Avera loses in Minn. Supreme Court

The Avera Health System suffered a defeat in a long-running legal battle last week when the Minnesota Supreme Court sided with doctors who had sued the administration of Avera Marshall Regional Medical Center.

The decision by the court reversed two lower court rulings that had sided with hospital administrators, and it means the legal wrangling will likely continue for Avera.

The 5-2 court ruling found that the medical staff had legal standing to sue the hospital and its board and it found that the hospital’s bylaws constituted a contract between the medical staff and Avera Marshall.

“It’s a clear victory for physicians and medical staffs,” said Kathy Kimmel, a lawyer with Oppenheimer Wolff & Donnelly who represented the doctors.

The medical staff, its chief of staff and chief of staff-elect filed suit against Avera after the hospital administrators unilaterally imposed new bylaws in 2012 without the consent of the medical staff. The new bylaws allowed administrators to appoint members to the medical staff without staff approval, interfered with who the medical staff could elect as its leaders and stripped the staff of its ability to weigh in on matters that affected patient care, Kimmel said.

“The ability of the physicians in a meaningful way to address matters of patient concern was stripped,” she said.

However, a dissenting opinion from the court noted that administrators imposed the new bylaws in an effort to address “dysfunction” between the medical staff and administrators after Avera Health Systems assumed control of the facility in 2009. The hospital’s medical executive committee had failed to carry out functions under the old bylaws, which included credentialing providers and peer review functions. The new bylaws, according to the dissent, were meant to promote better quality and patient safety.

David Crosby, a lawyer who represented Avera, said the new bylaws were put in place because of the dysfunction between certain members of the medical staff and the hospital board. The board, Crosby added, had a duty to rectify the problem.

“It was leading to an intolerable situation,” he said.

Despite the reversal of the lower court rulings, Crosby said Avera is still on firm ground.

“The issue goes back to the district court now,” Crosby said. “Nothing’s different today than what it was yesterday. No court has found that Avera did anything wrong.”

The lawsuit highlighted the tensions that exist between physicians and hospital administrators, and both the American Medical Association and the American Hospital Association weighed in on the lawsuit with friend of the court briefs.

Kimmel said she hopes administrators and the medical staff can now work together to implement the court’s decision.

“If it’s a contract, you can’t just unilaterally violate it without consequence,” she said.