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IJ Scores Early Victory Combatting Kentucky’s Certificate of Need Program

Late last year, IJ filed a case in federal court challenging Kentucky’s certificate of need (CON) laws on behalf of two entrepreneurs—Dipendra Tiwari and Kishor Sapkota. Dipendra and Kishor are immigrants from Nepal who would like to open a home health agency to serve Louisville’s large and aging Nepali-speaking community, but Kentucky’s CON laws stand in their way. This summer, we won a crucial early victory for Dipendra and Kishor and their small-business dream.

Liberty & Law readers may remember their story: In 2018, after noticing their neighbors could not find home health aides who spoke Nepali, Dipendra and Kishor applied for a CON to open a home health agency. But the government ignored the needs of their community and denied their application shortly after it was opposed by Baptist Health, a $2 billion health conglomerate with its own home health agency. This bald-faced economic protectionism insulates established health care providers from fair competition and deprives the Nepali-speaking community of access to better care.

On the books in dozens of states, CON programs were conceived in the 1960s with the goal of controlling health care costs and increasing access to care. But they have proven to do the opposite. Because the process of getting a CON resembles full-scale litigation and can take years, states with CON laws have higher health care costs and fewer medical services per capita.

When Dipendra and Kishor joined IJ to challenge this scheme as unconstitutional, the state and the Kentucky Hospital Association moved to dismiss their lawsuit. But we won a powerful first-round victory when federal trial court judge Justin Walker denied their attempt in August.

Judge Walker saw through the government’s arguments and recognized CON laws for what they are—blatant protectionism. “It’s hard to picture this kind of central planning in most other American industries,” he wrote. “Consider, for example, if Michigan had told Henry Ford he couldn’t build a Model T factory because the market had enough Buicks.”

Indeed, a bedrock principle of the American economy is that competition drives innovation. Consumers receive better products and services when companies must outwork one another for business. By artificially restricting supply and stifling competition before it even begins, Kentucky cuts a check to existing multibillion-dollar hospital networks at the expense of everyday people in need of health care.

With IJ’s help, Dipendra and Kishor are well on their way to vindicating their rights. Judge Walker’s order is a crucial first step toward justice. The fight, however, is not over. IJ will not stop until Dipendra and Kishor, and others like them, can provide health care to those who need it—without unconstitutional interference from the government and industry incumbents.

Jaimie Cavanaugh is an IJ attorney.

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