State Appeals Court tosses out lawsuit challenging N.C. certificate-of-need restrictions
- The N.C. Court of Appeals has dismissed a lawsuit challenging North Carolina's certificate-of-need law.
- The unanimous opinion highlighted concerns about CON's "restrictive, anti-competitive," and "monopolistic" rules.
A unanimous N.C. Court of Appeals panel has dismissed a New Bern eye surgeon’s challenge against the state’s certificate-of-need restrictions. The surgeon has announced that he will appeal the ruling.
A CON represents a state government permission slip to open medical facilities, purchase certain equipment, or perform certain procedures. Appellate judges agreed that Dr. Jay Singleton had failed to make a case that the CON law violated his constitutional rights.
Yet Judge John Tyson’s majority opinion highlighted problems associated with the state’s CON process.
“While counsel for Defendants clearly and correctly admitted the CON statutes are restrictive, anti-competitive, and create monopolistic policies and powers to the holder, and Plaintiffs correctly assert the CON process is costly and fraught with gross delays, and service needs are not kept current, those challenges can also be asserted before the General Assembly, Commissions, and against the agency where a factual record can be built,” Tyson wrote.
“At least twelve sister states, including New Hampshire, California, Utah, Pennsylvania, and Texas, have re-examined the anti-competitive, monopolistic, and bureaucratic burdens of their CON statutes’ health care allocations, and the scarcity created by and delays inherit [sic] in that system, and have abolished the entire CON system within their states,” he added.
Tyson suggested other avenues for addressing CON concerns in the future.
“Plaintiffs’ complaint has also not asserted a violation of North Carolina’s unfair and deceptive trade practices or right to work statutes,” he wrote. “Plaintiffs also failed to assert it had sought re-classification of certain surgical and treatment procedures under its medical or other licenses and certifications, which can be safely done at its Center and clinic, without the need for a CON operating room.”
“Advances in lesser and non-invasive procedures and technological treatments develop rapidly and have reduced or eliminated the need for a traditional operating theater and allowed for ambulatory clinical environments for patients,” Tyson added.
“We express no opinion on the potential viability, if any, of claims not alleged in this complaint,” Tyson wrote.
Regardless of the CON program’s flaws, appellate judges agreed Singleton’s case fell short.
“Plaintiffs acknowledge they could have applied for a CON and have sought and challenged any administrative review to invoke or ripen their constitutional procedural due process claims,” Tyson wrote. “Plaintiffs failed to file an application for a CON or to seek or exhaust any administrative remedy from DHHS prior to filing the action at bar. Plaintiff has not shown the inadequacy of statutorily available administrative remedies to review and adjudicate his claims to sustain a deprivation of procedural due process.”
“The remedy Plaintiffs admittedly and essentially seek is for a fact-finding administrative record and decision thereon to be cast aside and a CON to be summarily issued to them by the Court,” Tyson added. “This we cannot do.”
“Had Plaintiffs sought any administrative review or the procedures were shown to be inadequate, their claim would be ripe for the superior court to exercise jurisdiction over their procedural claims,” Tyson wrote.
Singleton, a board-certified ophthalmologist, has owned and operated Singleton Vision Center in New Bern since 2014. His “full-service” clinic provides “routine vision check-ups, treatments for infections, and surgery,” according to the court ruling.
The CON law forces Singleton to perform most surgeries at New Bern’s Carolina East Medical Center, “the only licensed provider with an operating room certificate of need located in the tri-county planning area of Craven, Jones, and Pamlico Counties.”
Singleton filed suit in 2020 to challenge CON restrictions. Lawyers from the Institute for Justice have helped him pursue the case.
Tyson’s opinion acknowledges that the single CON allocated to Carolina East “has not been revised for over ten years since 2012.”
“The 2021 State Medical Facilities Plan states there is ‘no need’ for new operating room capacity in the Craven, Jones, and Pamlico Counties planning area,” Tyson noted. “The tri-county planning area encompasses an area of approximately 1,814 square miles. Representatives of Carolina East informed Plaintiffs they will oppose any application they submit for an additional operating room CON within the tri-county area.”
Singleton could appeal the decision to the N.C. Supreme Court. Since the Appeals Court ruling was unanimous, the state’s highest court faces no obligation to take Singleton’s case.
“The court’s decision fails to engage with Dr. Singleton’s constitutional claims,” said IJ attorney Josh Windham in a news release. “Requiring him to apply for a CON — which does not exist — before he can bring a monopoly challenge is absurd. And turning a blind eye to a law that harms patients while padding the pockets of established players is a total abdication of the court’s duty to ensure that laws serve the public. We plan to appeal.”
Singleton shared his disappointment in the Appeals Court’s ruling. “All I want is a chance to compete so that I can offer my patients more affordable care,” Singleton said in the IJ news release. “It’s unfortunate that the court was so willing to rubberstamp this harmful and anti-competitive law, but I’m excited to continue pressing my rights — if necessary, all the way to the North Carolina Supreme Court.”
Editor’s note: This story was updated at 3 p.m.