*1 SD MAHAN, MacDougall, James Drs. John Mayo, Holte, Mat Chester

Michael Frisco, Reynen, In and Donald

thew Aberdeen,

dividuals, and Residents of Orthopedic Dakota, and Sur

South Ltd.,

gery Specialists, A Dakota Partnership, Plaintiffs

Medical

Appellees, LUKE’S, A South Dakota

AVERA ST. Community Hospital,

Non Profit Appellant.

Defendant and 21118,

Nos. 21135.

Supreme Court of South Dakota. 26, April 2000.

Argued 26,

Reassigned 2000. Oct.

Decided Jan. 2001.

Rehearing Denied Feb. *2 of the Blessed of the Presentation

Sisters Aberdeen, South Dakota. Virgin Mary of have the Presentation Sisters Since mission statement “to fulfilling been their min- respond calling healing for a to God’s *3 health ser- istry by providing quality ... community. to the Aberdeen ASL vices” beyond its mission the Aber- expanded has to become the full- community deen a 90-mile radius of hospital within service Aberdeen. 47-23-13, required As SDCL

[¶ 3.] by a Board of Trustees governed ASL is (Board), manages its affairs. The of 15 members from Aber- Board consists communities, surrounding includ- deen and four ing five Presentation duty of the Board “[t]o Sisters. It is the objectives implement purpose and of as determined the Members [ASL] Groseclose, A. of Richard- Chester Jr. and in accordance with the State- [ASL] Sauck, son, Groseclose, Ab- Wyly, Wise & Philosophy of the Presentation ment of SD, Braman, erdeen, and Richard G. By Laws of St. Luke’s Midland Sisters.” Plant, Gray, Mooty, Darling Thomas S. Regional (Corporate By- Medical Center Bennett, MN, At- Mooty, Minneapolis, & 14(b). laws), V, Membership in art ASL torneys plaintiffs appellees. for “religious is limited to Members of the Evans, Edwin E. Melissa C. Hinton Congregation of the Sisters of the Presen- Smith, Evans, Hurwitz & Sioux Davenport, Virgin Mary of Aber- tation of the Blessed Falls, SD, Attorneys for defendant deen, Dakota.” South appellant. I, § art 3. (on GILBERTSON, reassign- Justice mid-1996, In neurosur- [¶ 4.] ASL’s ment). departure, geon left Aberdeen. After his Orthopedic Surgery Specialists passed a recruit resolution to (OSS), corporation, a Dakota and its South neurosurgeons spine-trained two or two ac- physicians, individual commenced this Dur- orthopedic surgeons to fill the void. (ASL) alleg- against tion Avera St. Lukes ing process, recruitment ASL learned ing breach of contract. The trial court neurosurgeon applicants would that most granted summary judg- motion for OSS’ coming in to Aberdeen if not be interested mandatory permanent ment and entered a already orthopedic spine sur- there was injunction filed against ASL. ASL then This due geon practicing the area. was appeal. We reverse. community and the to the small size of the neurosurgeon for the probable need AND

FACTS PROCEDURE supplement practice by perform- his or her spine surgeries. Back and private, nonprofit, gen- ing a back and [¶ 2.] ASL is performed by are also or- spine surgeries eral care located in Aber- acute deen, Dakota, thopedic spine surgeons applicants and the organized under the nonprofit Dako- were doubtful whether Aberdeen could corporation laws of South Health, of both a neurosur- part region- support ta. Avera ASL is orthopedic spine surgeon. system sponsored by geon al health and an care recruiting sion to [¶ 5.] ASL successful close the staff. Plaintiffs claimed December, neurosurgeon who arrived that the action was a breach of the medi- time, (Staff Around this ASL learned that Bylaws) cal/dental OSS, orthopedic group of Aberdeen sur- sought a permanent writ of mandamus and day surgery had build a geons, decided to injunction ordering ASL consider Ma- directly compete center that would with application han’s for privileges. During ASL. first seven months parties Both submitted cross motions surgery open, OSS’ center was suf- ASL summary judgment. After a hearing, the fered a 1000 hour operating loss of room circuit court determined that ASL had usage. breached Bylaws by the Staff closing the decision, In making staff. the circuit response operat- the loss exclusively court relied on By- income, ing passed room ASL’s Board two *4 laws. The circuit court determined that 26, motions on June 1997. The first mo- delegated significant Board had a tion medical closed ASL’s staff with re- amount of its and con- spect physicians requesting privileges (1) cerning staff privileges to the spinal procedures: for medical spinal three fu- (2) sions, staff. The circuit court reasoned that spine closed be- fractures and (3) cause of delegation, the Board laminectomies. The second motion no longer had closed applicants ASL’s medical staff to for initiate actions orthopedic surgery privileges affected the privileges except for the medical general orthopedic surgeons two re- staff. The circuit court being concluded the cruited ASL. The “closing” effect of the Board had breached its contract with the preclude any physicians staff was to medical new staff when it closed the staff to the from applying hospital procedures for named use without first consulting procedures. facilities for the named the staff. request perma- The Plaintiffs’ for a Board’s decision physi- injunction did not affect those nent granted, requiring that had already granted hospi- cians been to consider application ASL Mahan’s tal privileges, including physician- privileges. appeals raising ASL the fol- decision, members of In making lowing OSS. issues: specifically determined that the 1. Whether physi- the individual OSS staff closures were in the best interests of standing challenge cians have the Aberdeen community and the sur- Board’s decision. rounding area. 2. Whether the Board’s decision 1998, In the [¶ 7.] summer of re- OSS breached its contract with the Staff. (Mahan), spine-fellow- cruited Dr. Mahan a ship orthopedic surgeon trained engaged ANALYSIS in the orthopedic surgery. 1. Whether the individual [¶ 9.] OSS Mahan,

