## Facts

- Avera Marshall Regional Medical Center is a Minnesota nonprofit hospital governed by a board of directors with general management authority under corporate documents.
- The corporate bylaws require the board to organize practitioners with hospital privileges into a medical-dental staff operating under board-approved medical staff bylaws.
- The Medical Staff consisted primarily of physicians holding admitting and clinical privileges at the hospital and operated through a defined governance structure and officers.
- Relations between the board and certain physicians became strained, including physicians affiliated with a competing local clinic.
- In 2012, the board announced it would repeal existing medical staff bylaws and replace them with revised bylaws.
- The Medical Staff and two of its leaders sued seeking declarations that (1) the Medical Staff had legal capacity to sue the hospital and (2) the medical staff bylaws were an enforceable contract between the hospital and the Medical Staff and/or its members.
- The broader dispute about whether the board could unilaterally amend the bylaws (and what staff approval, if any, was required) was not decided in this appeal.

## Issues

1. Whether the Medical Staff had capacity to sue and be sued under Minnesota law.
2. Whether, absent contrary language, medical staff bylaws constitute an enforceable contract between the hospital and the individual physician members of the Medical Staff.

## Decision

- The Minnesota Supreme Court reversed the court of appeals and remanded.
- The Court held the Medical Staff qualified as an unincorporated association and therefore had capacity to sue and be sued.
- The Court held that, absent language disclaiming contractual intent, medical staff bylaws constitute an enforceable contract between the hospital and the individual medical staff members.
- The Court did not decide whether the hospital board could unilaterally amend the bylaws; that question was left for further proceedings.

## Legal Principles

- An organized group formed for a common purpose with a governance structure can qualify as an unincorporated association with litigation capacity, even if it does not own property or have independent finances.
- Corporate or organizational bylaws may create contractual obligations between an entity and its members when they reflect mutual promises and govern membership rights and duties.
- Medical staff bylaws, as default, may be treated as contracts between a hospital and individual physicians regarding the terms and conditions of clinical privileges, unless the documents contain language to the contrary.
- Appellate resolution of threshold issues of capacity and contract formation may require remand for fact- and document-specific interpretation of remaining governance disputes.

## Conclusion

The court recognized a hospital’s organized medical staff as an unincorporated association with capacity to sue and held that medical staff bylaws generally operate as enforceable contracts between a hospital and individual physicians unless the documents expressly negate contractual intent, leaving unresolved governance questions for remand.


Med. Staff of Avera Marshall Reg’l Med. Ctr. v. Avera Marshall, 857 N.W.2d 695 (Minn. 2014)