A federal appeals court has upheld Virginia's Certificate of Public Need law despite arguments (PDF) from two doctors who allege the statute is unconstitutional.
The 4th U.S. Circuit Court of Appeals on Thursday upheld a lower court's ruling in a challenge to the law, which requires owners and sponsors of many medical-care facility projects to prove public need for their endeavors and gain approval for them.
Thirty-six states have CON laws, according to the National Conference of State Legislatures. The laws have been the subject of intense debate for decades. The laws' opponents say they hinder competition, leading to higher prices and lower quality. Hospital associations defend the laws as necessary to help financially protect hospitals that provide charity care.
The doctors behind the Virginia case alleged that the state's law violated the U.S. Constitution by making it difficult for out-of-state providers to enter the state.
A three judge panel, however, rejected that argument. In the opinion, Judge Harvie Wilkinson, also wrote that it shouldn't be up to courts to judge the overall value of CON laws. Rather, state legislatures should grapple with the issue.
“It is anything but clear … that courts can lead the way in providing a better path,” Wilkinson wrote. “While we cannot say whether Virginia's program is ultimately wise, it most certainly is constitutional.”
A spokesman with the Virginia Hospital & Healthcare Association said the group is pleased with the ruling.
“Virginia's Certificate of Public Need program helps offset the impact of charity care borne by hospitals, and it is an important element of the healthcare delivery system,” Julian Walker, with the association, said in a statement.
But Robert McNamara, a senior attorney with the Institute for Justice, called the decision disappointing. The institute, a public interest law firm that focuses on individual liberty and limited government, is backing the lawsuit.
McNamara said the court seemed interested in leaving the issue up to the state's elected officials, which he called "unfortunate given the overwhelming costs the CON law" imposes on citizens, providers and device manufacturers.
Dr. Mark Monteferrante, one of the doctors involved in the case, said he doesn't understand why the court was so hesitant to make a judgment about the value of the state's law, noting that other courts often jump into other potential legislative issues.
Monteferrante co-owns Progressive Radiology, which staffs and owns medical offices in Illinois, Maryland and the District of Columbia. He's been hoping to open a new radiology practice in Virginia, where he used to work before his practice was bought by Inova Health System. He says the difficulty of obtaining a CON in Virginia stops him from pursing an office in the state.
The other doctor involved in the lawsuit, Dr. Mark Baumel, runs Colon Health Centers of America, which also wants to open centers in Virginia.
McNamara said the institute and the doctors have not yet decided whether to appeal the case to the U.S. Supreme Court. He noted they are also keeping an eye on activity regarding the law at the state level. Several Republican lawmakers are backing legislation this session that would reform and repeal the state's CON laws.
However, the Virginia Legislature, along with those in many other states, has been debating the program for years but without much change. No state has repealed its CON law since Indiana eliminated its program in 1999.
But Virginia lawmaker Chris Peace, who is behind two bills aimed at the program this year, said he believes this year may be different, for his state, at least.
Walker, however, noted that a work group created by Virginia's Legislature reviewed the state's program last year and found that there's room for improvement, but did not recommend eliminating it. Walker said the association supports efforts to reform the program but not to repeal it.
