Levy v. Clinton Memorial Hospital, a recent Ohio state court case, confirms the longstanding concept that hospitals may close medical staffs or departments for quality of care reasons, but also reaches the absurd legal conclusion that medical staff bylaws do not constitute contracts and that clinical privileges are equipment specific. 


Clinton Memorial Hospital expanded its cancer care facilities by adding a linear accelerator, which is really nothing more than upgrading to current standard of care. The hospital awarded a full-time exclusive contract to Dr. Stella Ling to provide radiation oncology services. The radiology oncology services were previously provided by a group consisting of Drs. Richard Levy, Peter Fried, and Marc Mosbacher. 

The hospital took the logically absurd position that the exclusive contract did not impact the clinical privileges of Drs. Levy, Fried and Mosbacher, because they were still permitted to provide radiation oncology services at the hospital using the old equipment, but they were not entitled to use the linear accelerator. Of course, the old equipment had been removed and replaced by the linear accelerator. If widely adopted, this theory would allow hospitals to change privileges by changing equipment. Theoretically, hospitals could disenfranchise an entire group of specialists by replacing the equipment at the hospital. 


Although the headlines of the case deal with the idea of closing a medical staff or a medical staff department, that is a fairly well accepted principal and not widely contested. The issue is really what happens to the physicians with existing staff privileges. When the closing of the medical staff department does not disenfranchise the existing physicians, there is rarely a complaint about the process. However, when physicians are replaced by other physicians, those disenfranchised are quick to suggest future denial of due process. This issue of often puts physicians against physicians.


The majority position on this issue is that medical staff bylaws do constitute contracts, as noted by general posts on the MedLaw Blog. This Ohio court goes to absurd legal constructions to find that medical staff bylaws do not constitute a contract. Primarily, the court finds there is no mutuality of obligations, because only the hospital is required to follow the bylaws and the physicians are not required to even practice at the hospital. Of course, if the hospital had actually terminated the physicians medical staff privileges under circumstances in which the hospital desired to utilize the medical staff to process procedures, the first argument the hospital would have made had the physicians gone straight to court is that the physicians were obligated to use the administrative remedies of the bylaws. Medical staffs would do themselves a great favor if they simply stated in the bylaws that the bylaws were intended to be binding on both parties. In fact, the court stated that the medical staff bylaws were merely statements of general intent and did not reflect any meeting of the minds. 


The hospital denied that the physicians had medical staff due process hearing rights because, even though the change in the equipment might have been a constructive termination of their privileges, the privileges were not terminated for professional cause and the bylaws provided hearing rights only in the event of some type of professional cause termination. Ironically, the hospital is also arguing that it had the right to close the medical staff because it had the right to make improvements in quality of care, but that would not have been an issue had the physicians maintained their clinical privileges for the term of their appointments. 

The issue medical staffs must confront in dealing with these issues is whether hospitals should be permitted to constructively terminate clinical privileges by awarding exclusive contracts or changing equipment during the term of the appointment of existing medical staff members, or whether those types of changes must protect those existing rights. No dispute would be raised if the hospital simply declined to renew the medical staff privileges of the current physicians at the next renewal time. After all, if the medical staff bylaws do constitute contracts and the physicians have two year appointments, those contractual two year appointments expire at the end of two years. 

The complete text of the case is available at: http://op.bna.com/hl.nsf/r?open=mapi-7anrfh.