason of the fact that they were not enacted according to the provisions set out in the original 1947 medical staff bylaws.
The main issue raised in this appeal is whether the board of directors of the medical center has the power to amend the 1947 medical staff bylaws without the participation and approval of the medical staff as provided for in Article VIII of the medical staff bylaws. The medical center argues that the trial court erred in holding that a legal contract existed between the medical staff and the medical center by reason of the original 1947 medical staff bylaws. It raises two policy arguments in support of this contention: the owner to amend the articles must be lodged in the directors in order (a) to avoid impending loss of accreditation, and (b) to avoid the possibility of independent hospital liability in some future case of malpractice. After a review of the record, we find these arguments to be without merit. The trial court specifically held that there was no evidence that the hospital would lose accreditation if it were not allowed to revise the medical staff bylaws. Further, the medical center's assertions regarding independent liability are premature and not vital to this appeal. We therefore decline to decide that issue.
The medical center additionally argues that the medical staff lacks the attributes of a legal entity necessary to commence this action. As stated above, the medical staff represents an unincorporated association of the individual physicians holding medical staff privileges at the medical center. , SCDL 21--24--2 provides that:
'The word 'person' wherever used in (the declaratory judgment chapter) shall be construed to mean any * * * unincorporated association, or society * * * of any character whatsoever.'
Therefore, plaintiff medical staff is a proper party to bring this action. Cf. Schallenkamp v. Stevens, 1965, 81 S.D. 573, 138 N.W.2d 657. See also SDCL 2--14--2(16).
The remaining question to be resolved is whether the trial court erred in holding that the medical staff bylaws adopted and approved by both the medical center and the medical staff constitute a contract.
As a general rule, the bylaws of a corporation, so long as adopted in conformity with state law, constitute a binding contract between the corporation and its shareholders. Allied Supermarkets, Inc. v. Grocer's Dairy Company, 1973, 45 Mich.App. 310, 206 N.W.2d 490, 493, affirmed 1974, 391 Mich. 729, 219 N.W.2d 55.
An analogous rule in the area of medical staff bylaws is found in...
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