by Jon Guze
Senior Fellow, Legal Studies, John Locke Foundation
Jay Singleton is a trained and licensed eye surgeon who has performed approximately 30,000 outpatient eye surgeries at his Vision Center in New Bern, N.C. The Vision Center is accredited by the American Association for Accreditation of Ambulatory Surgery Facilities; it meets all applicable licensing standards and follows State Medical Board guidelines; and its operating and recovery rooms are fully equipped.
When Dr. Singleton performs outpatient surgeries at the center, the total cost is about $1,800. He would like to offer all his patients this safe, economical, and convenient option, but he can’t because North Carolina law strictly limits the number of surgeries he can perform at the center. Instead, he must treat most patients at a regional hospital that has been granted a “certificate of need,” or “CON,” that gives it the right to be the one and, in most cases, the only provider of ophthalmic operating room services in that region. The patients receive the same treatment at the hospital that they would have received at the Vision Center, but they must pay the hospital an additional “facility fee” of almost $6,000.
Why does the law force patients, insurers, and taxpayers to pay thousands more for identical procedures? Not to protect public health and safety. If that were the object, the law wouldn’t allow Dr. Singleton to treat any patients at his center. North Carolina’s CON law serves one purpose and one purpose only — to protect the large hospital chains from competition.
It does so in the following way. First, it requires medical service providers to obtain a CON before opening new or expanded facilities, installing new or additional equipment, or even, as in Dr. Singleton’s case, treating more patients. Second, it makes CONs almost impossible to obtain. Finally, it permits the large hospital chains, which already possess most of the existing CONs, to contest any decision to award a CON to one of their competitors. The inevitable results: more revenue for the big hospital chains, and less affordable and less accessible medical care for everyone else.
In 2020, Dr. Singleton filed a complaint alleging that the CON law violates his rights under three provisions of Article I of the North Carolina State Constitution:
Given that the CON law clearly gives CON holders the exclusive privilege of providing medical services in their regions, given that the granting of such an exclusive privilege is the very definition of “monopoly,” and given that North Carolina’s constitution — which is the supreme law of the land — explicitly prohibits exclusive privileges and monopolies, one might have expected the lower courts to at least give Dr. Singleton an opportunity to present facts and arguments supporting his constitutional claims.
Instead, both the trial court and the Court of Appeals summarily dismissed his case on basis of a set of highly implausible “legislative findings” that the state legislature had appended to the CON law at the time it was enacted. Dr. Singleton, with help from the John Locke Foundation, is appealing this decision.
In the early 20th century progressive jurists in the federal courts developed what has become known as “tiers of scrutiny doctrine.” It was created out of whole cloth for the specific purpose of insulating economic regulations from challenges under the due process clauses of the Fifth and Fourteenth Amendments to the U.S. Constitution. With the tiers of scrutiny approach, the highest level of judicial review is reserved for laws that interfere with fundamental rights. Such laws may only be upheld if the government can show they are necessary to serve a compelling governmental purpose.
Laws that regulate ordinary economic activity, on the other hand, merit only minimal, or “rational basis,” scrutiny. In other words, such laws are presumed to be constitutional unless they are plainly irrational. Moreover, because the governmental bodies that promulgate such laws are presumed to be in the best position to strike the right balance between individual liberty and the common good, courts are supposed to defer to those governmental bodies rather than make an independent determination about whether the “rational basis” test is satisfied.
During the second half of the 20th century, state courts in North Carolina and throughout the country began to apply tiers of scrutiny doctrine to claims arising under state constitutions, often without taking into consideration the text and the history of the state constitutions themselves.
That practice, which is sometimes called “lockstepping,” can lead to dangerous error, and in a brief to the Supreme Court supporting Dr. Singleton’s appeal, the John Locke Foundation and University of North Carolina Law Professor John V. Orth argue that that is precisely what has happened in this case.
The following excerpt from the Locke/Orth brief summarizes the argument:
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. Following federal tiers of scrutiny practice, it assumed that, as a 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.” 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. 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 enacting a statute with an appended list of legislative findings. That cannot be right. This court has an opportunity not only to correct the Court of Appeals error, but to rectify tiers of scrutiny practice in North Carolina in a way that brings it into proper alignment with the history and text of the North Carolina Constitution. [Citations omitted.]
For more information about North Carolina’s CON law and the legal issues presented in this case, see: