New Bern eye surgeon rebuts state’s CON defense in new court filing

Image of ophthalmologist Jay Singleton, who is suing North Carolina over CON laws affecting his practice. Image via Institute for Justice.

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  • Lawyers for a New Bern eye surgeon rebutted state government arguments Monday in a state Supreme Court case challenging North Carolina's certificate-of-need law.
  • Dr. Jay Singleton argues that the CON requirement violates his constitutional rights by blocking him from performing most eye surgeries at his own operating room. Instead he must use a nearby hospital that holds the region's only CON.
  • The state Supreme Court agreed last September to hear the case. Singleton had appealed to the high court in 2022.

A New Bern eye surgeon challenging North Carolina’s certificate-of-need law tackled the state’s arguments in defense of CON in a new court filing Monday. The state Supreme Court will consider the case in the months ahead.

Dr. Jay Singleton challenges the state law that blocks him from performing most eye surgeries at his own operating room. Singleton must perform those surgeries instead at CarolinaEast, a nearby hospital that holds the region’s only CON. The CON represents a form of state government permission slip.

Working with lawyers from the Institute for Justice, Singleton argues that the CON law violates his constitutional rights. The latest court filing replies to a state government brief at the state’s highest court.

“There are some choices the legislature can’t make. Try as the State might to frame this case as an untouchable policy debate, the State’s 88-page brief never really grapples with a basic truth: Some policies violate the Constitution,” Singleton’s lawyers wrote. “Laws that exceed the police power are not ‘law[s] of the land.’ Laws that grant ‘exclusive or separate … privileges’ or ‘monopolies’ are invalid.”

“This Court has a duty to say when the legislature has crossed these lines,” the brief continued. “The separation of powers demands nothing less.”

Singleton “is not required to slog through the CON process before he can challenge the CON requirement,” his lawyers argued.

“Economic laws must be ‘reasonably necessary’ to protect the public. Dr. Singleton alleged that, as applied, the CON law does not protect — and in fact harms — real patients,” his lawyers wrote. “The State’s contrary arguments simply fight the posture of the case. And they reveal, not a respect for the separation of powers (as the State claims), but a desire to prevent this Court from playing its part in that separation. The Court should decline.”

“The legislature can’t grant exclusive rights to provide private services — even if it thinks those privileges are a good idea,” the brief added.

The surgeon’s lawyers challenged the argument that Singleton should have sought a CON before filing suit. “Dr. Singleton alleges the CON requirement is unconstitutional. Forcing him to beg DHHS to make a CON available, to apply for that hypothetical CON, and then to spend years and thousands of dollars battling with CarolinaEast for that CON is not a ‘remedy’ for the CON requirement,” the brief explained.

Lawyers from the state Department of Justice urged North Carolina’s highest court in January to reject Singleton’s legal challenge.

“Healthcare is one of the most complex, heavily regulated, and politically contested markets in the economy,” wrote state government lawyers. “Whether the healthcare system appropriately balances costs, quality, and access — among many other factors — is a notoriously challenging and critically important policy debate.”

Justice Department lawyers represent the state Department of Health and Human Services, DHHS Secretary Kody Kinsley, Gov. Roy Cooper, and state legislative leaders. DHHS oversees the CON process. The CON law limits who can build new healthcare facilities, add beds to existing hospitals, and purchase large-scale medical equipment.

“The legal question here, however, is not whether the State’s certificate-of-need law is the best healthcare policy. The question is whether the law passes the deferential review that this Court applies to economic laws. It does,” the Justice Department brief continued.

“As with all policy debates, some would go further, arguing that the CON law should be repealed in its entirety. They contend that by requiring providers to get state approval before offering certain new health services, CON laws impose unnecessary barriers to entry, limit consumer choice, raise costs, and harm competition,” state lawyers added.

“In keeping with these objections, legislation that would repeal the CON law has been introduced in the General Assembly at least six times in the last six years,” the brief continued. “To date, however, this repeal legislation has not garnered enough support to pass.”

“Plaintiffs here ask the Court to stop this democratic debate about a disputed matter of economics and declare them the winners,” state government lawyers argued. “But this Court’s precedents on judicial review of economic regulations provide the Court with a far more modest role: to determine whether the CON law is reasonable. As shown by the General Assembly’s findings in the text of the CON law itself, the CON law easily passes this deferential review.”

The John Locke Foundation, which oversees Carolina Journal, supports Singleton’s legal fight against state regulations that block him from performing procedures in his own building.

Locke and constitutional law scholar John Orth filed a joint friend-of-the court brief in the case on Nov. 1. The Goldwater Institute also submitted a friend-of-the-court brief supporting Singleton.

“Locke has opposed North Carolina’s Certificate of Need (CON) law for many years, not only because it is unconstitutional and violates the rights of North Carolinians, but also because it directly harms patients, employers, insurers, and taxpayers by making health care more expensive and less accessible,” according to the brief from Locke and Orth, a constitutional law professor who taught at the University of North Carolina School of Law from 1978 to 2021.

