LOUISVILLE, Ky.—Yesterday, the 6th U.S. Circuit Court of Appeals ruled against two Nepali immigrants seeking to open a home health care agency that would offer care to Nepali speaking refugees in Louisville. Dipendra Tiwari and Kishor Sapkota planned to open a modest business that would provide nurses and home health aides but were denied a certificate of need (CON) by the commonwealth of Kentucky. In 2019, they sued the state in federal court with the Institute for Justice (IJ), seeking to protect their constitutional right to earn an honest living.

“The court recognized that Kentucky’s CON law isn’t working as intended but held that if the government just believes hard enough that a law is helpful, it can remain standing,” said IJ Attorney Andrew Ward. “Government shouldn’t be in the business of picking winners and losers. We’re disappointed in the result but hope that this case will inspire lawmakers to reconsider whether billion dollar hospital conglomerates need protection from entrepreneurs looking to serve a small community.”

With thousands of Nepali immigrants living in the Louisville area, Dipendra and Kishor hoped to open a modest business that would employ nurses and health aides qualified to offer services to both the Nepali community and anyone else needing quality care in their home. But their dream was ended by a state law that says that there is no need for new home health agencies in most of Kentucky.

Kentucky’s CON law allows large health care companies to effectively monopolize home health services in the state. Dipendra’s application was formally opposed by the $2 billion Baptist Health conglomerate, which operates its own home health agency. In Jefferson County, which contains Louisville and its suburbs, the state has determined that there is no need, so no new home health agencies can serve patients.

The federal government encouraged states to pass certificate of need laws in the 1970s as a move to control costs. However, after a decade of experience, it became apparent that the laws were not working as policymakers intended. The federal government dropped the requirement. But with the encouragement of existing health care providers, many states kept their CON laws on the books. Currently, 16 states require a CON to open a home health agency.

Numerous studies have shown that CONs do not reduce health costs and may serve as a barrier to patients getting the care they need. In 2013, a national consulting firm hired by the commonwealth of Kentucky recommended “Suspending / discontinuing the CON program for Home Health Agencies.” However, that recommendation was never acted upon by Kentucky legislators.

Importantly, the three-judge panel’s decision raised the question of whether federal courts should defer less to the government on questions concerning economic liberty and other rights, and also referenced IJ’s case on behalf of homeowner Susette Kelo. The panel declared that any changes to the law in this area would have to come from the U.S. Supreme Court. IJ will next consider petitioning the Supreme Court to review this decision.