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N.C. Doctor Sues to End Restrictions on Medical Facilities

For the last month, governors across the country have clamored to find or build hospital ICU beds to deal with the influx of COVID-19 patients in need of advanced medical care. To do that, many states, including North Carolina, were forced to suspend laws artificially limiting the number of hospital beds available in a state. These laws, called “certificate of need” (CON) laws, require state permission to add hospital beds or a variety of other services. Unfortunately, these suspensions may come too late: by some estimates North Carolina is predicted to run out of hospital beds during the height of the COVID-19 pandemic.

Now, a North Carolina doctor is partnering with the Institute for Justice (IJ), a non-profit public interest law firm, to challenge the state’s CON law in an effort to ensure that this situation never happens again. The lawsuit was filed in conjunction with a similar challenge in Nebraska.

“Certificate of need laws have exacerbated North Carolina’s ability to respond to the current crisis,” said Renée Flaherty, an attorney at the Institute for Justice. “In fact, the dozens of states that still have CON restrictions on hospital beds average nearly half as many ICU hospital beds as those states that have eliminated their CON requirements. Limiting the number of hospital beds, or other medical services, only hurts the patients and others who would benefit from greater access to care.”

Although hospital beds are at the heart of the current crisis, North Carolina’s CON restrictions go well beyond hospital beds; the state’s CON laws cover 25 different health services—making it the fourth most restrictive state in the country. Dr. Jay Singleton, who filed today’s lawsuit, wants to offer one of these services: affordable and life-changing eye surgeries at his office in New Bern, North Carolina. Although his office has everything necessary to safely perform outpatient surgical procedures, he is not allowed to because a board dominated by health care industry insiders has determined that there is no “need” for a facility that would compete with a nearby hospital, CarolinaEast. So Dr. Singleton must perform his surgeries there, even though it would be cheaper and more convenient for his patients to receive care at his own facility. (At the moment, Dr. Singleton has postponed all elective surgeries in compliance with to state emergency orders.)

Dr. Singleton thinks that competition is critical to maintaining quality, affordable health care, especially in an age when hospitals are overburdened and can’t provide the services patients need at an affordable price. Thankfully, the North Carolina Constitution specifically outlaws state-enforced monopolies and protects citizens’ rights to earn an honest living.

“The only reason Dr. Singleton can’t perform eye surgeries in his office is that the hospital down the street is already doing so,” said IJ attorney Josh Windham. “That’s unconstitutional: The North Carolina Constitution expressly forbids the government from picking winners and losers in the marketplace.”

The North Carolina Constitution outlaws monopolies and special privileges and protects citizens’ right to earn an honest living. In fact, the last time the North Carolina Supreme Court considered a previous version of the state’s CON law, it struck it down for just these reasons. The law was subsequently re-passed with minimal changes.

“Our government in North Carolina has created a monopoly that decreases patient choice and access while increasing profits for hospitals with CONs,” said Dr. Singleton. “It is ludicrous to think that the state has put an artificial barrier between me and the surgical care of my patients.”

Dr. Singleton is not alone in his frustration with the state’s CON law. Across the country, medical innovators have been forced to grapple with them since they were put in place in the mid-1970s. Since then, 14 states, including California and Texas, have eliminated their CON laws all together.

“CON laws are destructive,” said Windham. “Nothing illustrates this better than how recent shortages in the supply of medical services and equipment have hamstrung our ability to respond to the COVID-19 pandemic. It’s time to eliminate these outdated laws so that doctors can do what they do best: provide services that patients need, right when they need them.”

Dr. Singleton isn’t the first North Carolina doctor to challenge the state’s CON law. In 2018, IJ challenged the CON law on behalf of a Winston-Salem surgeon, Dr. Gajendra Singh. Unfortunately, Dr. Singh had to close his imaging center earlier this year, in part because of the enormous costs imposed by the CON law. Dr. Singh’s lawsuit could not continue, but Dr. Singleton has taken up the mantle to end the healthcare monopoly once and for all.

This is also not IJ’s first time challenging CON laws in court. IJ has fought to end CON laws in Virginia and Iowa, and it is currently litigating cases in Kentucky and Nebraska.

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