While recruiting OSS was one physicians standing have to chal- the OSS advised Mahan that lenge the Board’s decision. the staff at had ASL been closed to ortho- pedic surgery privileges. Despite this It [¶ 10.] is well settled South Dako warning, began Mahan practicing with hospital’s bylaws ta that “a constitute a occasions, OSS. On at least two Mahan binding hospital contract between the officially requested application an for staff staff members.” v. Read privileges with requests ASL. These were ¶66, 14, Hospital, McKennan 2000 SD 610 denied due to the July Board’s decision on 782, (citing N.W.2d 785 St. Hospital John’s 26,1997. Regional Medical v. St. John Medi Staff 1998, Center, Inc., In September 674, 679, [¶ 8.] Mahan cal 90 S.D. 245 (Plaintiffs) (1976)). 472, and OSS commenced this action 474 is also well ASL, against challenging bylaws ap- the Board’s deci- settled that when such are 154 that the properly The circuit court found accepted by governing

proved standing bring enforceable contract doctors have OSS staff they board become physicians. and its of action for breach of contract. cause between Georgia Radiological As See Northeast deci- 2. Whether the Board’s (5th [¶ 13.] 507, Tidwell, 670 F.2d v.

soc. its contract with the sion breached Cir.1982); Community Madera Janda v. (E.D.Cal. 1181, Staff. F.Supp.2d Hosp., 16 Inc. 1998); Regional Hosp., Terre Haute relationship spe- The A. [¶ 14.] (Ind.Ct. El-Issa, 470 N.E.2d Bylaws . cific terms of the App.1984). a contract Only parties to noted, Dako As such, As in the contract. rights have ta, bylaws constitute a contract between are the ones parties to the contract Read, 2000 hospital and its medical staff. of the contract. ¶ can enforcement who seek 66, 14, such, at 610 N.W.2d 785. As SD Leonard, 529 N.W.2d Leonard v. See upon to construe this case we are called (S.D.1995). staff doctors are The OSS doing that are at issue. so of the medical staff currently members principles apply we the normal for con ASL; party to the contract they are interpretation of a contract. struction *5 How and the medical staff. between ASL John’s, 245 at 475. We review St. ever, to a contract is merely being party the of a contract under the de construction standing. enough to have Read, question novo standard as a of law. “ ¶66, 22, at 786. 2000 SD 610 N.W.2d for a liti ‘Generally, 12.] [¶ bring an action standing to have gant Dakota [¶ 16.] Under South court, litigant the must ‘show

