July 26, 2017

IJ supporters may already be familiar with certificate-of-need (CON) laws, which essentially amount to a government permission slip to compete. IJ takes on these laws in the transportation and vending industries, where they stifle competition by allowing existing businesses to veto the opening of new businesses near them. But, as IJ client Dr. Lee Birchansky knows firsthand, certificate of need can be particularly harmful when required for medical services.

Iowa is one of 28 states that make it illegal for doctors to open an outpatient surgery center without proving to a state bureaucrat that there is a “need” for the center in the proposed area. The application process is costly and cumbersome—resembling full-blown litigation with attorneys, consultants and judicial appeals.

And because separate laws already govern who can practice medicine and what kinds of medical treatments doctors can provide, Iowa’s CON requirement has nothing to do with protecting health or safety. In other words, Iowa requires a certificate of need from licensed professionals who want to offer medical services that are perfectly legal.

Worse, Iowa does not apply its CON requirement evenhandedly. It has a big loophole for existing medical facilities, which can expand or open new surgery centers, as long as the new centers cost less than $1.5 million. And many hospitals take advantage of this loophole while vocally opposing doctors like Dr. Birchansky who want to open up their own centers.

For 20 years, Dr. Birchansky has been trying to perform cataract surgeries in an outpatient surgery center right next to his medical office. But he has been denied a certificate of need four times. At each and every turn, the two local hospitals have opposed his applications, claiming there is no need for additional surgery centers, all the while using the loophole to expand their own centers without going through the CON process.

Exemplifying the “IJ Way,” Dr. Birchansky remained positive and resilient. He teamed up with IJ to sue officials of Iowa’s Department of Health, challenging the constitutionality of Iowa’s certificate-of-need requirement for outpatient surgery centers.

Certificate-of-need laws amount to a government permission slip to compete.

Seven years in the making, the lawsuit builds on our first challenge to medical certificate-of-need requirements. In 2012, we challenged Virginia’s CON requirement as irrational, serving only to protect existing facilities and hospitals from competition, which is not a legitimate government interest. Unfortunately the 4th U.S. Circuit Court of Appeals dismissed our lawsuit. But instead of giving up, we decided to ramp up our litigation efforts and join forces with Dr. Birchansky to challenge Iowa’s law in a different federal court.

This new lawsuit affords us an opportunity to create a circuit split that we can take all the way to the U.S. Supreme Court. We also represent a patient of Dr. Birchansky’s to show that Iowa’s CON requirement violates Americans’ rights to seek routine, safe and effective medical treatment from qualified doctors.

Ultimately, doctors and patients—not state officials—are in the best position to decide which health care services are needed, and we look forward to proving that the U.S. Constitution gives them the right to do exactly that.

Subscribe to get Liberty & Law magazine direct to your mailbox!

Sign up to receive IJ's bimonthly magazine, Liberty & Law, along with breaking news updates about the Institute for Justice's fight to protect the rights of all Americans.