Orth authored the book “The North Carolina Constitution” in 1993. His co-author for an updated version of that book is current state Supreme Court Chief Justice Paul Newby.

The joint Locke/Orth brief addresses a legal issue called “tiers of scrutiny.” It refers to the different types of review that a court might apply to a challenged law. Only laws addressing a “fundamental” right face the strictest form of scrutiny.

North Carolina adopted the “tiers of scrutiny” approach during the second half of the 20th century, according to the Locke/Orth brief.

“The present case illustrates what happens when state courts casually apply federal tiers of scrutiny doctrine to claims arising under state constitutions without taking into consideration the text and the history of the state constitution itself,” the brief argued. “That practice, which is sometimes called ‘lockstepping,’ can lead to dangerous error, as it has in this case.”

“In the decision under review, the Court of Appeals treated the plaintiffs’ claims under the law of the land, exclusive emoluments, and anti-monopoly clauses of the North Carolina Constitution as if they were based on a vaguely defined right to substantive due process,” Locke and Orth argued. “Following federal tiers of scrutiny practice, it assumed that, as species of economic regulation, the CON law is subject only to minimal, rational basis scrutiny, and instead of conducting its own review to determine whether the rational basis test was satisfied, it simply deferred to the legislative findings that the General Assembly had appended to the current version of the CON law.”

“All of that was error. The plaintiffs’ claims in this case are not based on a vaguely defined right to substantive due process. They are, instead, based on what the North Carolina Constitution explicitly declares to be ‘great, general, and essential principles of liberty and free government,’” the brief argued. “Not only are those principles clearly defined and affirmed in the Constitution itself; they also have deep historical roots in our state. By any definition, therefore, those principles and the rights they protect are fundamental.”

“By failing to recognize that the plaintiffs’ claims are based on fundamental principles protecting fundamental rights, the Court of Appeals committed a dangerous error,” Locke and Orth argued. “If its reasoning is allowed to stand, it will mean that the General Assembly has effectively nullified several express provisions of the state constitution simply by enacted a statute with an appended list of legislative findings. That cannot be right.”

More than a year after Singleton asked North Carolina’s highest court to take up his challenge of the CON law, the court answered yes.

An order issued in September 2023 confirmed that the North Carolina Supreme Court would hear Singleton’s case. Singleton had appealed to the high court in August 2022.

Singleton’s state Supreme Court appeal followed the state Court of Appeals’ unanimous June 2022 decision dismissing his case.

The CON case presents three issues for the NC Supreme Court’s consideration, according to an August 2022 court filing.

“Whether the CON law, as applied, violates the law of the land clause (Art. I, § 19) of the North Carolina Constitution,” according to Singleton’s lawyers. “This issue raises substantial questions about the importance of economic liberty, what test applies in substantive challenges under the clause, and whether facts matter under that test.”

“Whether the CON law, as applied, violates the anti-special privileges clause (Art. I, § 32) of the North Carolina Constitution,” the brief added. “This issue raises a substantial question about how the clause applies to special economic privileges.”

“Whether the CON law, as applied, violates the anti-monopoly clause (Art. I, § 34) of the North Carolina Constitution,” the filing listed as the third issue. “This issues raises a substantial question about how the clause applies when the government grants an exclusive right to provide a service.”

Singleton’s lawyers reminded the state’s highest court that it struck down CON restrictions once before, in 1973. Five years later, the General Assembly approved a new, “substantially similar” CON law. The state Court of Appeals then declared the original state Supreme Court ruling “moot,” and now there is “confusion” about the original decision’s status.

“The time has come for this Court to put that confusion to rest,” according to IJ attorneys. “This case alleges that the current CON law, as applied to Dr. Singleton, violates the same three provisions the original CON law violated.”

The appeal labeled the case’s facts “simple.” “Dr. Singleton owns an operating room that he could use to expand patients’ access to safe, affordable eye surgeries,” according to the court filing. “But the CON law says that only operating rooms with a CON can be used. And Dr. Singleton cannot even apply for a CON unless the state first declares a ‘need’ for a new operating room in his area — which it has not done in well over a decade.”

“In fact, the only entity in Dr. Singleton’s area to ever own an operating room CON is CarolinaEast, a hospital located two miles down the road,” according to the surgeon’s lawyers. “Dr. Singleton could provide eye surgeries at his facility for thousands of dollars less than those same procedures cost at CarolinaEast. But the CON law bars him from doing so. As a result, patients suffer while CarolinaEast profits.”

For example, Singleton could perform cataract surgeries for $1,800, while the facility fee alone at CarolinaEast reaches almost $6,000, according to the appeal.

“If excluding Dr. Singleton from the market does not benefit real patients, what does it do? The obvious: It ‘protect[s] established healthcare providers’ — namely, CarolinaEast— ‘from competition.’”

The state Supreme Court has not scheduled the case yet for oral arguments.