Session #7: Who’s the Boss? How to Resolve Hospital Board/Medical Staff Disputes Presenters: Sara A. Noel & Ben Peltier, JD Saturday, Jan. 12, 2013 11 a.m. – 12:15 p.m. Sara Noel Sara Noel is a member of Leonard, Street and Deinard’s health Law practice as well as its regulated industries department. She represents a wide variety of health care clients, including hospitals, clinics, physician groups, health care professionals, nonprofit organizations, managed care organizations, health insurers, third-party administrators, nursing homes, assisted living facilities and health information technology companies. Sara practices health plan, insurance and provider law with an emphasis on transactional, contracting (including managed care and Medicare contracting) and regulatory issues. She has experience in health care transactions, including mergers, acquisitions, sales, integrations and joint ventures. She also advises clients on fraud and abuse laws, Medicare and Medicaid reimbursement, licensing requirements, credentialing, medical staff issues, Health Insurance Portability and Accountability Act (HIPAA), Emergency Medical Treatment and Active Labor Act (EMTALA) and other regulatory compliance matters. Ben Peltier Ben Peltier is the vice president of legal services for the Minnesota Hospital Association. Ben is an experienced hospital attorney with time served in the law department of a large Minnesota health system and representing hospitals and physicians at a Washington, DC law firm. Early in his career, Ben managed health care policy issues for U.S. Representative John Boehner of Ohio. During his time on Boehner’s staff, Ben worked on a variety of health reform topics including Medicare reform, HIPAA, and health insurance regulation. Ben went to law school at George Mason University in Virginia and studied economics as an undergrad at the University of St. Thomas in St. Paul. 1/4/2013 Resolving and Avoiding Board/Medical Staff Disputes Sara Noel, Leonard, Street, and Deinard, P.A. Ben Peltier, Minnesota Hospital Association Outline of Topics 1. Avera Marshall Medical Staff v. Avera Marshall case a. Key Issues, Court Findings and Rationale b. Lessons for Other Hospitals 2. Medical Staff Collaboration Strategies a. b. c. d. Involve Physicians in Strategic Planning Add Medical Staff Member to Hospital Board Other Strategies The Joint Commission View 3. Discussion 1 1/4/2013 Avera Marshall Medical Staff v. Avera Marshall Timeline Medical Staff Bylaws enacted by Board of Directors in 1995 Amended multiple times between 1995 and May 2012 January, 2012 – Avera Marshall provides proposed amended Bylaws to Medical Staff; sought comments Avera Marshall revises Bylaws again – not all Medical Staff comments acted upon favorably Lawsuit filed by some Medical Staff members against the Board of Directors July – Court grants summary judgment to Avera Marshall on issue of Medical Staff standing to sue September – Court grants summary judgment almost entirely in favor of Avera Marshall on remaining issues 2 1/4/2013 4 Key Issues 1. Does a Hospital’s Medical Staff, an unincorporated association, have the capacity to sue the Hospital it is affiliated with? 2. If so, do the Medical Staff Bylaws constitute a contract between the Hospital and the Medical Staff physicians? 3. Under what circumstances can a Hospital modify Medical Staff Bylaws without receiving the approval of the Medical Staff? 4. To what extent is a Hospital required to follow the Medical Staff Bylaws? First time a Minnesota court had considered Issues #1, #2, and #3 (“case of first impression”) Issue #1: Does the Medical Staff have capacity to sue or be sued? No: Factors considered: • The Medical Staff is a constituent part of the Hospital and not a separate entity Court concluded no capacity for Medical Staff to sue or be sued 3 1/4/2013 Issue #2: Are the Medical Staff Bylaws a contract? Factors Considered: • MN Regulations requiring Bylaws, subject to the ultimate control of the governing authority • MN Law on contract formation including whether any separate consideration exists • MN cases on due process and staff termination o Never considered whether due process is the result of a contractual obligation • Non-MN cases on the question Issue #2: Are the Medical Staff Bylaws a contract? Court’s Conclusion. Bylaws are not a contract: • Bylaws are not consideration because of pre-existing duty under Minnesota regulations (Hospital is required to have Bylaws; not a voluntarily entered into contract between two entities) • Board reserved authority for Hospital oversight consistent with Minnesota law which requires the Board to maintain control of the Hospital at all times – cannot delegate such authority to Medical Staff • Even if Bylaws were a contract they would be unenforceable with respect to business decisions • Allowing Breach of Contract claim would