Hospital and Medical Staff Bylaws Litigation

An Overview

Hospital and medical staff bylaws have become a common source of healthcare litigation. Typical hospital or medical staff bylaws set forth detailed sets of obligations that facilities and healthcare providers owe each other, and processes with which they must comply. Depending on the jurisdiction, these requirements in the bylaws may even be treated as creating contractual rights. Bylaw disputes frequently arise any time a facility or a provider believes the other (or another provider subject to the bylaws) has not lived up to its obligations, or has not complied with a required process. These types of disputes can create healthcare litigation both internally (i.e., through a quasi-judicial procedure that takes place within the hospital/facility, subject to the hearing and appeal procedures set forth in the bylaws) and externally (i.e., in a court of law after the provider or facility files a civil complaint).

Representative Matter: DBS attorneys represented a hospital and its medical staff in an internal process to remove a physician who had repeatedly violated the medical staff bylaws, and further represented the hospital and the chief of the medical staff in a civil lawsuit brought by that dismissed physician in state Superior Court. DBS attorneys ultimately won that civil lawsuit on behalf of both the hospital and the medical staff chief at the summary judgment stage.

---

Internal bylaw litigation typically involves one of two scenarios. Either there is a dispute between the facility and a provider, or there is a dispute between two providers both of whom are subject to the same bylaws. In either scenario, parties litigating the dispute internally must comply with the quasi-judicial proceedings provided in the bylaws. While the bylaws setting forth these procedures will vary by facility, generally internal dispute procedures reflect three common principles: notice, due process, and a fair hearing. Whether the dispute is between a provider and the facility concerning a revocation or failure to renew medical staff credentials, or it is between two providers concerning allegations of problematic behavior by one against the other, the bylaws will usually require the complaining party to provide the other with notice of the contemplated action, and then will provide that party with certain rights to present evidence and/or be heard before any final decision is made. Depending on the severity of the dispute, the bylaws may even provide for a hearing at which the sides can call witnesses and take testimony. In this sense, bylaw disputes can take the form of a truly adversarial process akin to a mini-trial, one that takes place entirely internally within the facility and at which the parties make their respective cases before a neutral arbiter, usually a high-ranking member of the medical staff or a designated committee of medical staff members (but sometimes an outside, independent third-party such as an attorney).

The entire purpose of these internal processes is to provide redress to the parties without forcing them to resort to formal civil litigation. Given the quasi-judicial nature of these proceedings, strict compliance with the bylaws and other state and federal laws that govern these internal processes is critical to preserving the outcome and the ultimate goal of avoiding formal litigation in state court. But even slight deviations by either party can result in further legal difficulties including lawsuits challenging the process or its determination (see below). To ensure strict compliance with the bylaws and, therefore, preserve the final decision of the internal process, all parties should engage legal counsel who is experienced in litigating medical staff bylaws disputes, and who is otherwise comfortable and knowledgeable navigating the internal hospital or provider setting.

External bylaw litigation arises when one or more of the parties to the internal process are aggrieved by a decision that they believe was made improperly or not subject to the processes and procedures guaranteed by the bylaws. For example, physicians or other medical staff members who, at the conclusion of the internal process, are subjected to adverse determinations—e.g., the revocation or nonrenewal of their medical staff privileges, or the implementation of some corrective employment action such as termination or suspension—may initiate external bylaw litigation against the facility, or even individuals who participated in the process, to seek judicial intervention to overturn the adverse determination on the grounds that the medical staff failed to comply with the procedures set forth in the bylaws. Federal and state laws do recognize the public policy of not interfering with the decisions of a medical staff and a hospital’s governing board whenever possible and, therefore, they limit the grounds on which medical staff decisions can be overturned. Moreover, the Healthcare Quality Improvement Act (“HCQIA”) provides immunity against liability for any individuals who participated in a peer review process so long as that process meets certain minimum conditions. Nonetheless, emotions are usually high by the time a party resorts to judicial intervention, and with so much at stake federal laws like HCQIA are usually not much of a deterrent for potential litigants. Accordingly, parties to hospital and medical staff bylaw litigation should exercise caution from the very outset, and should engage the services of experienced counsel early in the process to help obtain and preserve the desired result.