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Disclaimers in By-Laws

A version of this article was published in The Daily Record on December 29, 2013.

The law in Maryland and in the majority of states is that hospital bylaws are enforceable as contracts. It is curious then, that, in Atta v. Nelson, a federal court in West Virginia recently bucked the majority rule, and held that a hospital's bylaws did not create a contractual relationship between the hospital and a physician holding privileges there.

A. Disclaimer

The bylaws at issue contained an explicit disclaimer that stated: "the bylaws and the rules and regulations do not create, nor shall be construed as creating a contract of any nature between or among the hospital, the Board, and any person granted any clinical privilege provided for under the terms of [those] documents."
The court enforced the disclaimer, analogizing to cases where courts (including Maryland courts) have held that an employee handbook does not create contractual rights if it contains a disclaimer that disavows any intent by the employer to be contractually bound by the policies stated in the handbook.

B. Contrary View

By contrast, a court in Illinois, in Garibaldi v. Applebaum, held a dozen years ago that such a disclaimer in a hospital's bylaws was contrary to public policy and unenforceable. Illinois state law requires hospitals to have bylaws that include the right to a fair hearing on adverse decisions affecting physicians' clinical privileges. The Illinois court would not permit a hospital to skirt the law by inserting a disclaimer in its bylaws.

Like Illinois state law, the Joint Commission, which accredits hospitals for Medicare participation and for licensing in most states, also requires that medical staff bylaws contain fair hearing rights.

C. Conclusion

While Maryland courts have held that hospital bylaws are enforceable contracts, they have yet to be confronted with a case involving bylaws containing a disclaimer of any intent to create a contract.

Accordingly, parties will have to wait to see whether the approach taken by the West Virginia court takes root elsewhere or whether, if other hospitals include disclaimers in their bylaws, courts will follow the lead of the Illinois court in holding the disclaimers void as against public policy.

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Date

03.22.13

Type

Publications

Authors

Rosen, Barry F.

Teams

Health Care