before the law, [non-profit] corpora affairs of a “[t]he actu has suffered some personally that he by a board di managed tion shall be a of the injury al or threatened as result (emphasis 47-23-13 add rectors.” SDCL defen putatively illegal conduct the ” ed). specifically, More ARSD Lottery Dakota dant.’ Parsons (S.D. Commission, hospital states that a is re 595 44:04:04:02.01 504 N.W.2d 1993) Gladstone, organized to have “a medical staff quired Realtors v. Bell (quoting wood, 91, 99, 1601, 1608, approved by 99 S.Ct. under and rules the U.S. (1979)). body In regard governing responsible gov and the 60 L.Ed.2d an erning body hospital quality staff doctors suffered the for the whether the OSS injury, court found: in provided patients the circuit of all medical care the profession and for the ethical and undisputed that the Board’s deci- practices (emphasis al members.” in benefit for its sion resulted an economic added). “possess large hardship for these These directors ASL and an economic private practice, discretionary power in medical amount of within the doctors their in undisputed legal authority, limits of their and the It is also the OSS OSS. doctors, judgment per in through their medical cor- exercise of business OSS, money of their duties.” 18B AmJur2d poration spent time and to formance Mahan, him 1486. Pursuant to its au up Corporations, recruit to end with procedures thority, delegated the Board of ASL has perform unable to certain powers ap with inability to obtain staff certain associated because of his result, pointment personnel and review of medical privileges at ASL. As a OSS designated support Mahan to its medical staff. These staff doctors have had prac- powers Bylaws. their are manifested being while unable to build Bylaws Plaintiffs now claim that the Staff patient tice or increase their base as ability of the expected. Clearly trump decision-making [the OSS] [d]octors relating any all ... Board as to decisions standing. have to, way incidentally affecting, medical Members of the Board of [t]he Trustees shall have and exercise personnel agree. do not issues. We management Corporation, of the as give The circuit court failed to follows, limitation, but not in to wit: weight sufficient to the fact that the Staff Corporate are derived from the (b) implement To purpose and ob- 14(u) XIV, Bylaws. Article section Under jectives of Corporation as deter- powers sup- any mined the Members of the Cor- posedly granted under the Staff poration and in accordance with the from, originate by, must and be authorized Philosophy Statement of of the Pre- pursuant Corporate By- sentation Sisters. laws. legal relationship Their is similar to that between statutes and a constitution.

They separate equal are not and sover- (i) To periodically goals, examine its eigns. The former derives its and policies and the current programs of Hence, authority from the latter. to de- responsible and to be granted termine whether the staff was development of a mechanism that possess, that it now claims to provides systematic review of the judicial analysis begin must with an exami- quantity quality of the services Corporate nation of Bylaws. Article provided.

V, section states that business “[t]he (j) To personnel policies ensure that the property Corporation shall practices that adequate sup- are , controlled, managed be ... port patient sound care are estab- ” addition, Board of Trustees.... lished and maintained. Corporate Bylaws provide that: corporate powers, except [a]ll such *6 (r) ... to analyze and evaluate data as herein reserved the Members2 of which the reflects communities [sic] Corporation,

the except and such as are present projected health needs in provided By otherwise for Laws these accordingly develop a written and in the laws of the State of South plan hospital’s for the growth and Dakota shall be in vested and shall be development; appropriate exercised the Members of the Board physical and financial resources and of Trustees. personnel required to meet the Id., § 13. community pa- needs of the and the tients; appropriate and to make rec- Therefore, the [¶ 18.] medical staff has respect ommendations with thereto authority no any corporate over decisions Corporation. to the Members of the specifically granted unless that Corporate Bylaws the or under the laws of

the State of (u) South Dakota. Plaintiffs have To delegate to the Medical Staff the any powers not alluded to that arise under authority to evaluate profession- the the statutory or common-law of Da- competence al of staff Members and Therefore, again kota. we return to an applicants for staff and to Corporate examination of the Bylaws. Ap- responsible hold the Medical Staff V, plicable is article pro- making section for recommendations to the vides that: Members of the Board of Trustees 1. References to article and section numbers tion. Pursuant will refer to those articles and sections in the corporation membership in the is limited to Corporate Bylaws until stated otherwise. "religious Congregation Members the Sisters of the the Presentation of Blessed noted, previously 2. As members of the medi- Aberdeen, Virgin Mary of South Dakota....” corpora- cal staff are not "members” of the community. Such result is appointments, needs of the

concerning initial staff corporate law contrary the to South Dakota assignment reappointments privileges, all sub- thus cannot be allowed to stand. curtailment of approval ject to the final made its deci- When the Board Board Trustees. Members three sion to close the medical staff 26, 1997, acting it was

procedures on June (v) development of the To ensure powers granted Corpo- it in the within the ByLaws, Rules and Medical Staff 14(r). XIV, § Bylaws. See art When rate must state the

