Medical Staff of Avera Marshall Regional Medical Center v. Avera Marshall

In 2009, Avera Health Systems acquired Weiner Memorial Medical Center and incorporated the center’s hospital as the Avera Marshall Regional Medical Center (AMRMC) (defendant). At the time of the incorporation, the AMRMC governing board (defendant) established AMRMC’s articles of incorporation and medical-staff bylaws. The articles granted the board authority to manage AMRMC’s medical staff (plaintiffs). The bylaws provided that each member of the medical staff could receive admitting privileges if the staff member agreed to be bound by the bylaws. The bylaws also provided that medical staff could propose an amendment to or a repeal of the bylaws, given that one-third of medical staff members agreed, but that any changes recommended would require board approval. After tensions between the board and the medical staff, the board announced that it had decided to repeal the current bylaws and institute new bylaws. The board informed the medical staff that each staff member as an individual could provide input but that the board was not accepting input from the medical staff as a body. At a medical-staff meeting, the staff reviewed the proposed bylaws and determined that the bylaws would restrict the rights of the medical staff. Despite the board’s announcement, the medical staff voted to reject the changes, relying on the current bylaws that allowed a repeal if proposed by one-third of medical staff. However, the board ultimately voted to accept the new bylaws. The medical staff filed suit against the board on a breach-of-contract claim. The trial court dismissed the case, holding that the medical staff did not have standing to sue and that the medical-staff bylaws were not an enforceable contract because there was no consideration. The trial court reasoned that because forming hospital bylaws was required by Minnesota law, adopting bylaws was a preexisting duty and therefore was not sufficient consideration. The court of appeals affirmed. The medical staff appealed.