State Supreme Court vacates lower court decision in CON challenge

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  • The North Carolina Supreme Court has vacated lower court rulings against the New Bern eye surgeon challenging the state's certificate-of-need law.
  • In a unanimous unsigned opinion, justices ordered the case sent back to a trial court for further proceedings.
  • Part of Dr. Jay Singleton's case could head before a three-judge panel. That panel could address whether Singleton's challenge could throw out the entire CON law.
  • The Supreme Court ordered the trial court to consider two earlier decisions this year involving state constitutional challenges.

The North Carolina Supreme Court has thrown out lower court rulings against the New Bern eye surgeon challenging the state’s certificate-of-need law. The decision Friday revives Dr. Jay Singleton’s complaint that state government violates his constitutional rights by blocking him from performing most eye surgeries at his own facility.

In an unsigned unanimous four-page opinion Friday, the court directed the case back to a trial judge.

At the trial level, the judge must take into account two recent unanimous state Supreme Court decisions. One dealt with claims that Kinston engaged in racial discrimination when choosing which city properties to condemn. The other involved Ace Speedway’s claim that state officials violated the Alamance County racetrack owners’ rights when targeting the track for a shutdown during the COVID-19 pandemic.

“This decision clears the way for the trial court to resolve the central issue in this case: Does the CON law violate the North Carolina Constitution’s law of the land, anti-monopoly, and exclusive-privilege clauses?” wrote Joshua Windham of the Institute for Justice in an email to Carolina Journal. Windham represents Singleton.

“The lower courts dismissed this case on two mistaken premises: (1) that the state Supreme Court’s 1973 decision in Aston Park — which struck down the state’s prior CON law under the same three provisions we’re citing here — was ‘moot,’ and (2) that Dr. Singleton was required to apply for a (nonexistent) CON before he could challenge the constitutionality of the CON law,” Windham added.

“Today’s decision rejects both of those premises, and we’re excited to head back down to the trial court where we can finally vindicate Dr. Singleton’s right to provide more affordable care for his patients,” Windham wrote.

Healthcare providers must secure a CON from state government before building or expanding facilities or purchasing more expensive medical equipment.

Singleton argues that North Carolina’s CON regime forces him to direct his patients to a nearby hospital, CarolinaEast, for most surgeries. The hospital holds the region’s only CON. Singleton says that arrangement proves more expensive and less convenient for patients.

“Plaintiffs brought claims alleging that the Certificate of Need law violates their rights under the Monopolies Clause, Exclusive Emoluments Clause, and Law of the Land Clause of the North Carolina Constitution,” according to the state Supreme Court opinion. “Plaintiffs described their constitutional claims as ‘as-applied’ challenges in the complaint. Both the trial court and the Court of Appeals accepted plaintiffs’ characterization of these claims and evaluated the claims as as-applied challenges.”

“[W]e conclude that plaintiffs’ complaint asserts both facial and as-applied challenges,” Supreme Court justices wrote.

A facial constitutional challenge targets a law in its entirety. The plaintiff asserts that there is no circumstance in which a court could uphold the law as constitutional. An as-applied challenge asserts only that the targeted law is unconstitutional when considering the facts of a particular plaintiff’s complaint.

“Here, plaintiffs’ complaint alleges facts that could undermine the Certificate of Need law’s constitutionality far beyond the particular circumstances of these plaintiffs,” according to the Supreme Court opinion. “Indeed, in their supplemental briefing, plaintiffs acknowledge that, should they prevail, the ‘need for relief that extends beyond [plaintiffs] will likely arise here’ and ‘will likely entail facial relief.’”

“We agree. The complaint contains allegations that, if proven, could render the Certificate of Need law unconstitutional in all its applications,” Supreme Court justices wrote.

Labeling the case both a facial and as-applied challenge is a “crucial determination,” justices wrote. State law requires facial challenges to go before a three-judge Superior Court panel. Singleton has argued his case before a single trial judge.

“Because the trial court and the Court of Appeals mistakenly treated plaintiffs’ claims exclusively as as-applied challenges, we vacate the decision of the Court of Appeals and remand this matter to the Court of Appeals with instructions to vacate the trial court’s judgment and remand for further proceedings,” Supreme Court justices ordered.

The trial court must follow the three-judge panel rules spelled out in NC Gen. Stat. § 1-267.1, along with Rule 42(b)(4) of the Rules of Civil Procedure.

“Because we vacate the decision of the Court of Appeals on this basis, we need not address plaintiffs’ challenges to that decision asserted in the briefing before this Court,” Supreme Court justices added. “However, for the benefit of the trial court on remand, we disavow the Court of Appeals’ jurisdictional analysis concerning the exhaustion of administrative remedies and direct the trial court to this Court’s recent decisions in Askew v. City of Kinston … and Kinsley v. Ace Speedway Racing, Ltd.”

Singleton cited the Ace Speedway ruling in a Sept. 10 filing with the state Supreme Court. His lawyers wrote that the Ace Speedway ruling served as an “additional authority” supporting the surgeon’s legal arguments.

“The court’s decision in Kinsley reaffirms that in North Carolina, economic liberty matters,” Windham told CJ last month. “The court held that when the state restricts our right to earn a living, we can use evidence, under the fruits of their labor clause, to show the restriction is not ‘reasonably necessary’ to protect the public. That’s exactly the same test the court applied in 1973 when it struck down the state’s first certificate of need law under the law of the land clause.”

“Why does that matter? It means that courts can’t dismiss challenges to economic laws just because government lawyers utter the words ‘public health,’” Windham said. “It means that the state’s supposed reasons for destroying your business aren’t gospel; you can challenge them with facts and show that — in the real world — the law isn’t meaningfully serving the public.”

A unanimous North Carolina Supreme Court agreed in August that Ace Speedway’s COVID shutdown lawsuit against Gov. Roy Cooper’s administration could move forward. The decision upheld earlier rulings from a trial judge and the Court of Appeals.

Owners of the Alamance County-based race track argued that Cooper singled them out for a shutdown during the COVID-19 pandemic in 2020. They claim the shutdown was tied to track operator Robert Turner’s criticism of the governor’s COVID policies.

“These events concern matters that are controversial in contemporary politics,” Justice Richard Dietz wrote for the unanimous court. “The legal issues in this appeal, by contrast, are so time-tested that they border on mundane. In our legal system, we treat the initial allegations in a lawsuit as true when assessing whether the case can move forward at the outset.”

Dietz focused on Ace Speedway’s pursuit of a Corum claim. That’s the legal term for a North Carolina case with a plaintiff suing the government for a violation of state constitutional rights.

Ace Speedway can move forward with claims that Cooper’s shutdown violated track owners’ rights to the “fruits of their own labor” and the equal protection clause of the state constitution.

The case will head back to a trial judge for further proceedings.

A unanimous state Supreme Court issued a decision on June 28 in Askew v. Kinston. Justices rejected the argument that two Kinston residents needed to “exhaust administrative remedies” before challenging the city’s property condemnation practices as racially discriminatory. Much of the Askew decision focused on the Corum precedent.

The state Court of Appeals later ruled against the Askew plaintiffs. They are asking the state Supreme Court to review their case again.

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 in November 2023. The Goldwater Institute also submitted a friend-of-the-court brief supporting Singleton.

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