This same type of so-called “dormant Commerce Clause” argument surprised some legal experts last year when the 9th U.S. Circuit Court of Appeals in Seattle ruled in August that hospitals' rights to engage in interstate commerce may trump the Washington state certificate-of-need law.
The circuit judges in Yakima Valley Memorial Hospital v. Washington State Department of Health sent that case back to the trial judge for a decision on whether Washington's certificate of need law was merely an “incidental” restraint on interstate commerce, which would be legal. That case is set for a bench trial on Sept. 4, court records say.
The legal principle is called the dormant Commerce Clause because it involves allegations that a state has violated Congress' sole powers to regulate interstate commerce, even though Congress has not chosen to exercise the power in that situation, making it a violation of a “dormant” power.
In Colon Health Centers, two plaintiffs are involved. One plaintiff is a Maryland-based orthopedic and neurological imaging group called Progressive Radiology, which sold its diagnostic testing center in Virginia to HealthSouth in 1995, and then watched as the center changed corporate hands several times and then terminated its contract to provide radiology services at the office, the lawsuit says. The company says it cannot afford the legal costs or time requirements to get state permission to purchase new magnetic-resonance imaging equipment from out-of-state companies.
The other plaintiff is Colon Health Centers of America, a Delaware firm that was denied permission to open three clinics in Virginia for colon cancer screening after state and regional officials ruled that additional centers were not needed—a position advocated in administrative filings by the established providers who would be Colon Health Centers' competitors in the cities, the lawsuit says.
The two physician offices are being represented by the Arlington, Va.-based not-for-profit Institute of Justice, which describes itself as a “libertarian public interest law firm.”
The lawsuit seeks to invalidate Virginia's entire certificate-of-need law on the basis that violates Congress' power to regulate interstate commerce, and several other grounds.