Mahan v. Avera St. Luke’s

Brief Fact Summary. The circuit court found that Avera St. Luke's (Defendant) did not have the right to initiate actions that affected the privileges of medical staff such as Dr. Mahan (Plaintiff) when they had already delegated this authority.

Synopsis of Rule of Law. A hospital's medical staff bylaws do not outweigh the Board of Directors' ability to make administrative decisions.

Facts. Avera St. Luke's (Defendant) is part of a regional health care system sponsored by the Sisters of the Presentation of the Blessed Virgin Mary of Aberdeen, South Dakota.  Since 1901, the Presentation Sisters have provided quality health services to the Aberdeen community.  In mid-1996, Defendant's neurosurgeon left Aberdeen.  While recruiting his replacement, (Defendant) learned that most neurosurgeon applicants would not care to come to Aberdeen if there was already an orthopedic surgeon practicing in the area.  Defendant recruited a neurosurgeon successfully in December of 1996.  It was around this time Defendant learned that OSS (Plaintiff), a group of Aberdeen orthopedic surgeons, were going to build a day surgery center that would compete directly with Defendant.  During the first seven months that OSS's (Plaintiff) surgery center was operating, (Defendant) suffered a 1,000-hour loss of operating room usage.  Defendant responded by closing Defendant's medical staff with respect to doctors requesting spine surgery privileges and closed its medical staff to applicants for orthopedic surgery privileges.  OSS (Plaintiff) recruited Dr. Mahan (Plaintiff), a spine-fellowship-trained orthopedic surgeon who practiced orthopedic surgery, in the summer of 1998.  Mahon's (Plaintiff)  application for staff privileges at ASL (Defendant) was denied.  Mahan (Plaintiff) and OSS (Plaintiff) initiated this action against Defendant, challenging the Board's decision to close the staff.  The circuit court determined that  Defendant breached the Staff Bylaws when it delegated power regarding medical staff issues by closing the staff without first consulting the staff.  Defendant appealed.

Issue. Do a hospital's medical staff bylaws outweigh the Board of Directors' ability to make administrative decisions?

Held. (Gilbertson, J.)  No.  A hospital's medical staff bylaws do not outweigh the Board of Directors' ability to make administrative decisions.  This is not a case about issues delegated to the expertise of medical staff regarding appointments and privileges.  Instead, it was an administrative decision by Defendant's Board to close Defendant's staff for particular procedures in order to secure their economic survival.  Permitting the medical staff to pass on valid business decisions by the Board regarding any issue that incidentally affects the medical staff would result in an ineffective Board.  In regards to hiring competent doctors, hospitals have a duty of responsibility to do so.  Imposing this duty and leaving hospital boards powerless to make any decisions regarding medical staff, as the lower court suggests, would lead to results that are illogical.  Reversed. 

Discussion. Regardless of the arguments made in Mahan that hospital boards should not act as a rubber stamp in approving doctors for staff privileges that are approved or recommended by staff, this is actually how must hospitals do function.