Regulations which decisions, specifi- the Board making these which the Medical policies under cally determined that the staff closures itself, approve and to regulates Staff community’s best were the Aberdeen same, added). (emphasis interests, 24- necessary and were to insure 14(u), for the Aber- neurosurgical coverage that hour designated all Under section profitable responsibility By preserving is the deen area. to the medical staff ASL, neurosurgical to the Board re- services make recommendations unprofitable that other ser- competence of also insured professional garding in the Article vices would continue to be offered applicants. members and staff 1(a) When, here, XVI, or- area. as it is clear directs the Board to Aberdeen section by- Corporate Bylaws that the Board under medical-dental ganize staff corpora- laws, approved by authority manage has the which must be tion, authority necessarily Fi- “would in- they become effective. Board before 2(a) XVI, operate on how to individu- article section commands clude decisions nally, departments in serve the to the medical-dental al order best “assign the Board to authonty ensuring corporation’s purposes.... The cost of reasonable promotion community hospi- care to the such care and appropriate professional added). to the communi- (emphasis vitally important health is patients.” tal’s ty legitimate and a concern for board.” under ex Clearly, these Center, Bartley v. Eastern Maine Medical has the plicit powers, the Board (Me 1992). 617 A.2d ASL can- decisions without first to make business unprofitable, yet not continue to offer es- the medical staff. Nowhere consulting including maternity sential services explicitly is the staff Corporate Bylaws *7 ward, room, pediatrics and crit- emergency to decisions on authorized make business units, offsetting ical care without the finan- in corporation. Plaintiffs behalf of the profitable cial benefit of areas such more rely Bylaws on the Staff as their stead responded neurosurgery. as The Board to authority to assume the Board’s source the effect the would have on OSS Yet, power. Bylaws, even within viability the economic of ASL’s explicit provision granting is no there needs of the entire and the health care personnel medical staff control over issues. community. Aberdeen These actions were Instead, that the circuit court found surely power within the of the Board. spirit “the actions of the Board violated attempt to has the insure ASL’s a reli taken as whole.” Such such, the courts economic survival. As “spirit bylaws” of the [Staff] ance on politics in should not interfere the internal corporate up structure of ASL turns the making private, nonprofit and decision of a down, day control over granting side hospital corporation when those decisions a medical day hospital administration to pursuant Corporate By- are to its made that accountable for the legally staff is not laws. decisions, hospital’s obligation has no action, In this the circuit court further the mission of the Presentation Sisters, not an adminis- experience in determined that this was and has unknown Instead it by trative decision the Board. running hospital meeting or the medical regarding gate only “authority held this was decision to evaluate the “granting withholding privi- or professional competence [of] of staff Members ” that leges,” and the action fell “within the applicants and privileges.... for staff provisions bylaws.” of the medical staff 14(u).4 V, art The The circuit court concluded that the Board purpose of this delegation limited of au- “delegated significant had amount of its thority input was to obtain from the staff authority profes- concerning expertise. on areas of its Decisions relat- qualifications sional and staff to ing competence, training, qualifica- the medical staff.” to the cir- According tions and particular physician ethics of a court, cuit in personnel, matters of are for which matters the medical staff is only “secondary approval Board has au- uniquely qualified, while the Board admit- ...; thority originate no with actions tedly has in expertise limited those areas. view, support Board itself.”3 As for this Corporate Under the Bylaws, only it is in III, circuit court cited to article section expertise those confined areas of that the 2(a) Bylaws. of the Staff That section any authority However, staff has at all. provides as follows: Corporate Bylaws delegate do other appointments Initial reappointments duties the staff when it holds the staff to the Medical staff shall be made “responsible for making recommendations Governing Body. Governing Body The to the Members of the Board of Trustees appointments, shall act on reappoint- concerning appointments, initial staff reap- ment, appointment only or revocation of pointments and assignment or curtail- after there has been recommendation privileges.” ment of Id. Clearly, the medi- provided from the Medical as Staff gives cal staff recommendations to the Bylaws. these relating appointment Board on issues The circuit court provision also cited a However, privileges. this case is not the Credentialing support Manual to appointments about assignment or the claim that the Board essentially only has privileges. curtailment of It is about an rubber stamp authority. provision That administrative decision to close ASL’s staff states Board shall accept “[t]he either therefore, procedures, for certain the med- or reject the recommendation of the Cre- part ical staff no has the decision and ” dentials and Executive Committee.... apply. Staff do not The circuit Manual, Credentialing section 1.5-7. Final- responsibilities court has taken the ly, the circuit court proce- found that the staff in certain areas and elevated them dure for hearings appellate review was into and control over those areas. further evidence that the Board was not clearly This result was intended originate allowed to relating actions Corporate either or the Staff staff, the medical it allowed to Bylaws. appeals. Bylaws, hear Staff art VIII. *8 The of sections the Staff provisions [¶ 22.] These have been mis- upon by relied by provide the circuit court construed the circuit court. When the delegated power non-application. Board additional evidence of Ar- to the medical staff through III, the Bylaws, only applies Staff it had the au- ticle section appoint- to ments, thority corporate bylaws under the reappointments, to dele- or revocation of 3. The circuit authority responsibility, assign court further concluded that the give Board is allowed to its "seal of authority medical-dental staff reasonable approval” stages at the final of staff actions. ensuring appropriate professional care to the added). hospital’s patients.” (emphasis Clear- Another limitation on the Board’s to ly, degree authority given by the to the staff delegate authority Corporate is found in the interpretation the circuit court’s not a rea- XVI, 2(a), Bylaws, article section where it authority. sonable amount of states that "[t]he Members of the Board of shall, Trustees in the exercise of their overall the Board determined pre- quired personnel, privileges.5 As of staff

