State’s highest court has chance to end CON game

The state Supreme Court waited more than a year to say yes. But opponents of North Carolina’s health care certificate-of-need regime accept the delayed response.

CON critics asked the state’s highest court in August 2022 to take up the case Singleton v. NC Department of Health and Human Services. Justices eventually granted the request this September. The case could proceed to oral argument later this year.

The court has an opportunity to strike down a significant barrier blocking health care reform.

The certificate of need represents a government permission slip. Health care providers need a CON to build new facilities, add beds to existing hospitals, or purchase major new pieces of medical equipment.

Once state regulators grant a CON to a particular provider, competitors often take the decision to court.

In the Triangle, one ongoing CON court battle pits UNC Health against Duke Health. Both seek government permission to add 40 new hospital beds in Durham County. The same two players face a three-way tussle with WakeMed Health for a government grant of 44 new beds in Wake County. That fight is likely to end up in court. Duke and another provider are battling over adding one magnetic resonance imaging machine in Wake Forest.

Yet the Singleton case could end similar court fights in the future. The state Supreme Court could declare the CON law unconstitutional as it applies to Dr. Jay Singleton, a New Bern ophthalmologist. A win for Singleton would mean good news for others taking on the CON regime.

Singleton could have spent multiple years and hundreds of thousands of dollars chasing a CON. There’s no guarantee regulators ever would have allowed him to perform standard eye surgeries in his office. Instead Singleton challenges state rules that force him to perform most surgeries at a nearby hospital holding the region’s only CON.

The case has attracted attention from Jon Guze, senior fellow in legal studies at the John Locke Foundation. Locke has opposed the 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 and taxpayers by making health care more expensive and less accessible,” Guze wrote in a friend-of-the-court brief at the state Appeals Court.

CON laws have a “deleterious effect” on “medical service providers, the economy, and public health,” Guze warned.

State Supreme Court justices rejected a CON law 50 years ago. In a 1973 case known as Aston Park, the court found that it “establish[ed] a monopoly in the existing health care providers contrary to the provisions of Article I, 34 of the Constitution of North Carolina.”

Section 34 bans monopolies, which are described as “contrary to the genius of a free state.”

“The current CON law establishes exactly the same kind of monopoly in existing health care providers,” Guze wrote. “Since the present case is the first to challenge the current law on the basis of the Anti-Monopoly Clause since the Aston Park decision was handed down, the Supreme Court’s holding in that case governs.”

Article I, Section 32 of the state constitution bans exclusive emoluments, or unearned government benefits.

“Granting a small number of corporate healthcare providers the exclusive right to provide medical services … clearly falls within the ordinary meaning of ‘exclusive emolument,’” Guze wrote. A trial judge should not have dismissed Singleton’s arguments. “Plaintiffs’ Exclusive Emoluments Claim should have been reviewed under a standard appropriate to a right that the North Carolina Constitution declares to be a ‘great, general, and essential’ principle of liberty.”

Guze pointed to studies that “show beyond a reasonable doubt that the CON law not only makes medical care more expensive and less accessible for North Carolinians, it puts North Carolinians’ health in jeopardy, and it has almost certainly cost many North Carolinians their lives.”

“Defendants would no doubt urge the Court … to ignore this evidence and simply defer again to the legislature’s unsupported assertion that limiting the number of medical service providers is an effective and necessary way to reduce the cost and improve the availability of medical care,” wrote Guze, referring to arguments from the 1970s when lawmakers reinstated CON.

“However, judicial deference does not mean abject, unquestionable servility,” Guze said. “As circumstances change, and as new factual evidence accumulates, the time must come when those changed circumstances and that new evidence become sufficient to overcome a presumption of constitutionality based solely on decades-old legislative findings.”

“In the case of North Carolina’s certificate of need law, that time is now,” the brief concluded.

State Supreme Court justices will decide in the months ahead whether they agree.

Mitch Kokai is senior political analyst for the John Locke Foundation.