by Jon Guze
Senior Fellow, Legal Studies, John Locke Foundation
Under North Carolina law, health care providers who wish to open or expand facilities, buy various kinds of new equipment, or in some cases simply treat more patients, must first obtain a Certificate of Need or “CON” from the state. The council that issues CONs is controlled by the large medical conglomerates who already hold most of the CONs. They very seldom agree to issue new ones, and when they do it is only after a long and expensive application process followed by even longer and even more expensive litigation. This artificial restriction on the provision of medical care violates the North Carolina Constitution and directly harms patients and taxpayers by making health care more expensive and less accessible.
Thankfully, a New Bern eye surgeon named Jay Singleton has filed a lawsuit challenging the CON law, and the John Locke Foundation has been supporting him as his case makes its way through the courts. Last year, when the State of North Carolina filed a motion to dismiss Dr. Singleton’s case, we filed a brief in opposition. And because a Wake County Superior Court judge granted the State’s motion despite the cogent arguments made by Dr. Singleton’s lawyers at the Institute for Justice (and despite the cogent arguments we made in our brief), last week we filed a new brief urging the North Carolina Court of Appeals (COA) to reverse that judge’s decision and reinstate the case.
Complicating our task is the fact that when a previous challenge to the CON law reached the COA in 2010 the court upheld the law. The case was Hope—A Women’s Cancer Ctr., P.A. v. State. The plaintiffs had been denied a CON to expand their cancer center, and they claimed that denial violated their right to due process under the North Carolina Constitution. Rather than consider that claim on its merits by attempting to determine whether the law actually served a legitimate public interest and did so in a way that would justify denying the center’s right to expand, the COA simply “deferred” to the General Assembly which had appended certain “legislative findings” to the law. The findings, which were presented without evidence, made the absurd claim that restricting the supply of medical services would somehow make those services cheaper and more accessible. Nevertheless, as has become all too common for North Carolina courts, the COA chose to accept those findings at face value and it upheld the law.
In our brief we point out two factors that distinguish Dr. Singleton’s challenge from the one in Hope, and require a new and less deferential review of the CON law’s constitutionality.
The first factor that distinguished Singleton from Hope is the fact that Dr. Singleton raises constitutional claims that were never raised in Hope. Unlike the Hope plaintiffs, Dr. Singleton claims the CON law violates the North Carolina Constitution’s Anti-Monopoly Clause (“Monopolies are contrary to the genius of a free state and shall not be allowed.”) and its Exclusive Emoluments Clause (“No person or set of persons is entitled to exclusive or separate emoluments or privileges from the community but in consideration of public services.”). To support Dr. Singleton’s Anti-Monopoly Clause claim we provide a detailed history of the history of the clause and say:
To summarize:. In 1603 England’s highest court held that monopolies are “against the Common Law.” In 1624 Parliament enacted the Statute of Monopolies, which stated that monopolies are “altogether contrary to the laws of this realm.” In 1776 North Carolina’s first constitution declared that monopolies “ought not to be allowed.” In 1868 the state’s second constitution made the same declaration in the same words. In 1971 North Carolinians ratified the current constitution, which declares, even more emphatically, that monopolies “shall not be allowed.” And in 1973 the North Carolina Supreme Court held that a law giving existing medical-facility operators the exclusive right to provide medical services was a monopoly and violated the Anti-Monopoly Clause.
Given this history, it is clear that Plaintiffs’ Anti-Monopoly Clause claim in the present case should not have been summarily dismissed on the basis of the rational basis review that the Court of Appeals applied to a due process claim in Hope. It should instead have been reviewed under a standard appropriate to a right that North Carolinians have regarded as fundamental for more than 245 years.
We make a similar argument regarding Dr. Singleton’s claim under the Exclusive Emoluments Clause.
Dr. Singleton also claims the CON law violates his right to due process under the North Carolina Constitution, and, unlike his claims under anti-monopoly and exclusive emoluments clauses, the Hope plaintiffs did raise a due process claim, only to have it rejected by COA. Dr. Singleton’s due process claim requires a different approach therefore, and we provide one by arguing that changed circumstances and new evidence require a new, less deferential review by the court. We provide an Appendix containing citations to and summaries of studies that constitute “an abundance of new evidence showing the deleterious economic and public health effects of CON laws, much of which has only become available since Hope was decided in 2010,” and we note that:
these studies thoroughly rebut the legislative findings that the Court of Appeals relied on in Hope and make a mockery of the suggestion that the CON law is rationally related to a legitimate public purpose. Indeed, they 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 of Appeals 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. However, judicial deference does not mean abject, unquestioning servility. A pro forma listing of implausible legislative findings cannot permanently immunize legislation against judicial scrutiny, especially when, as in this case, fundamental constitutional rights and public health are at stake. 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.
There’s much more in the brief itself. If you’d like to learn more about North Carolina’s oppressive and unconstitutional CON law and why it needs to be struck down or repealed, read the whole thing.