appointments necessary to the staff of that it was close noted, does not involve this case viously procedures and ortho- as to the three ASL procedure for The procedures. those the pedic privileges. Under Cor- surgery found in article VIII review hearings and reason- Bylaws, this decision was porate Board by the if a decision only applies legal has no basis able and this Court practitioner’s] adversely [the affect “will decision. second-guess its as a member to or status appointment of clinical or his exercise Medical Staff powers of man- its broad [¶ 25.] Within ” VIII, Bylaws, art Staff privileges.... the business decisions agement, some of 1(a). Board by action disputed The undoubtedly im- by the Board will made physician’s appointment not affect did affect matters that relate to or pinge upon All of the staff. as a member or status This fact hospital. staff of the the medical clinical However, that had merely because is unavoidable. 26, 1997, priv- retained those ASL on June of the Board affects the staff a decision provision in the Cre- Finally, authority to over- ileges. give the staff does ap- only applies to the made dentialing Manual business decision rule valid here is not at issue plication process, Allowing the staff this amount Board. given appli- authority effectively was never would because Mahan administrative cannot privileges. We Board of ASL. ASL cripple governing cation for clinical analysis of in its current cor- circuit court’s would cease to function accept that the porate given if its staff were such Bylaws can somehow override form power. Board authority granted to the specific can Bylaws of ASL. Nor Corporate decision, In the circuit 26.] [¶ “spirit [Staff] accept that we attempted distinguish between court usurp can bylaws taken as a whole” present this situation and the situation Board. away from ASL’s enters into an exclusive wherein Under attempt find this to be un contract. We analyze has the An exclusive contract arises persuasive. present and reflecting data evaluate with an out when the contracts of the Aber- health care needs projected physicians, physician group side or data, light of that community. deen phy hospital agrees that the whereby hospi- develop “plan for the Board must physicians shall be the group sician or provide development; growth tal’s to use certain facili only personnel allowed financial re- physical and appropriate units hospital, radiology such as ties personnel required to meet sources room units. Such exclusive emergency pa- community and the the needs of the for most contracts are common 14(r). V, § Corporate Bylaws, art uni today, tients.” and have been almost hospitals enforceable, that it was in the versally The Board determined valid and even found community provide corporate for in explicitly provided best interests of the if not neurosurgical bylaws. Lyons services. v. St. Vincent Health Cen 24 hour access to (Pa.Comwlth. 1999); ter, ASL needed 731 A.2d coverage, To Health, orthope- Hosp. & neurosurgeons two or two Holt v. Good Samaritan recruit 439, 590 N.E.2d App.3d re- 69 Ohio spine surgeons. To recruit dic III, Staff as ommendation from the Medical 2 of the Staff 5. Article section *9 Bylaws. part: provided states in in these reappoint- appointments a. Initial shall Appointment c. to the Medical Staff be made ments to the Medical staff shall appointee only such clinical confer on Governing Governing Body. by the The granted by privileges been as have reap- Body appointments, shall act on Governing Body, in accordance with appoint- pointments, or revocation of Bylaws. only been rec- these [a] ments after there has (1990). Corporate past, In the ASL has closed sever- and common sense. facility physicians al grant privileges areas its Are we to force ASL to part an contract. Such areas exclusive every qualified physician may that stand at anesthesiology, radiology, include emer- doorstep and announce that he or she care, gency pathology, inter- room EKG using hospital’s will henceforth be fa- pretation, pulmonary interpreta- function cilities, simply they because the staff said tion and cardiac catherization. grant pow- could? Absent a dear of such er, any corporation the staff of does not Plaintiffs allege do not have the kind of control that the circuit prior that the exclusive contracts entered grant court would to the medical staff. into ASL are invalid. Neither is it disputed is not that there is no such clear that alleged the Board does not have the case, mandate in only “spirit of the authority into to enter such exclusive con bylaws spirit taken as a whole.” The Yet, they tracts. claim that the action of bylaws these cannot override entire they challenge now is somehow corporate structure of ASL. The Board logical invalid. There no why is reason only delegate authorized to to the staff facility ASL could close certain areas of its authority reasonable appropri- to ensure (via to all but few an exclusive professional Corporate ate care. Bylaws, contract), yet not be allowed to close its 2(a). XVI, § art The result reached any orthopedic facilities to new surgeons circuit gives court the staff an unrea- certain, performing procedures. named authority sonable amount of that is viola- sense, has entered implied ASL into an tive of SDCL 47-23-13 and ARSD orthope exclusive contract with all current impractical 44:04:04:02.01 and is in a cor- spine surgeons. implicit dic The au same porate business environment.7 Imagine that thority allows the Board to enter into the confusion and lack of clear lines of exclusive contracts allows it to close ASL’s management authority that would ensue at staff as was done here. if the Board had [¶ The circuit court 28.] also conclud- minimal amount of control over its medical accept ed that ASL application must an give that the circuit court would it. any wishing doctor to have privileges court, According ASL. to the circuit it is 29.] B. Contractual Element of [¶ then the responsibility of the medical staff Faith. Good applicant to decide whether the compe- [¶ 30.] We stated Garrett applicant tent to and whether the BankWest, Inc., (S.D. 459 N.W.2d 833 proximity hospital. resides close 1990), “[e]very contract contains an If the staff is satisfied as to these two elements, implied good covenant of faith fair then under the circuit court’s dealing prohibits contracting either analysis, required ASL is grant party from oth physician preventing injuring the hospital. at the Ac- court, party’s right agreed er cording to the circuit receive bene no other con- because, play (citing siderations can come fits contract.” Id. at 841 into (Second) Contracts, “the Restatement [Staff] do not for re- (1981)). “good generally strictions of the staff for other rea- The term faith” son.” Such a construction of indicates absence of bad faith on behalf contrary reaches a result that is a party to a contract. Id. at 845. Ex- Again, upon 6. the circuit court relied tion of the because “spirit bylaws” to reach this conclu- granted Board would have more than reason- sion. authority. We able cannot conclude that the Board would have intended to violate the It should be noted that under the circuit Corporate Bylaws when it enacted the Staff interpretation, delegation court’s of that Bylaws. much would be invalid as viola-

