“I don't think people had spent a lot of time questioning whether or not states could have certificate-of-need legislation until this decision,” said Douglas Ross, a partner with law firm Davis Wright Tremaine in Seattle. “It was assumed, until this hospital challenged it, that states could have certificate-of need-regulation.”
In the case at issue, Yakima (Wash.) Valley Memorial Hospital challenged a 2008 certificate-of-need law that said state officials could grant only one certificate of need to perform percutaneous coronary interventions for every 300 procedures likely to be needed in a given community each year. The hospital's direct competitor already holds the sole certificate for the community, likely until 2022.
Attorneys for Yakima Valley Memorial argued that the certificate-of-need law violated the “dormant commerce clause”—the Supreme Court interpretation of the Constitution that gives Congress, not states, exclusive power to restrain interstate trade in more than an “incidental” way.
Yakima Valley Memorial said the state's law governing percutaneous coronary interventions unconstitutionally restricted its ability to find out-of-state patients to treat, doctors to hire, and medical supplies to buy. That kind of restriction on interstate trade requires a specific authorization by Congress to be legal, according to the hospital.
Attorneys for the state argued that Congress gave all states clear authority to regulate medical need in 1974 when it passed the National Health Planning and Resources Development Act, establishing processes for states to create certificate-of-need programs.
The problem, the judges said, is that Congress repealed that federal law in 1986.
“Whatever the NHPRDA authorized prior to 1986, after Congress repealed the statute there was no NHPRDA left to authorize a regulation promulgated in 2008,” the 9th Circuit judges wrote. “A statute that Congress snuffed out of existence by repeal leaves no residual clear statement of authorization.”
The decision did not directly invalidate the certificate-of-need law. Rather, the appeals judges sent the case back to the federal trial court to determine whether Washington's percutaneous coronary interventions law is merely an “incidental” restraint on interstate commerce, which would not require authorization from Congress.
A spokeswoman for the Washington State Department of Health said it was not clear whether the state would appeal the ruling to the Supreme Court.