Louisville, Ky.—Today, Federal District Court Judge Justin R. Walker handed a first-round legal victory to two Nepali immigrants in their challenge to a Kentucky law that is preventing them from opening up a new home health care business in Louisville. Dipendra Tawari and Kishor Sapkota filed their lawsuit in December 2019, after the state rejected their application for a certificate of need (CON), a government permission slip to open a business. The Institute for Justice, a national law firm that has challenged CON laws in several states, is representing Dipendra and Kishor.
“Certificate of need laws unconstitutionally prevent new businesses from competing with established ones,” said IJ Attorney Jaimie Cavanaugh. “We are thrilled that the court recognized that government shouldn’t be in the business of picking winner and losers. In fact, by doing so, it is entrepreneurs and patients who lose out.”
In his order denying the state’s motion to dismiss the suit, Judge Walker documents,”[T]here is every reason to think that Kentucky’s law increases costs, reduces access, and diminishes quality — for no reason other than to protect the pockets of rent-seeking incumbents at the expense of entrepreneurs who want to innovate and patients who want better home health care.”
Dipendra and Kishor saw an urgent need for Nepali speakers to receive home health care from workers who understood their language and culture. With thousands of Nepali immigrants living in the Louisville area, they 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 the state’s CON law, which says that there is no need for new home health agencies in most of Kentucky.
That law effectively allows large health care companies to 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.
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 state of Kentucky recommended “[s]uspending / discontinuing the CON program for home health agencies.” However, that recommendation was never acted upon by Kentucky legislators.
“No one should be barred from opening a business just because a competitor got there first,” said IJ Attorney Andrew Ward. “Kentucky’s CON law is unconstitutional, and we’re looking forward to proving it at trial.”