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When Protectionism Hurts Those in Need: IJ Challenges “Certificate of Need”

Law That Prevents Home Health Entrepreneurs From Helping Underserved Communities

Louisville, Kentucky, may be best known as the home of the Kentucky Derby and Louisville Slugger baseball bats. Many people may not know, however, that Louisville is also home to a large community of Nepali-speaking immigrants. Many of these immigrants are refugees, who resettled in Kentucky after being violently expelled from their native Bhutan. And just like the rest of the population, as these individuals age, they need more medical attention.

That’s where entrepreneurs Dipendra Tiwari and Kishor Sapkota saw an opportunity to help their community. A few years ago, Dipendra and Kishor noticed that their aging friends and relatives needed home health care services ranging from housekeeping and meal prep to administering medication and therapy. Such care is typically less expensive than institutional care in a hospital or a nursing home, and many patients prefer getting care from the comfort of home. There was only one problem: Few home health aides in Louisville speak Nepali.

Kishor and Dipendra were in the perfect position to fulfill this unmet need. Kishor works as a home health aide and is married to a nurse. And Dipendra used to keep the books for a home health agency in Virginia. Together, they developed a plan to open their own agency focused on serving the Nepali-speaking community.

But Kishor and Dipendra were forced to put their dream on hold when the state told them there wasn’t any “need” for their services. That’s because Kentucky is one of 18 states that require new home health agencies to apply for a “certificate of need” (CON) in any county where they wish to operate.

Regular readers of Liberty & Law will recall that CON laws are the result of a 56-year-old failed experiment in controlling health care costs. In the 1970s, the federal government created incentives for states to enact these laws, thinking they would keep health care costs down. Even though it quickly became apparent that restricting the supply of health care had precisely the opposite effect, most states still have CON laws of some form. Not surprisingly, hospitals and other large health care providers fight vigorously to keep these laws on the books and keep their competitors out of business.

Unfortunately for Louisville’s Nepali-speaking community, Kentucky’s formula for determining “need” ignores factors like the need for care in a particular language. Even so, Dipendra and Kishor applied for a certificate, hoping they could demonstrate that Nepali speakers are unable to find adequate care. In response, a $2 billion health care conglomerate objected to Dipendra and Kishor’s application, and the state denied it.

But Dipendra and Kishor refuse to give up. They have teamed up with IJ to challenge Kentucky’s anticompetitive CON law as a violation of the U.S. Constitution.

As Dipendra notes, other Certified Public Accountants weren’t allowed to veto him when he opened his accounting practice, and his and Kishor’s home health business should be no different. IJ will fight as long as it takes to help Dipendra and Kishor get into business.

Jaimie Cavanaugh is an IJ attorney.

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