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Physicians, Hospitals Disagree Over Ruling Significance

Lawnwood Regional Medical Center in St. Lucie lost the final round of a dispute spanning more than eight years regarding medical staff bylaws and peer review.

The Florida Medical Association declared the state Supreme Court decision issued August 28 a victory for physicians in general, while the Florida Hospital Association downplayed the significance. The ruling struck down a 2003 local act pertaining strictly to Lawnwood Regional, a for-profit hospital, but the dispute had existed since at least 2000.

At issue was the Lawnwood medical staff's refusal to issue a peer review recommendation, which in effect prohibited the hospital from taking action against two pathologists. After several lawsuits, the hospital sought a legislative fix and got it through a special law passed by the Florida legislature in 2003, allowing the hospital to unilaterally resolve conflicts with its staff physicians.

Almost immediately the Lawnwood medical staff battled the law in court. An appeals court ruled in favor of the doctors last year. And then finally last month the Florida Supreme Court affirmed the lower court ruling, finding that the 2003 law was unconstitutional on the grounds that it violated a prohibition on special laws.

If the legislature wanted such a law, it should apply to all hospitals and not just an isolated case, the court ruled. Three justices concurred, one was recused and another did not participate.

"We're disappointed in the ruling," said Nicole Baxter, spokeswoman for Lawnwood Regional. "We are reviewing it to determine our next steps." Beyond that, Baxter said she could not comment.

Leaders at the Florida Medical Association declared the ruling an important "development in the continued legal tug of war over the division of responsibilities within hospitals," according to an FMA announcement.

Representatives for the American Medical Association, too, said the ruling did in fact have broad reaching significance.

"The victory before the state Supreme Court reaffirms that medical staff bylaws are a binding contract and lays out precisely why these documents are an important part of preserving patient safety," said Cecil B. Wilson, MD, a Winter Park internist and board member of the American Medical Association (AMA), based on a press release. "Hospital boards must work cooperatively with medical staffs to ensure that hospital policies related to financial management do not conflict with the best interests of patients."

Bill Bell, legal counsel for the Florida Hospital Association, downplayed the court ruling. Bell said the ruling didn't pertain to the merits of the law but rather it's legal format as a local act versus a statewide law.

For that reason, Bell said, "It's much to do about nothing."

For another reason, Bell said, he didn't know of any other Florida hospital with a similar dispute as what exists at Lawnwood. The hospital association wasn't interested in pursuing a similar statewide law, he said.

The law that the Florida legislature passed in 2003, which the FMA vigorously opposed, allowed Lawnwood Regional to supersede medical staff bylaws in conflicts over privileging, contracting and quality issues.

Based on its medical staff bylaws, the hospital needed a recommendation from the medical staff in order to take action against a physician following a peer review. The law, in effect, allowed the hospital to supersede the medical staff and instead seek an outside recommendation, allowing it to move forward with any discipline action.

The hospital had already taken unilateral action in suspending the privileges of two pathologists that hospital management believed had committed fraud and misdiagnosed some patients. In 2000, a court order reinstated the doctors' privileges based on the hospital medical staff bylaws.

According to the Supreme Court decision issued in August, Lawnwood ignored the suggestions of the trial court order – upheld by an appeals court – and instead, for the second time, suspended the doctors' privileges by unilaterally altering the medical staff bylaws. Any changes to the bylaws, however, require a 60 percent vote of the medical staff. That sparked another legal dispute before the legislature got involved in 2003.

In its ruling, the Florida Supreme Court said that the law "grants Lawnwood almost absolute power in running the affairs of the hospital, essentially without meaningful regard for the recommendations or actions of the medical staff."

Florida, along with 14 other states, has a constitutional prohibition against granting privileges to private corporations.

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