Andrew Wimer
Andrew Wimer · November 21, 2022

ARLINGTON, Va.—Today, the U.S. Supreme Court refused to hear a case of two Nepali immigrant entrepreneurs who were stopped from opening a home health care business after hospital conglomerates opposed their application. Many states have laws that effectively shut new entrants out of a sector thatcould stand to benefit from innovation: health care. These “certificate of need” or CON laws let large health care companies effectively monopolize certain health services and prevent people from exercising their right to earn an honest living.

Dipendra Tiwari’s CON application was formally opposed by the $2 billion Baptist Health conglomerate, which operates its own home health agency. After Dipendra, his business partner Kishor Sapkota and the Institute for Justice (IJ) sued, the Kentucky Hospital Association intervened to defend the law and protect its members from new competition.

“It’s disappointing that the Court won’t step in to protect Dipendra and Kishor from naked favoritism,” said IJ Attorney Andrew Ward. “Kentucky shouldn’t be picking winners and losers in the marketplace. In just this case, three judges have suggested that the judiciary needs to take the right to earn a living more seriously. Dipendra and Kishor are still looking for ways to serve the refugee population in Louisville, but, unfortunately, as Kentucky’s CON law stands, it’s unclear if they’ll ever be able to.”

The 6th U.S. Circuit Court of Appeals upheld Kentucky’s protectionist law but questioned whether the U.S. Supreme Court should rethink how federal courts consider cases where the right to earn a living is at stake. “Many thoughtful commentators, scholars, and judges,” the court wrote, “have shown that the current deferential approach to economic regulations may amount to an overcorrection.”

Judges elsewhere have also recently questioned whether the courts should be more willing to defend economic liberty. Judge James Ho of the 5th Circuit wrote a concurrence saying, “In short, the right to engage in productive labors is essential to ensuring the ability of the average American citizen to exercise most of their other rights.” He noted that this case was an opportunity for the Supreme Court to change direction.

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, 18 states require a CON to open a home health agency.

The overwhelming evidence shows 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.

The COVID-19 pandemic exposed the flaws of CON laws. Dozens of states suspended CON requirements for a variety of services, including limits on hospital beds. This has led at least some states to reconsider their CON laws. IJ released a comprehensive nationwide survey of CON laws, “Conning the Competition,” in 2020.

The Institute for Justice is a non-profit public interest law firm that protects economic liberty, property rights, the First Amendment and educational choice nationwide. IJ is also representing a North Carolina doctor challenging his state’s CON laws, a Jordanian immigrant fighting against Colorado’s transportation monopolies, and a Texas mother trying to run a home day care.