160 performance not interfere with the staffs performance faith include ampies bad of negotiated simply It made an party Bylaws. other of of the Staff depriving the contract, preventing the not to al- right economically under the reasonable decision receiving the bene- party physicians perform from to aggrieved any low additional interfering in the bargain, orthope- of the procedures fits the three named Therefore, contract. party’s performance of the any allegations other surgeries. dic 841, Id. at implied duty breached its that ASL faith must fail. good noted, previously As hospital’s bylaws binding constitute a “a Hospitals legally have de hospital and the hos contract between responsibilities and duties. See Ten fined Read, 66, members .” 2000 SD pital staff Zamora, 464, Health Ltd. v. 13 S.W.3d et ¶ 14, at 785. Because the 610 N.W.2d hospi that (Tex.App.2000)(stating 471 “[a] accepted approved Board hostery providing [sic] tal is not a mere a contract was formed between Bylaws, place and a for room board contract, medical staff. This ASL and its craft, their but institution [an Dakota, im all in contains the like independent of care to its owes duties that] and fair deal plied good covenant faith carry duty, To out this patients.”). implied covenant allows either ing. That must have the to close its Board for of contract “even party to sue breach fact, physicians. certain In doors to the conduct failed to violate though Impe nearly beyond is refute. See agreed express terms of the contract Ass’n, Inc., 862 Hosp. rial v. Suburban Garrett, parties.” 459 N.W.2d (D.Md.1993) 1390, F.Supp. (noting 1401 assume this is what the circuit 841. We “ private hospital right that ‘a has the “spirit court meant reference practicing from any physician exclude bylaws.” duty good of the But the faith therein, such exclusion rests within the Implied not limitless. Id. defini tlje managing discretion of the authori sound faith that tion of bad is the idea the actions ”); Hosp., ties.’ Hutton v. Memorial 824 unreasonable, therefore, were a breach of 61, (Colo.App.1991) that (stating P.2d 63 good the covenant of faith cannot exist nothing “requires hospital there is parties act a reasonable man when every physician grant ner. the minimum criteria set who satisfies The 32.] Board’s decision to [¶ obtaining privi forth in its for such certain, hospital’s facility close the v. Health leges.”); Sarin Samaritan Cen procedures named was a reasonable ad ter, 790, 80, Mich.App. 82 ministrative decision. It had determined (1989) (declaring that rule is well “[t]he necessary to that the closures were insure private hospital that a has a established viability hospital. the continued right any physician prac- to exclude The Board must be allowed to make such therein.”); tising Joseph [sic] Lewin St. reasonable, independent if it is to decisions Cal.Rptr. Hosp., Cal.App.3d provide comprehensive continue to medical (1978) (stating every 906-07 that “in community. services to the Aberdeen to our in which a brought case attention should also be noted that the Board did hospital’s operation facility of a on a any right abrogate for which the staff challenged, ‘closed-staff basis was the de previously negotiated. had Nor was the governing authority cision of the medical staff denied the benefit of its bar upheld.”). has been gain. rights The and benefits that addition, claiming negligent 34.] staff is now are not mentioned in [¶ impute liability can to a Bylaws, they delegated nor are act of a doctor Staff theory respondeat under a su Corporate Bylaws. the staff in the It is unless it can be shown that perior clear from the record that the Board did