improperly restrict ability of Board to protect patient safety 4 1/4/2013 Issue #3: Can a hospital modify Bylaws without staff approval? Factors Considered: • Cases from other jurisdictions were examined • The amendment procedures from the old Bylaws: o (1) request to amend, (2) MEC review of proposed amendments, (3) review by the rest of the Medical Staff, and (4) Medical Staff vote • Old Bylaw provision: “Nothing contained herein shall supersede the authority of the [Board] as set forth in its corporate Bylaws or … law…” Issue #3: Under what circumstances can a Hospital modify Bylaws without receiving the Medical Staff’s approval? Court Concluded: • The Medical Staff voting requirement (the text of the Bylaws prior to their amendment required agreement between the Hospital and the Medical Staff) conflicts with the “Nothing contained herein …” clause • The notice requirements were met • If a hospital is exposed to potential liability for the acts of the Medical Staff, then it must be able to make changes in the Medical Staff 5 1/4/2013 Issue #4: To what extent is a hospital required to follow Medical Staff Bylaws? Factors Considered: Minnesota regulations (discussed above) and Hospital’s Bylaws Court Conclusion: As a general principle, Hospital must follow properly adopted Bylaws; however it is not precluded from changing the Bylaws If the hospital doesn’t follow the Bylaws, an affected member of the Medical Staff may bring an action in equity (an injunction) Case has been appealed Lessons for Other Hospitals Nonprofit Corporations Act dictates the result Bylaws language is important: • “Nothing contained herein shall supersede the authority of • • the [Board] as set forth in its corporate Bylaws or … law…” Include processes to ensure proper oversight Note that Medical Staff is advisory to the Board, where applicable Follow the Bylaws to the extent possible but deviate when necessary to ensure patient safety, quality … Board documents should reflect rationale for deviation 6 1/4/2013 Medical Staff and Physician Collaboration Strategies Involve Physicians in Strategic Planning Establish explicit role for physicians in the Board’s long-term planning process through: • committee and subcommittee membership, • participation in strategic planning retreats, • presenters of educational topics, • CEO and Board Chair meetings with independent clinic leaders, • Medical Staff surveys, • focus groups 7 1/4/2013 Involve Physicians in Strategic Planning (continued) Cautions: • Don’t expect one physician to represent all of their peers in this process; • Note Stark and other regulatory requirements for nonemployed physicians • Failure to follow through on strategic plans brings risk of even greater disappointment for those physicians actually involved in creating the strategic plans Add Medical Staff Member to Hospital Board CMS actually proposed as a Condition of Participation in 2012, but later backed off Joint Commission standard: governing body provides the Medical Staff with the “opportunity to participate” and “to be represented at governing body meetings (through attendance and voice) … as selected by the organized Medical Staff.” Hospitals can benefit from physician Board members who help the Board understand clinically related issues 8 1/4/2013 Add Medical Staff Member to Hospital Board (continued) Effective Nominating Committee criteria and Board member training necessary to ensure physician does not see role as “representative” of Medical Staff, but rather strategic thinker, effective communicator, committed to the organization’s mission and values, etc. Physician Board members have the same fiduciary responsibility as other members: to make decisions in the best interest of the organization, not the interests of Medical Staff Members IRS requires not-for-profit hospitals to have at least a majority of “independent” directors on its Board; minimize “insiders” Other Collaboration Strategies Physician Leadership Committees Medical Directorships – payment for oversight of programs, services, departments “Physician Compacts” from Virginia Mason Practice Support Services Recruiting Support Arrangements 9 1/4/2013 The Joint Commission View JC Hospital and Critical Access Hospital Standard MS.01.01.01: Medical Staff Bylaws address selfgovernance and accountability to the governing body JC Standard MS.01.01.03: “Bylaws are not unilaterally amended …” JC Critical Access Hospital Standards do not include the MS.01.01.03 standard • As with all JC Standards, would be superseded by state law • to the contrary State Court decision to the contrary would be controlling Discussion Strategies that have worked for you? Contact Info: • Sara Noel Leonard, Street and Deinard, P.A. 150 S. 5th Street, #2300 Minneapolis, MN 55402 612-335-1938 [email protected] • Ben Peltier Minnesota Hospital Association 651-603-3513 [email protected] 10