Is the Medical Staff Independent in California? Not Exactly
In Bichai v. Dignity Health (2021), the Fifth District Court of Appeal correctly noted that California hospitals and medical staffs are separate legal entities. Consequently, the Bichai court held – also correctly – that when a medical staff recommends adverse action against one of its members, but the hospital’s board has not yet taken action, no cause of action arises for retaliation against the hospital under Health and Safety Code § 1278.5. In other words, until the board acts, the aggrieved physician may not bring a retaliation lawsuit against the hospital.
Since then, however, some commentators have stated that Bichai means medical staffs are not only legally separate but also independent from their hospitals. That conclusion significantly overstates Bichai’s impact.
It ignores the nuanced relationship in California between medical staffs and their affiliated hospitals. It is also confusing and divisive. Instead, a much more accurate reading of Bichai, together with applicable California law, is that: (1) the medical staff and hospital are indeed separate legal entities; (2) the medical staff enjoys statutory independent rights[1]; and (3) because the hospital and the medical staff depend on one another to advance the hospital’s mission, they are mostly interdependent. This is clear from both a practical and legal standpoint.
Practically Interdependent
Practically, the hospital and medical staff have a clear and undeniable common interest in the hospital’s success. Both entities benefit from the hospital’s service success, patient loyalty, and stellar market reputation. To pursue this common interest, the hospital and medical staff must engage in day-to-day cooperation and develop a strong, trusting partnership.
Legally Interdependent
Legally, certain realities make it clear that California medical staffs are not entirely independent of their hospitals, but must interact cooperatively in certain respects.
- Yes, the medical staff is self-governing, but:
- It cannot unilaterally amend its own medical staff bylaws.[2]
- It cannot appoint or terminate its own members – it can only recommend appointment and termination to the hospital board, which makes the final decision.[3] This legal division of disciplinary responsibility is the basis for the correct Bichai decision: The board rarely acts on such matters until after the medical staff has acted.[4]
- The medical staff’s peer review must be overseen by the hospital, which has a legal duty to ensure the medical staff’s competence.[5]
- The medical staff relies on the hospital to “indemnify the medical staff and its individual members from and against losses and expenses [arising from] litigation-related costs…relating or pertaining to any alleged act or failure to act within the scope of peer review… activities.” This is a universal requirement in medical staff bylaws throughout California.[6]
- If any hospital ceased to exist, so would its medical staff.
- Yes, the hospital governing body (board) has ultimate authority over the hospital, but:
- Yes, the hospital board appoints members of the medical staff and grants privileges, but:
- It may do so only on the medical staff’s recommendation.[9]
- It may not take action against a medical staff member’s privileges or membership without the medical staff’s recommendation, except in extreme circumstances when the medical staff has failed or refused to act.[10] (As noted above, this is the division of disciplinary responsibility forming the basis for the Bichai decision.)
- The hospital board has final approval authority over a medical staff member’s appeal of a reportable adverse peer review decision, but it still must give great weight to the medical staff’s recommendations and decisions.[11] It must reach a decision by applying the standard of review provided in the bylaws, and in most cases not by exercising its independent judgment.[12]
In some of the discussion about Bichai, the above realities are disregarded. To be sure, the medical staff is a separate legal entity from the hospital, and thus the hospital is not liable for the medical staff’s recommendations on which the hospital has not yet acted. Still, that does not mean that either the medical staff or the board is independent of the other. The uniquely interdependent relationship between the two entities is too important to allow them to be so fully disconnected. Peer review lawyers, medical staff leaders, and hospital board members on both sides of these matters can bring more balance, reason, and accuracy to this critical discussion.