lfil Therefore, independent an con tween the Board and the staff. acting as doctor § 28.8 Hospitals 40 AmJur2d tractor. judgment the circuit court’s is reversed. Behrens, Further, Shamburger in v. 380 imposition perma- a The circuit court’s of (S.D.1986) 659, we held that 665 injunction nent is likewise reversed. liability negligence attaches to separate own when it has breached its MILLER, C.J., [¶ 36.] standards, those available in the same or KONENKAMP, JJ., AMUNDSON and community hospitals general or or similar concur. ly, allowing incompetent such as a known on staff. also doctor to remain See Good JOHNSON, C.J., part [¶ 37.] concurs States, 291, 2 man v. F.3d United in part. and dissents (8thCir.1993) law). (applying South Dakota completely to first illogical It would be JOHNSON, Judge (concurring Circuit impose duty upon of reasonable care part, dissenting part) hospital, strip and then later ability implement to I majority concur with the on fulfill policies programs required to I, Issue but dissent on Issue II. duty. that ignored

[¶ 39.] ASL the Medical Staff Conclusion Bylaws, which allow the active medical concerning vote and be heard Because the actions of ASL’s Instead, bylaws. amendments to the ASL Corpo- permissible Board were under the faith, unilaterally made a business decision to good and done in there rate breach of the contract close the medical orthopedic has been no be- staff to new appointment go beyond 8. Given the fact that to ASL cases the definition used in that staff, bylaws, type medical under its with it of document and of carries invoke some form an event, agency, adoption any of of the circuit elements “economic realities" test. In our Akins, 124, legal at court's rationale arrives further diffi- recent case of v. 2000 SD Setliff Vilhauer, 54, 878, Lucey culties. 64 S.D. employ- 616 N.W.2d dealt with which an 203, (S.D.1935) (overruled N.W. on other dispute ment in a between doctors medical grounds), duty agent clinic, we set forth the an agency principles is instructive on as principal: well. We cited SDCL 60-2-13 which states, employee who has business "[a]n The law is well settled that the relation of account, to that to transact on his own similar agent principal an to his is one of confi- employer, entrusted to him his must al- agent duty dence and It is the trust. ways give preference.” We the latter the fur- good to act with the utmost faith for the although ther concluded that SDCL 60-2-13 principal dealings best interest his in all flatly prohibit employees pursu- does not concerning affecting subject matter interests, ing require their own it does an agency, place and he must not him- ¶ Id., employee prioritize. 616 N.W.2d self in such relations his own interests employee give preference at 887. An must repre- or the interests of others whom he employer's his interests over his or business may antagonistic sents become to those of (citing v. Pure Plant her own. Id. Bushman principal. his matters not how fair the Intern., Ltd., Food 330 N.W.2d 763-64 agent may conduct of the have been nor (S.D.1983)). principal injured. that the was not part can a doctor who is a owner of the How opinion The circuit court’s elevates the inter- for-profit expected staff, OSS be to fulfill his or her agent, as ests of above interests ASL, duties or her co-owners and in towards his principal. clearly as This violates the same instance fulfill the duties towards general principles agency and cannot al- be ASL, profit principal, who is a not for lowed. hospital? imply This does not ill-will on employees Whether the medical staff are also doctor, part simply presents question. it faces fundamental a difficult Cases from oth- results, jurisdictions er arrive at medical issues such as at which institution different place patients, employee something from that of to a does the doctor his or her OSS akin agent corporate independent We officer to that of an or ASL? have often stated that applies rule contractor. A review of the ASL Staff cannot serve two masters. This professionals does not a definitive answer. Other to medical as well. except surgeons, annually. those ASL was least The review shall be *12 recruiting. any proposed bylaw timed so that changes ready are for submission to the medical entirely ASL relies almost on [II40.] staff on or the meeting.” before annual 2(a) III, bylaws, the article which Article further XVI notes: appointments reap- “Initial and states: any the event that [i]n member of the shall pointments to the medical staff be question medical staff has a or disagrees Governing Body. The by made the Govern- proposed with changes By- the the appointments, reap- ing Body shall act on laws, ... [d]iscussion from the floor re- pointments, appointments revocation of or garding changes the in the and has been a only after there recommenda- may Rules and Regulations be conduct- provided by tion medical staff as from the by participate, ed those who desire to reliance Bylaws.” these This is flawed. revisions, following which al- change, or deals with a unilateral amend- This case upon, (empha- terations shall be balloted bylaws, prescribed ment to without the the added). sis staff, approval the medical and not an appointment reappointment. or At no time the Board of did Trustees allow any the input medical staff to have or vote This Court has held that “medi- [¶ 41.] proposed changes bylaws on the to the as bylaws cal staff do constitute a contract required. is, terms, express subject which to bylaws Article of the [¶ 43.] XVII sets amendment when the amendment forth that Bylaws together “[t]he with the agreed to both the medical staff and appended Regulations Rules and shall be Hosp. medical v. center.” St. John’s M.S. adopted any regular special or meeting C., 674, 679, Reg. St. John M. 90 S.D. 245 of the active medical staff.” This (1976). means (Holding the bylaws that the amendments to cannot be board of directors unilateral amendments adopted unilaterally; the active medical bylaws to the staff null and void medical present.9 staff must be and participation approval without the provided in by- the medical staff as The trial court found: [¶ 44.] laws). principles govern “The whole, reading bylaws, as a [i]n govern construction of contracts also bylaws Court concluded that con- interpretation corpo- construction and template applications taking any Johnson, bylaws.” rate State v. Wis.2d doctor privi- who wishes to have staff 624, 626, (1963). 124 N.W.2d As leges bylaws at ASL. The do not contain such, “where the terms of a contract are any may restrictions as to who apply, plain unambiguous, duty and of the they put professional logistical stands, court is it as it giving to construe qualifications on who can accepted be plain meaning language effect to the qualifications These on center staff. used.” Id. a physician’s competence hand, In the case at the follow- availability medicine and his or her to be by- ing language hospital. They bylaws article XVI of ASL’s at the do not to the clearly delegates laws active medical for restrictions of staff for power and be heard Any interpretation vote when other reason. other proposed there would contrary are amendments lead to result whole, bylaws: Bylaws, Regula- spirit bylaws “The Rules and taken as a (emphasis tions Committee shall review these in original). alter, Clearly repeal bylaws adopt under articles XVI and XVII of the amend or or bylaws given bylaws the board of have directors new shall be vested in the board of alter, provided active medical staff amend or directors in the arti- unless otherwise repeal adopt bylaws. bylaws.’’ (empha- incoiporation new See cles added). provides: SDCL 47-22-33 which "The sis in this conclu- is no flaw There 2001 SD 12 not contain bylaws did The staff sion. DAHL, Appellant, Plaintiff Ron may apply for staff on who

restrictions on place did restrictions privileges, but COMPANY, This COMBINED INSURANCE accepted to the staff. may who be members, Appellee. Defendant as it to the staff benefit to their to recruit allowed them No. 21291. *13 the new exception clinics with Supreme Court South Dakota. (to receive staff privileges doctors would full within 90 service Sept. Argued Aberdeen) they profes- if met the miles of 17, 2001. Decided Jan. of the geographic requirements sional and bylaws. staff unilaterally denied 46.] ASL

[¶ by blatantly ig- members

benefit to staff provisions of the

noring the amendment “Every contract contains an bylaws.

staff and fair good covenant of faith

implied contracting

dealing prohibits either injuring the oth-

party preventing agreed party’s right

er to receive the bene- BankWest, of the contract.” Garrett

fits (S.D.1990). partial ASL’s staff, orthopedic strictly for

closure reasonable, reasons, was not

economic faith, and was a breach of contract. good may sue for breach of con- party

Either though the conduct failed to

tract “even express terms of

violate parties.” Id. at agreed

contract issuing correct in

841. The trial court was injunction requiring ASL to permanent application Dr. Mahan with privileges. Accordingly, I would affirm the

circuit court on Issue II. JOHNSON, C.J., sitting for

SABERS, J., disqualified.